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Cold truth of storage units

- Lack of power, subsidy hurts owners

Patna, Dec. 4: The backbone of the food processing industry, cold storage units, is weakening in the state when international food chains such as KFC and Pizza Hut are setting up shops in the capital.

According to state government records, ten of the 35 cold storage units in the city are non-functional for over a decade. Members of Cold Storage Owners’ Association, Bihar, however, claimed that only seven units were functional and four more had shut down this year.

A city with over 20 lakh population needs around 50 cold storages with a total capacity of around 2,50,000 tonnes. The city has no such luck, though. With its 18 lakh-plus population, the seven functional cold storages have an estimated capacity of only 35,000 metric tonnes.

Decades-old cold storages have shut down allegedly because of perennial power crisis and lack of subsidy.

The owner of a 53-year-old cold storage at Digha that closed down this year told The Telegraph: “Electricity tariff was hiked numerous times with retrospective effect over the past two to three years. Being one of the oldest units in the state, we were using comparatively old technology. It required higher and uninterrupted electricity supply, which was not available. Accordingly, there was a steep rise in the expenditure while our capacity remained the same. We were almost on the verge of bankruptcy and decided to close down.”

Madan Kumar, the owner of Saraf Cold Storage in Lodi Katra, Patna City, had a similar story to tell. His cold storage unit with a capacity of 2,450 tonnes was set up in March 1997. Mostly used for potato storage, the unit closed down last year. He said: “We started suffering heavy losses, mainly because of repeated hikes in fuel surcharge. Finally, we had to close it,” he said.

According to the records of the directorate of horticulture, there are 330 registered cold storages in the state. One hundred of them have been listed as non-functional for over a decade. S.N. Ashraf, the secretary of Cold Storage Owners’ Association, Bihar, said: “The records of the horticulture directorate are obsolete. They have also included several small ice cream-making units in the list of cold storages.”

Lamenting that running cold storages is no longer financially feasible, he said: “Recent studies state that about one-third of the horticultural produce, especially fruits and vegetables, is damaged because of poor cold storage facilities. With regard to its establishment cost, a cold storage unit with a capacity of around 4,000 metric tonnes can be set up at a cost of around Rs 2 crore.”

Arvinder Singh, director, directorate of horticulture, agreed the business was no longer viable but added that Bihar was not the only sufferer. “Cold storage is no more a viable business not only in Bihar but in other parts of the country as well. It is in consideration of its low profitability that the Government of India provides 40 per cent capital subsidy for setting up cold storages, which is the highest rate of subsidy given under any of the government schemes. The business model of cold storage is faulty, as recovering capital cost through rent is not at all feasible,” he said.