All fruits and vegetables require specialized post-harvest treatment, appropriate temperature and relative humidity for their storage. Establishment of cold storage provides refrigerated storage and preservation facilities for different fruits, vegetables as well as flowers. Special licenses are required for food items like milk, meat etc & can be studied in the ‘requirements for manufacturing & storage of food in Pakistan‘. Because of technology advancements and logistic strategies, the cold storage of perishable items has become an important stage in the distribution between manufacturers / processors and retail locations. The cold storage will ensure the increased availability and improved quality of high value perishable fruits and vegetables for both export and local sale, which would otherwise perish or deteriorate.
This project is primarily designed for storing of Potatoes, Apples and Kinnoes but it can be used to store multiple products, stored in different compartments of the unit, where relative temperatures for respective products can be maintained. The major clientele of this business will be the local traders, export houses and growers of fresh fruits and vegetables. Storage capacity utilization of different fruits and vegetable will be primarily determined on seasonal basis; however, this facility also aims to cater the off-season fruits and vegetables storage requirements of the traders. The unit will render storage facility services to fruit and vegetable traders (both local and exporter) and growers on market rates.
The cold storage prevents the spoilage of perishable commodities like Potato, Apple & Kinno, etc. and making them available off-season and in places where they are harvested. This also serves the dual purposes: the growers of the perishable produce don’t need to sell out their produce in hurry at throwaway price and protect the nation from shortage of commodities due to spoilage of food during off season. The proposed project contains racking system build up by using good quality steel and wooden logs. These racks provide space for placing different types of vegetables and fruits. Generally, potatoes / vegetables are stored in bags, whereas fruits are in crates.
Operational Capacity of Cold Storage Unit
The proposed cold store facility has a maximum storage capacity of storing 60,000 bags of vegetables (i.e. Potato and others) or 180,000 crates of fruits (i.e. Apple, Kinno and others) at a particular time. The starting capacity utilization is assumed at 70% with 10% gradual increase in subsequent years up to maximum capacity utilization of 100%.
Potential target customers and market for the proposed project mainly comprised of the traders (both local and exporters) and growers of fresh vegetables and fruits.
Factors for Success of Cold Storage Unit in Pakistan
The most critical considerations / factors for the success of this project are as follows:
- Complete adherence to best agronomic practices is critical to the success of this project; therefore, technical knowledge and experience of the entrepreneur in the field of fresh vegetable and fruit is absolutely necessary.
- Adaptation of better insulation technology, energy efficient construction techniques and appropriate compartmentalization of the facility
- Appropriate storage arrangement and internal control systems
- Careful selection of good location and purchase of land at competitive price.
- Ability to generate work orders through networking, direct marketing and negotiating long term contracts.
- Stringent supervision of the production process at every level.
- Knowledge about local environmental regulations and compliance requirements.
Space Requirement for Cold Storage Unit in Pakistan
Approximately 1 acres (8 kanals) of land would be required for the establishment of proposed unit. It is suggested to purchase land instead of getting on rent or lease as the project life is very high and Plant & Machinery used in the project is expensive. The required land should be closely located to agricultural fields or fruits and vegetable markets. The cost of land is estimated at a rate of Rs. 8.00 million per acre; hence total cost of required land is Rs. 8.00 million. The infrastructural requirements of the project mainly comprises of the construction of Storage Areas, Management Office, Machine Room and other facilities.
Financial Requirements for Cold Storage Business in Pakistan
An investment of Rs. 150 million (appx) is required to start a cold storage unit in Pakistan. All the figures in this financial model have been calculated for estimated sales revenue of Rs. 51.66 million in the year one. The capacity utilization during year one is worked out at 70% with 10% increase in subsequent years up to the maximum capacity utilization of 100%. A detailed financial model has been developed to analyze the commercial viability of cold storage (vegetables & fruits) unit. Various cost and revenue related assumptions along with results of the analysis are outlined in the pre-feasibility study of cold storage business in Pakistan by SMEDA.