Good Intentions, Flawed Assumptions: Solar-powered Cold Storage Facility to Reduce the Wastage of Fresh Produce

With the aim to reduce the loss of fresh produce post-harvest and to boost the farming community’s income, Sustain Plus Energy Foundation (SPEF) partnered with People’s Action for National Integration (PANI) to provide a hyper-local cold storage solution for small farmers in eastern Uttar Pradesh. Under the project, we set up a 5 MT solar-powered cold storage facility in the district of Balrampur, equipped to serve about 100 small horticulture farmers. The objective was to extend the shelf life of the farmers’ produce, thereby reducing wastage and preventing the distress sale of produce. Since this was one of the first interventions for cooling implemented by the team, we financed the project and PANI was responsible for the overall management in coordination with the Tata Trust’s Uttar Pradesh team.
A process was devised where farmers would transport their produce to the cold storage facility using their own resources. The facility was managed by a community-based organisation and followed a pay-per-use service model. As the region had an abundance of banana growers, the secondary application of the facility was to use the cooling chamber for the ripening of bananas. About 35 banana farmers were identified to use this facility as a ripening chamber. Moreover, we also informed local businesses about the facility and encouraged them to store their produce. To date, about 125 farmers and fruit vendors have used this facility to store their produce or ripen bananas.
In the initial phase of the project implemented from January to March 2020, we expected about 35 farmers to make use of the newly-installed cold storage. However, only 26 farmers used the facility during this time. Of these, six farmers used the cooling chambers for banana ripening. The Farmer Resource Centre (FRC) managing the unit was able to earn only Rs 1,600 as profit in this period. Since April to June are the warmest months of the year, the project was expected to see at least 60 unique farmers use the cold storage facility. However, there was hardly a rise in the number of users due to low harvest volumes. Additionally, the farmers were unwilling to shell out more money for transportation and cooling. Between July and October, major farmers were expected to use the facility as there is higher production in the kharif season. However, the first target of covering 100 unique farmers was achieved only by the end of October 2020. Of these farmers, 92 stored vegetables and the rest used the cooling chambers to ripen bananas.
On paper, the project seemed to be advantageous to the farmers. However, once implemented, several factors adversely affected the potential impact of the cold storage unit. Issues associated with the lack of affordable transportation and warehouse services added to the failure. Even though the storage fee was quite affordable at Rs 0.50 per crate, only a few farmers availed of this service. Furthermore, the service model managed by the FRC was unviable due to sub-optimal utilisation of the unit’s capacity.
Though distress sales and produce wastage were correctly identified as need areas, the intervention failed to understand the farmers’ retail behaviour. While we assumed that farmers would be keen to store their leftover produce, their retail behaviour remained largely unchanged even after the cold storage unit was established in the area. This was mainly due to the small quantities of produce that needed to be stored overnight. Usually, the farmers preferred selling small amounts of produce they harvested regularly instead of accumulating it. Besides, the cost of accumulation and transportation, and the amount of produce to be stored by the farmers were not clear at the time of the project’s need assessment.
Most of the growers preferred to sell whatever produce was left at the end of the day at a lower price than spend the time and money for it to be transported to the cold storage facility and back. Since the unit was not located in a market, extra travel was required for this transport. The unit was also not centrally located for all farmers. We also wrongly assumed that the price recovery due to avoided distress sales and wastage would cover the service fee of cooling as we expected them to store larger accumulated quantities of produce. We had missed accounting for the cost of transporting the produce to and from the cold storage unit.
The viability of the unit comes from the optimisation of storage volumes. But since the service fee was too low, it would take several years to recover its cost. Also, the heterogeneity of produce made it difficult to store all kinds of produce in a single chamber – hence, it was never fully utilised. The implemented cold storage solution was not well-suited for frequent door openings and closures. Hence, a very regulated system would be required for it to run smoothly on a service model. An aggregation/procurement model would have been more appropriate. However, this would have required an institution in place which would procure, store and sell the produce through its own independent market linkages – which did not exist in this case.
At the operational level, the original economics of the solution was impacted by the lack of understanding of capacity utilisation as well as the need for a power backup for the cooling solution’s reliability. Though we had expected the cold storage unit to run entirely on solar power, it required minimum backup support of a one-phase connection. While the secondary application of banana-ripening was initially successful, one batch of bananas got spoilt when desired temperatures could not be maintained due to the lack of a power backup. The system’s recovery to an appropriate operational state took a lot of time and cost, which impacted the farmer’s trust in the reliability of the solution. Lessons from this project’s implementation included value chain planning, aggregation and ownership model, and the need to consider the stability of technology in use.