What is Cold Storage Business?
A cold storage facility is a location where fruits and vegetables can be preserved for a long time. The most likely candidates for this initiative are business owners or MSMEs in the food and beverage industry. Cold storage is a one-time investment business that requires a large upfront investment. However, when compared to other small businesses, the returns are higher and more long-term. There are two types of cold storage facilities: single-product storage and multiple-product storage. Fruits and vegetables, chicken and fish products, beef products, as well as tobacco and alcohol, all require cold storage.
Table of Contents
- What is Cold Storage Business?
- Why Are Cold Storage Businesses Required?
- How to Apply for Business/MSME Loan for Cold Storage Business?
- How to Start Your Own Cold Storage Business in India?
- Types of Cold Storages
- Investment Cost Includes:
- Food Safety License Requirement
- Benefits of Cold Storage
- Why Cold Storage Is Important For India
--------------Blog Contact Form-------------
A service that keeps vegetables and fruits from rotting for a longer period of time is known as cold storage. Although this firm requires a significantly larger initial investment than other small enterprises, it provides higher profits over a longer period of time. In both developed and emerging countries, the cold storage industry is booming. There are two forms of cold storage, which are determined by the available facilities. Except for potato storage, one type is product-specific cold storage, while the other is multi-purpose. Multi-purpose cold storage, on the other hand, yields substantially higher returns and is generally lucrative.
Why Are Cold Storage Businesses Required?
Fresh fruits and vegetables are thrown away in large quantities all around the world. Generally speaking, countries with larger food crop production have the highest percentage of food waste. As a result, cold storage is essential in these countries for extending the marketing period, shelf life, post-harvesting, eliminating gluten, and decreasing transportation bottlenecks during increased food production while maintaining product quality. Cold storage facilities are very useful in reducing perishable commodity waste. It also assists in providing farmers with remunerative expenses and making farm products available to consumers in fresh condition at cheap and competitive pricing. Demand for packaged and processed foods, as well as changing living choices, are driving the cold storage industry worldwide.
How to Apply for Business/MSME Loan for Cold Storage Business?
Follow the below steps to apply loan to start your own cold storage business in India:
- Research and evaluate all of the business financing choices available from major financial organizations.
- Simply fill out the basic information such as your name, mobile number, residence, loan amount, email address, annual turnover & profit, and so on to get the deal that best meets your business needs.
- After you submit the information, a bank representative will call you to verify the documents and begin the loan process.
- If the bank is happy with the verification, the loan will be approved. The bank will disburse the loan amount to your specified bank account once the loan has been approved.
Top Banks offering Loans for Cold Storage Business
Farmers, individuals, and groups of individuals can apply for a Cold Storage Loan. Apart from NABARD and the State Bank of India, many banks in India offer these types of loans. Cold Storage Loans are used not only to start a new cold storage facility but also to expand an existing cold storage facility. Agriculture is the primary source of income for millions of people in India, particularly in villages and other rural areas. Farmers also want suitable storage facilities to store farm produce that will be shipped to various locations throughout the country. Furthermore, people in the cold storage sector provide cold storage to farmers and traders of farm products. The top financial institutions giving business loans for cold storage businesses in India include SBI, HDFC Bank, Bank of India, Bank of Baroda, National Bank for Agriculture and Rural Development (NABARD), Corporation Bank, Union Bank of India, and many others.
Loans & Subsidies for Cold Storage Business
Entrepreneurs or MSMEs can apply for business loans for working capital loans to fulfill their business's working capital needs, whether it's to cover a shortfall in investment costs or to manage cash flow. The Ministry of Food Processing Industries funds around half of the entire cost and machinery, while North Eastern states are eligible for 75 percent of the grants. The ministry or the bank issuing the loan or subsidy will determine the eligibility conditions.
How to Start Your Own Cold Storage Business in India?
To start a cold storage firm, a business owner must write a complete business plan that includes all business-related information, product and service specifics, and staff information, including full names and addresses. The rest of the important takeaways are mentioned below:
Find Perfect Location
In any business, location is critical. Cold storage facilities should be located as close to the producing fields or consumption centers as practicable. A multi-storage or multi-commodity cold storage facility with a capacity of 5000 metric tonnes requires around one acre of land. The rest of the time, the size of the area will be determined by the amount of produce that a business owner wishes to maintain and preserve.
Because of the extreme heat during the summer, the equipment to be used should be carefully selected and built to handle large loads and power outages. Before deciding on cold storage equipment, consider the following factors: the age of the equipment, the light, fan, and product load, the heat created by stored items, the ceiling, wall, and floor, and so on.
Ideal Standards for a Cold Storage
- Cold storage room dimensions 14 ft. x 10 ft. x 10 ft.
- Storage Space Humidity: 85-90%
- Storage Materials: Fruits and Vegetables
- Storage Unit’s Capacity: 10 Metric Tonne (MT)
- Initial Temperature to produce: 28-35 degrees Celsius
- Insulation material: 60mm Poly Urethane Fibre (PUF)
- Refrigeration Capacity: 30000 Btu/hour
- Assumed outer temperature: 43 degrees Celsius
- Temperature requirement: (+-)2-4 degrees Celsius
Maintenance and Cleaning
The temperature, humidity level, and preserved produce should all be monitored on a regular basis as part of the cold storage plant's maintenance. Containers, trays, and storage bins must be serviced or cleaned on a regular basis.
Promotion and Target Audience
The successful implementation of marketing strategies, and promotional and advertising campaigns is critical to the profitability of a cold storage business. Traders, wholesalers, marketers, promoters, retail marketplaces, and warehouse firms, as well as supermarkets in rural and metropolitan locations, are all market sectors that an entrepreneur should target in the early phases of their business. Company owners can engage retailers, business growers, producers, distributors, exporters, and others to improve sales and profit.
One of the most challenging tasks is securing financing, as the cold storage industry necessitates a significant capital expenditure. Managing whole business investment from hard-earned savings is not a practical solution, nor is it suggested, because savings are typically utilized to cover immediate financial needs or cash crunch situations.
Firm loans are available from a variety of financial institutions to entrepreneurs who want to launch a cold storage business. They can evaluate and contrast the different loan options accessible in the financial industry to find the ideal loan for their business needs.
Types of Cold Storages
Combi refrigerator rooms, industrial cool rooms, and modular refrigerator rooms are the three types of storage facilities available in India. These are not the same as vegetable and fruit cold storage, fish cold storage, or potato cold storage. The categories, on the other hand, are more formal and regimented!
- When manufacturing sectors need to store products before transporting them to the ultimate customer, they utilize freezers (temperature-controlled freezers).
- When things must be maintained intact before being sold, end buyers will require cool storage.
- In many firms, third-party logistics plays an important role. They are in charge of storing objects until they are delivered to the correct location. Third-party logistics, too, require the assistance of a good storage solution.
Investment Cost Includes:
The Cold storage business is a capital-intensive business. You must have an investment capacity of about 3 to 4 crores for commencing this business. Generally, you can set up this Cold storage business with financial help from banks. Also, check if there is any subsidy or Govt. grants available for this business in your District or State. In India, the National Horticulture Board provides financial assistance for this Cold storage business for entrepreneurs.
Food Safety License Requirement
Under section 92 of the Food Safety and Standards Act, 2006, and, more crucially, the Food Safety and Standards Regulation, 2010, all food industry owners must get a food safety license. This license complies with the Act's rules and regulations in terms of safety, hygiene, and sanitary conditions.
Things to Remember!
- Land that was going to be used as a cold storage facility is being turned into non-agricultural land.
- Before launching a business, you must obtain permission from the local government.
- No one should work more than 12 hours a day in a cold storage facility.
- There should be adequate drainage, road connectivity, and site elevation.
- Load bearing strength of the soil should be tested.
- Vacuum and pressure testing of the refrigeration system should be done for safety reasons.
- A cold storage facility should have fire extinguishers, alarms, and other safety features.
- Soft water should be utilized; if this is not possible, a water softening facility should be installed.
- The most significant of all is the cold storage facility's insurance.
Benefits of Cold Storage
- Perishable product waste can be reduced.
- Off-season goods might be sold at a discount.
- Provides producers with remunerative prices.
- Customers are offered processed or packaged foods.
Why Cold Storage Is Important For India
India produces roughly 260 million metric tonnes of fruits and vegetables yearly, making it the world's second-largest producer. India is also the world's greatest producer of milk, as well as fruits such as mangoes, papayas, guavas, and bananas, as well as meat and poultry goods. Despite this, about 4.6-15.9% of fruits and vegetables are thrown away each year in the United States. The lack of cold storage infrastructure and current harvesting procedures are to blame for this waste. As a result, an entrepreneur has a better chance of starting a cold storage firm and reducing waste while earning large profits.
A business plan is an engraved sketch of your business's prospect, a document that describes the step to step process on what a business owner plan to do and how to execute the plan.
If you are into food business with revenue below 12 Lakhs, you must obtain an FSSAI Registration before starting operations. Corpseed can help you to obtain FSSAI registration for your business.
Startup India Registration
Startup India Registration offers a range of training and skill-building programs to help you and your team stay ahead of the curve. With Startup India Registration, you'll gain access to a wide range of resources, including funding opportunities, mentorship programs, and networking events. You'll also benefit from tax exemptions and other incentives designed to help you grow your business quickly and efficiently.
This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.
BOOK A FREE CONSULTATION
Get help from an experienced legal adviser. Schedule your consultation at a time that works for you and it's absolutely FREE.