In case you are searching for a business that requires a one-time investment, then cold storage is the ideal one for you. Cold storage is a service where vegetables and fruits are preserved from spoiling for a longer period of time. Although the initial investment is much higher in this business compared to other small businesses, it offers higher returns for a longer tenure.
The cold storage business is thriving in both developed and developing countries. There are two types of cold storage, which depends on the different facilities available. One type is product-specific cold storage except for potato, and another is multi-purpose. However, the returns of multi-purpose cold storage are much higher and are quite profitable overall.
Why are cold storage businesses required?
Around the globe, the wastage of fresh fruits and vegetables is quite high. Generally, countries which have higher produce of food crops are the ones which hold the maximum share in wastage of food. Hence, in these countries, cold storage is quite necessary for extending the marketing period, shelf life, post-harvesting, avoiding gluten, and reducing transporting bottleneck during the higher production of food items and maintaining the product quality.
Additionally, cold storages are also important in decreasing perishable commodity wastage. Further, it helps offer remunerative costs to farmers and make farm products readily available to consumers in fresh condition at affordable and competitive prices.
Demand for packaged and processed foods and changing lifestyle habits are also creating the need for cold storage business globally.
Benefits of Cold Storage
Some benefits of cold storage plant are:-
- It reduces the wastage of vegetables and fruits.
- It can be used to store medicines or vaccines.
- Off-season farm products are available at affordable rates.
- It helps in providing remunerative price to farmers.
- Packaged or processed food are available to customers.
Investment cost of cold storage
The initial cost of investment is very high as compared to other small businesses. Basically, the investment is required in the following areas like land acquisition, construction of cold storage building, licensing, obtaining permissions, arranging necessary utilities like electricity, water, etc.
Further, you are required to invest a significant sum of the capital in purchasing cooling machinery. There are various updated machinery that ensures long term sustainability and better performance. Apart from the fixed cost mentioned above, there are certain costs that you might need to consider, like working capital expenditures. Other monthly costs include staff salaries, utility bill payment, and other promotional expenses.
Investment Cost includes (summary):
- Purchasing cooling machinery
- Purchasing/renting land and construction of the cold storage facility
- Obtaining Government licenses or from the respective local authority
- Monthly bill of utilities like electricity, water, and other related materials
- Hiring skilled, experienced & professional staff and paying them salaries to them
- Daily expenditure and capital
- Promotional, advertising and marketing expenses
Types of cold storages machinery
In cold storage machinery, there are three kinds of facilities in India: industrial cool rooms, combi refrigerators, and modular room refrigerators.
Guidelines on Cold Storage Business in India
If a business owner in India wants to start a cold storage business, you need to prepare a detailed business plan. That business plan should incorporate all information related to cold storage business-like products’ details and services that are to be used together with the employee’s details like your full name and address, etc. In addition, there are some other points that are mentioned below:
- Location Finalizing:
The location of cold storage plants plays a very important role in this business. Cold storage location should be kept in close proximity of the consumer centres or producing farms. If a cold storage facility has a capacity of 5000 metric tonnes requires one acre of land for a multi-commodity or multi-storage unit. Sometimes the volume of produce that a businessman wants to store also decides the location or area.
- Selection of Equipment:
In summers when the weather is immensely hot, equipment that is to be used must be selected cautiously, keeping in mind heavy loads and power cuts. There are some factors that need to be focused on before finalizing which equipment are to be used for cold storage. These factors are the age of the equipment, fan, light, and product load besides ceiling, wall, floor, etc.
Basic requirements for an ideal cold storage plant:-
Temperature requirement: (+-)2-4 degree Celsius
- Cleaning and Maintenance:
Cleaning and maintenance of cold storage plants is equally important. The machinery should be regularly checked, like humidity level, temperature and preserved produce. It is a must to timely service or clean trays, containers, and storage bins.
- Promotion of product and target Audience:
Whether a cold storage business succeeds or not entirely depends on the good marketing strategies and effective implementation of advertising and promotional campaigns. In the starting and later stage, an entrepreneur should target all the different market segments such as traders, promoters, wholesalers, marketers, warehouse companies and retail markets, and supermarkets in urban and rural areas. For additional growth in profit and sales, business owners can discuss with business growers, producers, exporters and distributors, etc.
5. Arranging Funds
Arranging funds is one of the most difficult jobs as the cold storage business investment is quite high. Getting funds for the total investment for cold storage business from the savings is not a good option as one might need them to fulfill urgent requirements or in case of a cash crunch.
Entrepreneurs wanting to start a cold storage business may choose to get a business loan, which LendingKart offers.
Important Points of cold storage business
- Land which needs to be used as a cold storage facility must be converted to a non-agricultural land.
- You must get a permission letter from the local authority before constructing the facility.
- Cold storage facility are permitted to work for only 12 hours per day.
- The place must have proper drainage with a road connectivity.
- There should a site elevation.
- Soil testing must be done to check load bearing strength.
- As safety precautions, pressure and vacuum testing of refrigeration system must be done
- Cold storage facility must be equipped with alarms, fire extinguishers and exists
- Soft water must be used, if it is not available then you must install a water softening plant
- Most important, you must have a insurance of the cold storage facility.