Aug. 16 (Bloomberg) -- About a third of Ayannan Karuppaiah’s 75-ton banana crop used to rot before it reached the market about 300 miles (480 kilometers) away in Chennai, India. Now, his fruit is eaten in the Middle East.
Karuppaiah transformed his business after buying a refrigerated truck from Ingersoll-Rand Plc two years ago. The vehicle, modified to handle narrow roads and temperatures that can reach about 40 degrees Celsius (104 degrees Fahrenheit), enabled Karuppaiah to get his bananas blemish-free to Bangalore and Chennai, where he sells them wholesale for export to the United Arab Emirates and Saudi Arabia.
“It used to be awful seeing all of my hard work just rot away,” said Karuppaiah, 51, who’s bought five more trucks since. “Now, I’ve paid for my daughter’s wedding and put my son through college.”
Ingersoll, United Technologies Corp.’s Carrier and shipping line AP Moeller-Maersk A/S are among companies promoting cold-chain technologies in India, where about 300 billion rupees ($6.6 billion) of food is lost each year because of a lack of chillers and poor infrastructure. That push is helping local farmers -- the world’s biggest growers of bananas, mangoes, papayas, lemons and limes -- sell more goods at home and abroad.
“Reducing waste can directly translate into income for farmers and lower prices for consumers,” said Sankalpa Bhattacharjya, a senior director at KPMG in Gurgaon, India. “It will have a long-lasting impact by lowering food inflation.”
An index measuring Indian wholesale prices for agricultural products jumped 9.9 percent in the week ended July 30 from a year earlier, according to the Department of Commerce.
0.1 Percent Exports
India produced 26.3 million tons of bananas in 2008, of which 0.1 percent was sold overseas, according to the United Nations’ Food and Agriculture Organization. Ecuador, the biggest exporter of bananas, sold 79 percent of its 6.7 million-ton crop abroad that year, the latest for which figures are available on the organization’s website.
As much as 40 percent of India’s banana crop is lost to wastage, according to KPMG’s Bhattacharjya. That would equal 10.5 million tons based on the 2008 data, more than the total crop in the Philippines, the world’s second-biggest producer.
India is investing to pare food waste, setting aside 78.1 billion rupees in the year started April for states to spend on cold storage and other farming infrastructure. That support, coupled with private loans, helped a 600-member cooperative in Karuppaiah’s home village in Tamil Nadu state build a refrigerated facility that can hold 160 metric tons (176 tons).
“We now have the power to bargain for a better price for our produce,” said Karuppaiah, who slashed waste at his own farm to near zero even after adding more land and boosting annual production 20-fold to 1,500 tons.
Cold-chain investments may also help India become a major exporter of other crops, including apples and strawberries, Bhattacharjya said.
Demand for chillers helped Swords, Ireland-based Ingersoll boost sales in India 27 percent last year, according to a company presentation. China sales grew 24 percent. The company expects emerging-market revenue to grow at more than double the pace of the local economies, Chief Financial Officer Steven Shawley said in a June 17 conference call.
To win sales in India, Ingersoll has developed Thermo King refrigeration units that are narrower and less power-hungry so they can fit onto local trucks, said M.S. Manjunath, head of its cold-chain business in the country.
Ingersoll-Rand India Ltd., the company’s Bangalore-based unit, declined 1.5 percent to 457 rupees at the 3:30 p.m. close in Mumbai after earlier rising as much as 2.8 percent. The Bombay Stock Exchange’s benchmark Sensitive Index fell 0.7 percent. The unit expects to become a $500 million enterprise by 2012, helped by investment plans totaling about $100 million, Chairman and President Venkatesh Valluri said.
Gujarat Fluorochemicals Ltd., a maker of refrigerant gases, gained 8.9 percent to 487.15 rupees. The stock rose as much as 13 percent, the most since Dec. 2. The company reported Aug. 12 first-quarter profit more than tripled to 1.6 billion rupees.
United Technologies’ Carrier, the world’s largest provider of temperature-control products, has introduced small chiller units that can be powered by vehicle engines rather than using a separate generator, said Pankaj Mehta, assistant director at the local unit of Carrier Transicold. The company also intends to start selling refrigerated railroad cars during the next few years as India builds new lines, he said.
Copenhagen-based Maersk, the world’s largest container line, has introduced cargo boxes that keep bananas fresh for up to 50 days by controlling oxygen, carbon dioxide and nitrogen levels as well as temperature and humidity, according to its website.
The technology enables Indian banana farmers to send their goods as far as the Baltic Sea region, said Rizwan Soomar, managing director at Maersk Line (India & Sri Lanka). He didn’t comment on how many bananas the line was carrying from India. The containers also have been used for avocados, he said.
The Maersk system helped Navsari, western India-based Desai Fruits & Vegetables ship 2,000 containers of bananas to the Middle East in the year ended March 31, Desai Chief Executive Officer Bjoern Witte said. The company’s wastage levels are about 2 percent for bananas, he said.
Desai is now looking to send bananas to eastern Europe and Ukraine as part of a push to boost exports fivefold by 2015, he said.
“We are growing strongly,” Witte said. “The fundamentals are tremendously promising for exports.”
India plans to double total exports by the year ending March 2014 from $246 billion last fiscal year, according to a Department of Commerce plan. Still, infrastructure remains a hindrance.
A lack of port capacity can lead to congestion and delays, hobbling volumes. The nation’s 13 biggest state-run harbors missed a government target of handling 581.3 million tons of cargo last fiscal year by 3.5 percent.
India plans to spend $1 trillion on new roads, airports, urban rail and power networks in the five years through 2017 to boost trade and growth.
“Technology has enabled even people in villages to earn foreign exchange,” said M.M. Mustaffa, director of the government-backed National Research Centre for Banana in the southern Indian city of Tiruchirapalli.
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