China Needs Cold Chain Improvement to Meet Food Demand

CHINA - The new railway from Chongqing to Rotterdam provides exciting new opportunities for European producers to meet Chinese food demand, but improvement of cold chains to ensure perishable food safety is needed, leading agricultural bank Rabobank has said.
calendar icon 30 October 2015
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In a joint report entitled "Freight Trains and Cold Chains", Rabobank together with the world’s leading agricultural university of Wageningen UR, analysed what building China’s new supply chains for perishables will entail.

“China’s demand for fresh, safe and high-quality food is outstripping its capacity to produce and deliver domestically. Europe is able to address this need,” says Paul Bosch, F&A Supply Chains Analyst at Rabobank.

“However, the growth in consumption of perishable food in China will only continue if supply chains deliver on quality and safety. To a large extent this depends on the proper cooling of products during storage handling and transport.”

Increasing consumption in China is being driven by continued economic growth and urbanisation. China’s economy is expected to grow by 6-7 per cent annually in the coming years, pushing a further 38 million households into the upper middle class.

Fresh or perishable food is increasingly reaching Chinese consumers through modern distribution channels, including supermarkets, hypermarkets and online. Food safety is one of the driving forces pushing shoppers away from traditional wet markets and it is expected to remain one of the biggest concerns for the Chinese population.

The demand for fresh safe food, bought through convenient modern channels is driving the country’s investment in cold chain infrastructure. Over the past five years, storage capacity has grown from 12 million cubic metres in 2007 to roughly 100 million cubic metres in 2015.

However, China’s cold chain sector is still lagging and needs to improve in terms of both quality and capacity.

The associated investments are huge: an estimated USD 85 billion is needed in the next ten years. The country’s cold chain sector will be able to improve once cold chain companies start adapting their business models into higher-value strategies in response to the higher service needs of their clients.

Rabobank said the presence of a high-level cold chain sector would provide benefits such as:

  • reducing the waste of perishables by 14 per cent: worth of $7.5 billion;
  • creating a 10 per cent reduction in food prices and hunger - rural income would also increase as farmers transport their crops in refrigerated trucks;
  • reducing healthcare costs: improved cold chains would reduce the 90 million annually recorded cases of food-borne diseases:
  • 10-20 per cent reduction of emissions: modern, energy efficient technologies and new refrigerants can reduce emissions of both vehicles and warehouses by 10-20 per cent.

Rabobank said the new railway could stabilise China’s food system by enhancing international trade and reducing the vulnerability to regional events, such as crop disease and extreme weather, as well as enhancing global competition.

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