Cold chain industry sees 10% growth this year

MANILA, Philippines — The Philippine cold chain industry is expected to grow by as much as 10 percent this year as food importation will remain a key driver for its expansion, according to the Cold Chain Association of the Philippines (CCAP).

“For 2023, at least eight to 10 percent is already achievable,” CCAP president Anthony Dizon said.

He said this projection is equivalent to an additional 50,000-metric ton (MT) capacity to be taken up by food.

“The natural factors will be always economic recovery, population growth, the growing e-commerce platforms,” Dizon said.

Growth in the sector has been on a steady climb since 2015, CCAP said.

“The growth curve of industry has been happening since 2015. And even before the pandemic, there are projects already in the pipeline,” Dizon said.

In 2020, the Board of Investments (BOI) and its partner industry stakeholders launched a Cold Chain Industry Roadmap, which aims to increase cold storage capacity by 10 to 15 percent annually or 50,000 pallets each year.

Last year, the industry grew by 10 percent with the addition of 50,000 MT of cold storage capacity.

Now, the cold chain industry has a capacity of 600,000 MT, Dizon said.

He said African swine fever (ASF) would continue to be a concern in the country, driving more pork imports.

“We still haven’t resolved ASF and I think the Department of Agriculture (DA) said this may take another 12 to 18 months,” Dizon said.

The livestock subsector managed to grow by 1.9 percent in 2022, reversing the 17-percent drop recorded in 2021, the Philippine Statistics Authority (PSA) said.

In particular, the hog industry reversed its 20.8-percent contraction in 2021 to a 2.4- percent growth last year.

Philippine Chamber of Agriculture and Food Inc. (PCAFI) president Danilo Fausto said the hog industry is on the road to recovery with raisers learning to operate amid the presence of ASF.

“Hogs are on to recovery as commercial farms are learning to live with ASF through proper biosecurity measures,” Fausto said.

But until  ASF cases are fully addressed, the livestock subsector will continue to reel from its effects, with local hog producers struggling to repopulate after the steep drops recorded because of the disease experienced over the last two years, industry analysts said.

“We could see this sector struggle until ASF is fully addressed. This only highlights the scope and magnitude of the work cut out for the secretary of agriculture, with the President already having two full quarters at the helm,” ING Bank senior economist Nicholas Mapa said.

Apart from pork, there is also the problem of onion shortage recently.

“The additional capacity would also include onions,” Dizon said.

To prevent the situation from happening again, CCAP is urging the government to launch a program to build more cold storage facilities.

CCAP said the government needs to develop and implement a holistic policy and strategic methodologies to balance supply and demand and mitigate undue market volatility.

“This can be undertaken as a concerted effort among concerned government agencies, government financial institutions (GFI)  and private sector stakeholders working together toward the realization of the National Agriculture and Fisheries Modernization and Industrialization Plan,” it said.

Dizon said the first step is for government to lead in putting up new cold storage facilities, instead of leaving it all up to the private sector.

“If the government can launch a program to build 100,000 MT, it can be through public-private partnership or GFI package,” he said.

For a 2,500-MT cold storage facility for onions, CCAP said an investment of P150 million is needed to build the plant and for the equipment. The cost of real estate not included.

Meanwhile, the operating cost for a facility of this size is approximately P1.5 million to P2 million per month, consisting mostly of electric power and labor.

Historically, the going rate for onion storage is approximately P1 per kilo per month.?These rates may have changed as of late because of the increase in the costs of power.

With these figures, investing in a cold storage facility solely relying on onion storage is not viable.

“Ergo, it is necessary (and convenient) to adopt a complementary business strategy to justify the capital investment. This is where the trading role comes into the picture,” CCAP said.

Cold chain industry sees 10% growth this year

Danessa

MANILA, Philippines — The Philippine cold chain industry is expected to grow by as much as 10 percent this year as food importation will remain a key driver for its expansion, according to the Cold Chain Association of the Philippines (CCAP).

“For 2023, at least eight to 10 percent is already achievable,” CCAP president Anthony Dizon said.

He said this projection is equivalent to an additional 50,000-metric ton (MT) capacity to be taken up by food.

“The natural factors will be always economic recovery, population growth, the growing e-commerce platforms,” Dizon said.

Growth in the sector has been on a steady climb since 2015, CCAP said.

“The growth curve of industry has been happening since 2015. And even before the pandemic, there are projects already in the pipeline,” Dizon said.

In 2020, the Board of Investments (BOI) and its partner industry stakeholders launched a Cold Chain Industry Roadmap, which aims to increase cold storage capacity by 10 to 15 percent annually or 50,000 pallets each year.

Last year, the industry grew by 10 percent with the addition of 50,000 MT of cold storage capacity.

Now, the cold chain industry has a capacity of 600,000 MT, Dizon said.

He said African swine fever (ASF) would continue to be a concern in the country, driving more pork imports.

“We still haven’t resolved ASF and I think the Department of Agriculture (DA) said this may take another 12 to 18 months,” Dizon said.

The livestock subsector managed to grow by 1.9 percent in 2022, reversing the 17-percent drop recorded in 2021, the Philippine Statistics Authority (PSA) said.

In particular, the hog industry reversed its 20.8-percent contraction in 2021 to a 2.4- percent growth last year.

Philippine Chamber of Agriculture and Food Inc. (PCAFI) president Danilo Fausto said the hog industry is on the road to recovery with raisers learning to operate amid the presence of ASF.

“Hogs are on to recovery as commercial farms are learning to live with ASF through proper biosecurity measures,” Fausto said.

But until  ASF cases are fully addressed, the livestock subsector will continue to reel from its effects, with local hog producers struggling to repopulate after the steep drops recorded because of the disease experienced over the last two years, industry analysts said.

“We could see this sector struggle until ASF is fully addressed. This only highlights the scope and magnitude of the work cut out for the secretary of agriculture, with the President already having two full quarters at the helm,” ING Bank senior economist Nicholas Mapa said.

Apart from pork, there is also the problem of onion shortage recently.

“The additional capacity would also include onions,” Dizon said.

To prevent the situation from happening again, CCAP is urging the government to launch a program to build more cold storage facilities.

CCAP said the government needs to develop and implement a holistic policy and strategic methodologies to balance supply and demand and mitigate undue market volatility.

“This can be undertaken as a concerted effort among concerned government agencies, government financial institutions (GFI)  and private sector stakeholders working together toward the realization of the National Agriculture and Fisheries Modernization and Industrialization Plan,” it said.

Dizon said the first step is for government to lead in putting up new cold storage facilities, instead of leaving it all up to the private sector.

“If the government can launch a program to build 100,000 MT, it can be through public-private partnership or GFI package,” he said.

For a 2,500-MT cold storage facility for onions, CCAP said an investment of P150 million is needed to build the plant and for the equipment. The cost of real estate not included.

Meanwhile, the operating cost for a facility of this size is approximately P1.5 million to P2 million per month, consisting mostly of electric power and labor.

Historically, the going rate for onion storage is approximately P1 per kilo per month.?These rates may have changed as of late because of the increase in the costs of power.

With these figures, investing in a cold storage facility solely relying on onion storage is not viable.

“Ergo, it is necessary (and convenient) to adopt a complementary business strategy to justify the capital investment. This is where the trading role comes into the picture,” CCAP said.