Despite Gains, China’s Cold Supply Chain Needs Improvements
China needs to improve its cold supply chain to provide a growing middle class with perishable food options, according to a new report from Dutch agri-finance group Rabobank.
Increasing consumption of fruit and vegetables, dairy and meat in China, it said, “is being driven by continued economic growth and urbanization with China’s economy that is expected to grow by 6-7 percent annually in the coming years.”
That growth “will elevate a further 38 million households into the upper middle class increasing the country’s appetite for perishables by 17 percent over the next decade.”
A key link in that chain is the so-called New Silk Road—the 7,000-mile long Yu’Xin’Ou Railway, which connects Chongqing and Duisburg, Germany—which provides a new route to market for European food exporters by reducing critical transit times by as much as 36 days compared to shipping by ocean freight.
Despite the land link, with 20 percent of the world population, but only 10 percent of its arable land and 6 percent of its water, China “faces enormous challenges on food security and safety,” the report said.
“The demand for fresh, safe food, bought through modern channels, is driving the country’s investment in cold chain infrastructure,” it said. “Over the past five years, storage capacity has grown from 12 million cubic meters in 2007 to roughly 100 million cubic meters in 2015.”
But, “China’s cold chain sector is still lagging and needs to improve in terms of both quality and capacity with an estimated $85 billion [in investment] needed between 2015 and 2025,” the report said.
The country’s cold chain sector will only improve “once cold chain companies start adapting their business models into higher-value strategies in response to the higher service needs of their clients.”
The benefits to China of an improved cold chain sector “can hardly be overestimated, with the presence of a high-level cold chain sector potentially reducing the waste of perishables by 14 percent (valued at $7.5 billion), creating a 10 percent reduction in food prices and hunger, increasing rural income, reducing healthcare costs and cutting emissions,” the report concluded.