Wednesday, December 15, 2010

Cold Chain Development

China has made a lot of progress in improving farm productivity to the point that farmers encountered "hard to sell" problems in the 1990s and 2000s.

Now China is moving to the next stage in developing a modern food system by encouraging marketing infrastructure and management systems. The State Council unveiled a logistics plan for agricultural commodities in July that sets targets and key projects for agricultural and food cold chain development. By 2015, the plan sets targets for 20% of fruits and vegetables, 30% of meat, and 36% of seafood to be marketed through cold chain transportation and storage chains. This is expected to reduce spoilage and increase interregional trade in food commodities. The plan sets targets for spoilage losses of 15% for fruits and vegetables, 8% for meat, and 10% for seafood.

Seven main tasks:

1. Spread modern cold chain logistics concepts and technology
2. Improve the cold chain logistics standard system
3. Establish a cold chain logistics and distribution system for key products and regions
4. Speed up and nurture third-party logistics enterprises
5. Strengthen cold chain logistics infrastructure facilities construction
6. Speed up cold chain logistics equipment and technology upgrades
7. Push forward informatization of cold chain logistics

According to the plan’s requirements, central and local governments must strengthen and coordinate, improve policy, integrate resources, increase investment, encourage innovation, cultivate personnel, strengthen laws and regulations, support healthy development of the agricultural product cold chain.

Provincial officials are starting to implement the plan. In November, Sichuan's commerce department announced that developing cold chain systems was a key part of its work in 2010. Sichuan intends to attract mature foreign companies and nurture large model logistics companies.

A month later, Sichuan announced that a big meat logistics distribution center is being launched at an industrial park associated with the airport in Chengdu. The company has investment of 530 million yuan and will have 55,000 metric tons of storage capacity. The meat logistics company is being launched jointly by the Sichuan Commerce Group and the Sichuan State-Owned Assets Management Company. The company's main business will be pork but it will also deal in other meats, poultry, seafood, and frozen foods.

The promotion of frozen meat trade is an important and challenging development. Chinese consumers are accustomed to buying fresh meat, which keeps most pork markets very localized. Part of the commerce ministry's long-term plan is to promote interregional trade in frozen pork to eastern cities. Potentially, this could also open the market wider to imported frozen meat. Interestingly, the November announcement was made at an "American Food Entering Western China" meeting.

However, Chinese authorities probably have ambitions for using this new system to export. The Sichuan distribution center is at an industrial park near the airport that is designated as an inland port.


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