On average, 50% of the food produced in African countries is wasted – an amount that could feed 300 million people. According to the Food and Agricultural Organization of the United Nations (FAO), this is mainly a result of the inefficient supply chain infrastructure within the agricultural sector where in sub-Saharan Africa alone, more than 60% of the population are smallholder farmers.
“The benefits of temperature control and maintenance of the cold chain are often seen as nonessential and a luxury in different parts of Africa,” explains Gary Benatar, CEO of Relog, a design/build firm headquartered in Cape Town, South Africa. “Building a temperature-controlled warehouse or distribution center is just the first part – you have to look at the complete supply chain, including transportation and the retail environment.” Benatar notes that often African consumers do not have a refrigerator in their home, and food is purchased in quantities for immediate consumption. “This also means the long-term shelf life that we value in products is irrelevant in these markets,” Benatar says. “Our customers are not ready yet,” says James Eason, who worked in Africa for years and is a cold chain technical advisor to GCCA. “Food production is almost nonexistent, logistical costs will never go down, not to mention the infrastructure issues.” Eason believes the number one factor companies looking to build or operate temperature-controlled warehouses in Africa need to understand is that the fundamentals on which the 3PL model is based – infrastructure and logistical systems, the water and sewer systems – are all substandard.
Energy and Other Constraints
In most African countries, electricity costs are very high and outages are common, especially in remote farming areas, says Carsten Thorsen, CEO, CT-TECHNOLOGIES, a Danish design/build company that has been operating in Africa for nearly 20 years. “Having a cold storage facility without a back-up electrical solution is sometimes a challenge,” Thorsen says. “At the same time, many builders without cold storage experience are constructing facilities with inappropriate materials. This leads to huge energy consumption, which further demotivates the use of temperature-controlled warehouses.” Apart from changing from freon units to ammonia systems, Thorsen said many operators are now choosing 200 mm PIR insulation rather than 150 mm as they had before. He notes solar power is discussed but has not yet broken though. “Using solar panels to produce electricity could be a solution, especially if the country’s grid system can take the extra energy produced during the day to be used during the night – a net metering system,” Thorsen says. Many cold stores used to be refrigerated by several split units with freon, but now many users are moving to central ammonia systems, which offer 30 to 40% savings on electricity, Thorsen explains. “This means a lot in Nigeria, for example, where the public power supply is very unreliable, and the plants are running on diesel generators most of the time.”
Building and Costs
“To start with, I highly recommended using the appropriate material in construction that can save and maintain the temperature inside the facilities for some time when the electricity is out,” says Thorsen. He adds that today, goods in warehouses in most African countries are traditionally stacked on the floor. “Room height used to be 6 meters (20 feet) but now I also see 8 meters (26 feet) – racking is rarely considered.” When it comes to cost, Thorsen explains building materials and spare parts are still not available in most of African countries, which leads to high prices because of importing these materials.
“Most of the technology and skills are imported, as there are limited local resources outside of South Africa” Benatar says. “And the high cost of the imported building materials is exacerbated by high import duties and government bureaucracy, which adds to costs, delays and difficulty developing worldclass facilities.” “In Africa, because of energy and inadequate transport infrastructures, you need self-sufficient, small, prefabricated facilities at production/recollection zones, which normally are far apart from consumption and export areas,” says Manuel Cabrera, Executive Managing Director, Technical Operations for Ifria, an integrated cold chain development company in North and West African markets.
“In consumption zones, more traditional cold facilities are required in order to combine import/export, distribution and other cold storage services to optimize these facilities.” Cabrera says African markets need robust capable facilities and logistics built to modern standards but not overdesigned nor over automated as the market simply isn’t there yet. “There are needs everywhere but it is important to stay focused on serving demand and that is HRI (hotel restaurant institutional) and modern grocery retail and bulk commodity storage for leading agri-producers,” says Cabrera. “Facility design should include robust and modern facilities and logistics offering value added services, notably pre-cooling, which is almost absent from the African market and necessary to unlock export potential.”
Last Mile/First Mile
With the increase in online shopping resulting from the pandemic, Benatar says there has been an enormous increase in scooters and other smaller vehicles making last mile deliveries in cities in South Africa and other countries. “However, the maintenance of the cold chain in the last mile is poor with no refrigeration, sometimes some insulation and the addition of dry ice (or eutectic plates), but that is the exception rather than the rule,” he says. “Last mile is really hard for distribution purposes,” says Cabrera. “Besides consumer purchasing behavior and low cold chain culture, you have to deal with traffic volumes, restrictions and regulations, downtown tonnage restrictions, delivery time windows and noise regulations.”
Cabrera says when it comes to first mile origin, there is inefficient or almost no cold storage infrastructure, package houses and post-harvest facilities, and up to 50% of foodstuffs are lost. “As a result, farmers have to sell at much lower prices, food quality is worse and has a lower commercial life span,” he notes. “First mile cold chain infrastructure is one of the best investments for developing countries as it increases domestic production with higher standards, produces more consistent foodstuffs with longer shelf life, and those countries can substitute imports with domestic production and even export, should the products meet consumer requirements.” “With respect to first mile delivery, in most cases this is better controlled by the manufacturer and retailer in a formal market, and most reputable manufacturers with brands to manage will control the cold chain if necessary,” Benatar explains. “However, in informal markets and with informal farmers, the route to market and the control of the cold chain is poor. There is a drive to improve this in most of Africa, and an opportunity exists.” Thorsen says while the lack of a cold chain makes first mile practices to extend the life of perishable products challenging and not very common, this is slowly starting to change with the help of visionary entrepreneurs.
“Our vision is an interactive cold chain from first mile to end customer that is built with international expertise to the highest industry standards for cold storage to ensure compliance with international certifications,” says Matthew Meredith, Executive Managing Director, Operations at Ifria. “However, this does not necessarily mean the assets need to be very expensive. Facilities must be robust and not overengineered, with a simple and efficient operational layout.”
Matthew says Ifria has two integrated cold chain solutions. The first are cold hubs – more sophisticated assets designed for airports, maritime ports or agri-business industrial zones. The hubs offer efficient renewable energy integration with phase I capacity for 5,000 pallets and direct cross-docking and other value-added services related to cold storage. The Phase I design integrates planned expansions. The second integrated cold chain solution is a first-mile network of on-farm, remotely monitored, post-harvest modular cold storage units capable of hold 1000 tons or 1000 to 2000 tonnes, and available to growers as needed. Ifria accomplishes this through partnerships with first mile producers. “We develop with ecosystem partners, programs intended for grant support that focus on an innovative business model that brings smaller-scale cold chain assets into an integrated model,” says Meredith. “I’m optimistic about building the cold chain in Africa. The need is here, there is a willingness to pay, we’ve done it before, and we have the people who know how to build a cold chain in emerging markets with capital and development partners who are willing to support this growth.”
The interest in Africa in building temperaturecontrolled warehouses for horticultural needs is growing, according to Thorsen. “Some farmers are more interested in showing the quality of their products to exporters, while others want to reduce the waste and product loss, but overall, there is still a big need for solutions.” Thorsen adds, “There is a future vision of Africa becoming the center of agriculture – the tropical fruits are the best quality in the world and of interest to many investors looking to establish cold chains to reduce the considerable loss of fresh fruit and vegetables. With more awareness and investment, the future looks promising in having more temperature-controlled facilities accommodating different products.”
As for frozen food cold storage, Thorsen believes the demand is stable for now but will be expected to increase as cold chains improve. Benatar agrees there is increased interest in building temperature-controlled warehouses in Africa. “There are some special funding opportunities through the World Bank and developers are seeing this as an opportunity,” he says. “As the density of cities grows and the traffic congestion increases, the move to more formal trading will increase and so will the requirement for cold chain infrastructure,” Benatar says.
“The pandemic and vaccines have also increased this requirement.” Benatar believes the cold chain in Africa will continue to grow as supply chains get longer and more controls are put in place to ensure better quality and freshness for consumers. “Eventually, these countries will legislate food safety,” he says. Meredith notes cold chain studies conducted by Ifria indicate as markets move from “informal” (currently 80%) to “formal” structures, food hygiene regulations increase, driving up demand for cold chain. Also, major international food retailers are expanding in the region which is driving food value chains to improve quality and services. Meredith says this elevates the quality of the entire market. “Building the cold chain in Africa creates business opportunities along the supply chain, starting from the smallholder farmer to the sophisticated retailer,” says Meredith. “At the end of the day, an interconnected African cold chain can deliver profitable investment returns linked to broad-based impact and will help achieve a better standard of living in Africa.”
Source: Cold Facts Magazine September – October 2021. Page 14 -18. Building the Cold Chain in Africa by Alexandra Walsh.