Georgia Agriculture Project Georgia Cold Chain Refresh 2019 Ata lists - USAID
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Georgia Agriculture Project
Prepared forP g e 1by| the
a lists
review
Ata Georgia
UnitedCold Chain
States Refresh
Agency 2019
for International Development under USAID Contract No72011418C00001,
The USAID Agriculture Program implemented by CNFA
The USAID Agriculture Program Refresh of Georgia Cold Chain Assessment USAID USAID Contract 72011418C00001 Implemented by CNFA Submitted to: The Georgia Agriculture Project Submitted on: January 14, 2020 P a g e 2 | Georgia Cold Chain Refresh 2019
Contents ................................................................................................................................................................ 1 Refresh of Georgia Cold Chain Assessment ............................................................................................ 2 Contents .................................................................................................................................................. 3 Executive Summary................................................................................................................................. 4 Introduction ............................................................................................................................................ 6 Cold Chain Overview ............................................................................................................................... 6 Cold Chain Drivers ............................................................................................................................... 7 Cold Storage Infrastructure Assessment ................................................................................................ 8 Gap Analysis of Cold Storage Infrastructure ........................................................................................... 9 Correlational Analysis ........................................................................................................................... 12 Recommendations ................................................................................................................................ 14 Conclusion ............................................................................................................................................. 16 Appendix 1 – Visits & Meetings for Operations .................................................................................... 18 Appendix 2 - Visits & Meetings for Design Build .................................................................................. 32 Appendix 3 - Recommended Training................................................................................................... 35 Appendix 4 – Example of Rolling Inventory .......................................................................................... 36 P a g e 3 | Georgia Cold Chain Refresh 2019
Executive Summary
The USAID Agriculture Program identified the need to conduct a rapid assessment of cold chain capacity in the
program’s selected value chains of berries, culinary herbs, perishable vegetables, stone fruits, pome fruits, table
grapes, and mandarins. The World Food Logistics Organization (WFLO) was engaged for this assignment and sent
a two-person team with experience in cold storage operation and facility design. The objective of the WFLO
team was to assess the capacity of existing cold storages, identify gaps in cold chain capacity with a focus on
infrastructure, and identify weaknesses in operations with the overall goal of effectively addressing the
challenge of supply chain management through consistent and targeted interventions.
The WFLO team traveled to Georgia the week of August 10-17, 2019 visiting key stakeholders including the
Georgia Agricultural and Rural Development Agency (ARDA), orchards, cold storage facilities, fruit processors, a
fruit and vegetable wholesale distributor, supermarket headquarters, supermarkets, grocery stores, and an
open market.
The construction of cold storage facilities in Georgia is impressive relative to what has been seen elsewhere in
the region. The cold storage facilities are well built and functional, and Georgia has avoided some of the typical
costly initial mistakes. For example, in Azerbaijan, facilities were built to hold volumes that were far too large
for the product flow with docks that were too small.
However, the current and projected cold storage capacity is not enough to successfully enable Georgian
produce to enter higher-end export markets and compete with other regional producers. A variety of project
interventions are recommended to catalyze cold chain development.
1) Facility Investments. Potential investments in new cold storage should consider the temperature
sensitivity of the products. Those products with the highest sensitivity, such as berries, will require
infrastructure on-farm, or as close to the farm as possible. Products with an intermediate sensitivity to
temperature can be transported to a packhouse or a more centralized facility. Products with the lowest
sensitivity can travel to the built infrastructure with the right planning. Understanding this will help to
ensure the business is maximizing the investment.
2) Facility Operations and Size. Rolling inventories (Annex 4) should be used to determine the storage
capacity. This will help to ensure that facilities are operational beyond a few months per year and that
they are built to the right size. To complete the rolling inventory, it is imperative to know the current
and expected future volumes of product. Each location should be designed with a phased approach so
that businesses can expand as they grow, but they are not forced to operate an asset that is too large
for product supply and demand.
3) Existing Facilities. USAID support of cold storage in Georgia has prevented mistakes common to other
countries in the region. However, existing facilities may consider upgrades or new investments such as
enclosed, refrigerated docks. These facilities would benefit from technical consultations on design build
aspects as well as refrigeration systems. Any businesses considering retrofits, upgrades or expansions
should consult with neutral GCCA advisors. WFLO can assist with this by accessing GCCA members from
the Controlled Environment Building Association (CEBA) who can review specifications and drawings or
the International Association of Refrigerated Warehouses (IARW) who can offer peer-to-peer advice to
their own experience with refrigeration systems and operational investments.
4) Equipment. Where possible, pilot activities should be initiated to demonstrate the value of critical
equipment such as precoolers or refrigerated transport where possible. This is especially important for
the high value products. The Return on Investment (ROI) should be examined and reported on for each
pilot activity to provide business owners with a clear sense and understanding of expectations.
5) Education. Businesses that are currently operational, and especially for those already in the process of
exporting, education should be provided in the areas listed below. The target audience are CEOs and
facility owners who will be the primary decision makers when it comes to investing in human capacity.
The main takeaway is that neglecting to address food safety or operational best practices will cost
money in the long run.
a. Cold Storage Operation and Maintenance
P a g e 4 | Georgia Cold Chain Refresh 2019
b. Food Safety and Quality Standards
c. Cold Storage Design and Construction
d. Business Models and Marketing
6) Aggregation. Investments in aggregation centers such as packhouses or distribution centers should be
considered. Aggregation could facilitate purchases from large buyers such as supermarkets, drive the
development of quality standards and be locations for piloting potential investments such as precooling
and refrigerated transportation best practices.
7) Regulations and Standards. There are two approaches that should be considered to address this lack.
One option would be mandatory standards established by the government. A second option would be
to encourage the private sector to establish their own best practices that could serve as the standard.
For standards involving produce, there are informal standards system in place: high quality goods are
exported, medium to high quality goods move into the local organized retail sector, and mid to low
quality are sold in the informal markets (bazaars). Using retailer quality standards to guide farmers and
aggregators during grading sorting and packing should be the short-term solution with the end goal of
having industry backed government guidelines adopted similar to the USDA grades levels for
agriproducts.
8) Data. Georgia should be included in the 2020 Global Cold Storage Capacity Report, a bi-annual report
published by the Global Cold Chain Alliance. This reports surveys members and cold storage networks
to determine the size of the cold storage industry within a country. The data is analyzed and published,
providing a helpful baseline to see where growth is occurring. The report includes an analysis that
highlights key findings and trends. WFLO will ensure that the Georgia Agriculture Project receive this
survey to ensure that country information is included in the 2020 report. This exercise will be repeated
in 2022 and in all subsequent reporting years beyond the life of the project as GCCA maintains contacts
in the country. To ensure that this happens, WFLO would request the contact information of those
grantees and stakeholders who received project support to enable us to maintain those relationships.
P a g e 5 | Georgia Cold Chain Refresh 2019
Introduction The USAID Agriculture Program is a five-year activity that aims to accelerate growth of agricultural sub-sectors that demonstrate strong potential to create jobs and increase small and medium enterprise revenues. The program aims to support and further strengthen high value fruits and vegetables, such as berries, perishable vegetables, table grapes, mandarins, culinary herbs, stone fruits, and apples. USAID helped establish 14 cold storages under the REAP program, which operated from 2013-2018. A number of facilities were also created under APMA’s enterprise development program and Government of Georgia projects such as Preferential Agro Credit and Enterprise Georgia. These programs provided financial and technical support to reduce fruit and vegetable losses which ranged from 40 to 50 percent and were primarily attributed to the lack of cold storage facilities that are necessary to preserve quality and extend shelf life. To build on the entry-level cold storage facilities established by previous projects, the USAID Agriculture Program identified the need to conduct a rapid assessment of cold chain capacity in the selected value chains. To do this, the program engaged the World Food Logistics Organization (WFLO) to send a team with experience in cold storage operation and facility design experience. The WFLO is one of four core partners that comprise the Global Cold Chain Alliance (GCCA), the trade association that supports the refrigerated warehousing, transportation and construction industries. The WFLO, a nonprofit foundation, is the education, training, research, and international development arm of the GCCA. The objective of the WFLO team was to assess the capacity of existing cold storages, identify gaps in cold chain capacity with a focus on infrastructure, and identify weaknesses in operations with the overall goal of effectively addressing the challenge of supply chain management through consistent and targeted interventions. To do this, two specialists traveled to the Republic of Georgia the second week of August 2019 with experience in cold storage design/build and operations. Cold Chain Overview The cold chain refers to the temperature management of perishable products in order to maintain quality and safety from the point of slaughter or harvest through the distribution chain to the final consumer. The cold chain, much like the entire supply chain, is composed of links, each essential to the integrity of food quality and safety. As the most basic level, these links include postharvest, transportation, storage and consolidation, and retail. Processing can also play an integral part of the cold chain. Development of the cold chain enables farmers to diversify production to include high value perishable crops that increase earnings benefiting supporting industries such as transportation and export, earning it the reputation of a “force multiplier” that generates exports and opens new markets for multiple sectors over an extended period (Department of Commerce, 2015, p. 5). Fresh fruits and vegetables destined for export and sale in higher end markets must move through an unbroken cold chain to maintain product integrity. The product flow is illustrated below, but please note that the order of precooling to sorting/grading may vary based on the product and the availability of facilities. If possible, unmarketable produce can be sorted first so that cooling occurs only with packed produce. This works well for berries, and leafy greens. Other crops might be harvested in hot weather conditions so best practice may be to precool them using a bulk method, such as hydro-cooling, before sorting/grading and packing. The illustration also demonstrates that the cold chain is more than cold storage. A fully integrated cold chain involves all of the steps below, and neglecting any of these can result in product deterioration. While cold storage receives the most attention, without the necessary steps taken immediately after harvest, investments in cold storage will not fully achieve the anticipated impact. When working with fresh fruits and vegetables, which tend to move quickly through the cold chain to reach the consumer, investments in postharvest steps, such as precooling and packaging, as well as distribution should be considered. P a g e 6 | Georgia Cold Chain Refresh 2019
Cold Chain Drivers Economic factors such as per capita GDP growth, trade flows, poverty, and education impact the development of the cold chain. On average, adding temperature-control to a product increases the price by approximately one-third so strong economic growth is a good measure for success. In addition to economic data, auxiliary issues critical to driving cold chain development include consumer demand, government regulations, and access to finance. Consumer Demand Cold chain infrastructure is expensive. In addition to basic infrastructure, including access to clean water, a reliable power source, and good roads, constructing facilities and purchasing transport solutions require large capital expenditures sustained by extensive operating costs. Some of the costs may be recouped by quantity and quality increases as waste is reduced. However, at least a portion must be passed on to the consumer. Therefore, a question of fundamental importance is whether consumers, foreign or domestic, are willing to pay more for products that have benefitted from cold chain. The Georgia Agriculture Program considered consumer demand as one of the factors when selecting the value chains. Access to Finance Shortage of capital is often a constraint to small and medium sized enterprises (SMEs) looking to invest in the cold chain. In most countries, business owners struggle with high interest rates on loans needed for capital- intensive investments, often leading them to seek assistance from development projects. While projects can and often do provide valuable sources of funding, there are at times certain strings attached via deliverables and reporting that may detract, or at the very least distract, from the fundamental core business of managing cold chain logistics. Georgian business owners are fortunate with the ability to receive subsidized loans, making access to affordable finance a successful cold chain driver. Government Regulations The lack of clear food safety regulations and cold chain standards are often cited as a concern in developing countries. GCCA experience has demonstrated that most countries do have regulations for certain food safety protocols, but these are not enforced or are enforced badly. Where regulations do exist, they may be copied P a g e 7 | Georgia Cold Chain Refresh 2019
and pasted from another government or taken from an entirely different industry leading to regulations are
unreasonable and unrealistic. Food safety practices written into regulations should be considered from the lens
of what industry best practices are and enforcement should follow accordingly. There is a very positive role for
the government to play when it comes to the cold chain, but regulations should be considered carefully and
utilizing the input of all actors throughout the supply chain to ensure it does not have a needlessly negative
impact on development and investment. There is an opportunity for the Georgian Agriculture Program to
successfully influence regulations to support cold chain growth. For example, government actors could
participate in food safety training to encourage understanding.
Cold Storage Infrastructure Assessment
To formulate recommendations to facilitate this development, the WFLO team visited the Agricultural and Rural
Development Agency (ARDA), 11 orchard/cold storage facilities, two third party cold storage facilities, two fruit
processors, a fruit and vegetable wholesale distributor, two supermarket headquarters, six supermarkets and
grocery stores, and an open fruit and vegetable market 1 to assess the current cold chain with particular focus
on the cold storage infrastructure. This section will describe the observations of WFLO that products would
experience as they move through the cold chain (postharvest, cold storage, refrigerated transport, distribution
and retail) based on the visits and discussions with the program team.
Postharvest Handling/Precooling. The cold storage facilities visited by WFLO were located close to the orchards.
This is positive because it facilitates rapid precooling where precooling is in use. However, of the cold storage
facilities visited, only one had precooling equipment, and it had not been used. The team observed nectarines
being sorted and packed on open docks. At least one of these facilities was exporting to France. The lack of
precooling will result in significant deterioration and loss by the time the product arrives to the destination
market. This could result in the buyers refusing to purchase from them in the future or agreeing to buy but only
at a lower price.
Cold Storage Design/Build. The predominant design/type of cold storage infrastructure in Georgia is a long-term
storage type (graph below). This model works well for frozen, but products like fresh fruits and vegetables do
not typically spend a long amount of time in storage. For this reason, packhouses and distribution centers have
a larger impact on these products. Both are lacking in Georgia.
Existing facilities are well constructed with rooms appropriately sized for seasonal fruit harvests, thus providing
flexibility for operations. The impact of the USAID/REAP Program and the ARDA Programs was immediately
apparent as the programs provided much needed financial assistance to purchase equipment and support
construction. For example, cold rooms were built with insulated panels and quality refrigeration equipment
enabling the storage and, in some cases, processing, of quality fruit. However, none of the facilities had
refrigerated docks or refrigerated rooms for value added services. In the opinion of the WFLO team, it would be
possible to add these should the facility owners desire to make this investment.
Cold Storage Operations. Georgian warehouse operators lack fundamental best practices for food safety and
commodity storage. This has a negative impact on product shelf life and quality. Facilities reported difficulty in
staffing competent personnel, involved with exports. The country lacks large-scale aggregation for fruits and
vegetables although it does occur on a small-scale with fruit and vegetable distributors consolidating produce
1
See Appendix 1 and 2 for Trip Notes on each visit.
P a g e 8 | Georgia Cold Chain Refresh 2019
from small orchard/cold storage operators. The distributors maintain virtual inventories and supply
supermarkets, small grocery stores, restaurants and institutional groups. They are located strategically in
metropolitan areas such as Tbilisi, Gori, and Batumi. Their facility size is determined by the number and needs
of the customers.
Some cold storages are transitioning to a third-party logistics service-based model. Companies interested in
pursuing this business model should be very cautious as third-party storage, processing, or renting space is a
very difficult business model for fruits and vegetables. The seasonality of fruits and vegetables typically results
in the facility being shut down for a significant part of the year.
Transportation. The team did not visit any transporters, but the Agriculture Program reported high
transportation costs for small producers. The Agricultural and Rural Development Agency (ARDA) may initiate a
program to assist farmers with refrigerated containers which would allow small farmers to harvest daily and
store in a refrigerated container until the produce is collected by buyers. It was reported to the team (not
observed) that common practice is to directly load product from orchards into refrigerated trucks for export, a
practice that typically results in high losses.
Retail. There are currently no uniform quality standards. Standards to export are typically a prerequisite for long
term contract. The USAID REAP program, in cooperation with three large local supermarket chains in Tbilisi,
initiated a pilot to establish quality standards in the Georgian market for 13 crops based on European standards.
Personnel in these market chains were trained on those standards. One retailer is using these standards as
reference for their quality requirements; however, this is not done on constant and continuous basis. The
program should provide further support in this area. Small cold storage operators have trouble selling their
produce to supermarket chains as it is not feasible for supermarket chains to purchase from a large number of
small suppliers and big chains sometimes delay payments to small producers for one month or six weeks.
Additional Challenges. Discussions with the Agriculture Program staff revealed additional challenges that impact
the cold chain although they do not fall neatly into one of the links. First, there is a lack of trust among the
stakeholders. This is symptomatic of a relatively new and growing agricultural market, but large-scale
aggregators could help alleviate this problem as they create consistency. They may even have better payment
terms than supermarket chains.
Second, consistent and reliable agricultural data does not exist. What is currently tracked by the Ministry of
Agriculture and the Department of Statistics is too vague and general. This is a fairly common challenge, and it
is even faced by countries with established record-keeping systems. WFLO will work with the Georgia Agriculture
Program to ensure the country is included in the 2020 Cold Storage Capacity Report. This information will help
to establish a baseline for the country in 2020 that can be updated is subsequent years beyond the life of the
project. To ensure that this happens, WFLO would request the contact information of those grantees and
stakeholders who received project support to enable us to maintain those relationships.
Gap Analysis of Cold Storage Infrastructure
This analysis examines each of the links outlined above, comparing them against best practices in order to locate
the gaps within the Georgian cold supply chain for fruits and vegetables.
The target state below is taken from a categorization matrix that WFLO created based on experience in cold
chain development from start-up, to developing/emerging, to consolidating, and finally to mature/sophisticated
industries. High-quality exports tend to be most common in the most sophisticated industries although they can
begin to emerge in countries at the consolidation stage.
Cold Chain Link Current State Target State Corrective Action
Postharvest Of the cold storage Consolidation: Uses pre- Invest in precooling
Handling/ facilities visited, only one cooling and packing best equipment for existing
Precooling had precooling equipment, practices with appropriate facilities and ensure new
and it had not been used. packaging, mechanized facilities have factored in
The team observed cooling, clean, covered and precooling prior to
nectarines being sorted well-lit areas, and investment. To encourage
and packed on open docks. palletization. business owners to make
Most of the facilities built these investments, WFLO
P a g e 9 | Georgia Cold Chain Refresh 2019
were built to store Sophisticated: Mechanized recommends calculating
product, not to pack for pre-cooling of harvested the ROI and piloting the
distribution. product and exact proper use to demonstrate
packaging value.
Invest in aggregation
centres that incorporate
grading, sorting and
packing in one location.
These packhouses may
have precooling services as
well depending on the
product mix.
Cold Storage Existing facilities lack Consolidation: Use of Training on food safety
critical aspects such as mechanized facilities with and cold storage
refrigerated docks. humidity control, different operations will help the
Operational management temperatures for different facilities currently
of the facilities is lacking in products and ethylene operating and those with
best practices both from a scrubbers or fans (when planned investments to
profitability and food appropriate). run their businesses for a
safety perspective. Sophisticated: Achieves profit and will support best
Competent, trained global food safety practices necessary for the
personnel are difficult to standards with exact export of product.
recruit and retain. Fruit packaging and palletized
The *3PL business model
and vegetable distributors inventory control
for fruits and vegetables
receive and consolidate
should be considered with
produce to supply the
caution. Typical 3PLs
markets but are working
operate with frozen
with small volumes. Some
(longer-term) storage.
of the cold storages are
Georgian enterprises
transitioning to a third
would benefit from
party logistics service
education on different
based model.
business models for cold
storage of fresh fruits and
vegetables.
Transport Small producers face high Consolidation: Uses Calculating the ROI of
transportation costs. ARDA refrigerated transport/ refrigerated truck usage
may initiate a program loading best practices with should be shared with
which would allow small loading/delivery at night, CEOs and owners to
farmers to harvest daily refrigerated transport, and encourage investment in
and store in a refrigerated only pre-cooled product is sanitary transportation
container until the loaded for transport best practices. Program
produce is collected by Sophisticated: Achieves may consider laminated
buyers. Common practice global food safety cards for drivers
is to load product from standards by following summarizing best practices
orchards directly into refrigerated transport and in the Georgian language.
refrigerated trucks for loading best practices and
export, resulting in high practices palletized
losses. inventory control
Retail There are currently no Consolidation: Uses best Understanding the export
uniform quality standards. practices for refrigerated and local retailers demand
Small cold storage display cases and cold room will enable the growers to
operators have trouble management including respond. Working with an
selling their produce to inventory management, aggregator could be a
P a g e 10 | Georgia Cold Chain Refresh 2019supermarket. Big chains appropriate packaging, potential pilot to test
sometimes delay separation of product by improvements in cold
payments to small appropriate temperature chain and payment plans.
producers for one month zones, and use of cold room
or six weeks. for additional product not
on retail floor.
Sophisticated: Achieves
global food safety
standards, maintains
product temperature at all
stages of cold chain, and
uses automated inventory
management
*3PLs refer to Third-Party Logistics which is the outsourcing of distribution, warehousing, and fulfillment
services. This is opposed to vertically integrated companies with private warehouses. The argument behind a
3PL is that when customers such as retailers or food processors, outsource the elements, it enables them to
focus on their core business. Typically, a successful 3PL will store a variety of products with an emphasis on high-
value, frozen products and offer a variety of services such as cross-docking, pallet building, labeling, freezing,
thawing, rapid chilling, picking, and wrapping. Commodities, such as fresh fruits and vegetables, are challenging
for a 3PL as they tend to be lower in value and seasonal unless frozen. Fresh fruits and vegetables will move
quickly through a warehouse onto to the final destination as their shelf-life is too short for long-term storage.
To advance into a more sophisticated level of development Georgia needs additional cold chain infrastructure.
To determine where and what type, a rule of thumb can be applied as a general guideline that breaks the cold
chain products into three temperature zones of high, moderate and low sensitivity.
High Sensitivity Products. High sensitivity products include berries and cherries and will need more cold chain
infrastructure as close to farm as possible thus driving the design to be smaller in size as it will handle product
that is harvested on a daily basis and stored locally for a short period of time before it enters the supply chain.
It also has to be noted that if product is targeted for export, the container or truck load shipments will impact
the size of the facility. Products harvested and held for the domestic market could result in a larger on-farm
facility or potentially transported to an aggregator’s regional or urban-based facility to supply into the domestic
organized retail markets. Regardless of which channel it enters, the cold chain must be maintained with
refrigerated transportation to ensure maximum food quality and safety.
An additional consideration is the length of harvest season. It is quite often the case that the higher the
temperature sensitivity, the shorter the harvest season and thus one must be careful in investing in
infrastructure that potentially could be utilized for as little as a few months out of the year. The ultimate idea
for successful investment is that the asset should be utilized at least 80% of the year. The 20% downtime allows
for annual maintenance and cleaning to maximize the lifetime utilization of the equipment.
Moderate Sensitivity Products. Considerable thought has to be given to the right balance of product that can
be handled by a facility built for moderately sensitive product such as apples and pears. These types of product
need to be precooled within 8 hours of harvest, which means they can travel longer distances to a more
centralized packhouse or cold store before needing to be pre-cooled. In addition, these types of products are
perfectly suited to drive the decisions for larger, centralized aggregation centers. They can be stored for longer
periods of time which allows for greater utilization of the infrastructure investment. These larger centers are
ideal to handle both moderate and highly sensitive products more economically and with greater energy
efficiency.
Low Sensitivity Products. The last category of product that underpins a profitable, sustainable cold supply chain
are low products with low sensitivity such as potatoes, onions, carrots and cabbage. These products can be
transported up to 24 hours to a centralized cold store for precooling and have a longer shelf life by nature that
builds towards the 80% target utilization number.
Proposed investments in cold storage facilities must factor in temperature zones and products into their
business plan. This will inform the facility design, location, and size. Each facility should justify their proposed
design. WFLO will commit to reviewing these justifications and designs for potential grantees to offer feedback.
P a g e 11 | Georgia Cold Chain Refresh 2019Correlational Analysis
To measure whether Georgia has enough current and projected cold storage capacity to support the export of
the identified value chains, WFLO utilized production data supplied by the project, estimating that at least 70
percent of the production should pass through the cold chain. The remaining 30 percent accounts for
postharvest losses and small lower-end domestic consumption.
The current and projected capacity data was reduced to 80 percent. To successfully manage operations, facilities
should operate at approximately 80 percent capacity. This enables storage and retrieval of boxes and pallets and
is an industry standard utilized by members of the Global Cold Chain Alliance.
Although export markets will likely require palletization, the conversion rates for product metric tons will vary
per product. To keep the correlation simple, the amount of product was subtracted from the amount of cold
storage capacity as both data sets were provided using metric tons.
Analysis of data demonstrates a clear projected shortfall in cold storage capacity for identified products (pome
fruits, stone fruits, subtropical and berries). The table below has the regions listed in descending order of
greatest cold storage capacity shortage.
2018 Georgian Fruit Production (70%) Contrasted Against Current & Financed Cold Storage (80%) (Metric Tons)
Pome Stone Cold Capacity
Region Subtropical Berry Citrus Total
Fruit fruit Storage Shortage
Shida Kartli 52290 9310 210 1176.7 0 62,987 11064 -51,923
Ajara 1890 1470 1540 40.6 33,740 38,681 0 -38,681
Kakheti 840 16800 2800 2510.2 0 22,950 2536 -20,414
Guria 560 560 420 145.6 9,310 10,996 160 -10,836
Samegrelo and
2380 1610 3150 102.9 3,080 10,323 0 -10,323
Zemo Svaneti
Imereti 2380 2800 1120 608.3 280 7,188 512 -6,676
Kvemo Kartli 1400 630 1400 531.3 0 3,961 800 -3,161
Samtskhe-Javakheti 1260 1120 0 156.8 0 2,537 0 -2,537
Mtskheta-Mtianeti 700 1120 280 155.4 0 2,255 504 -1,751
Racha Lechkhumi
700 140 0 28.7 0 869 0 -869
and Kvemo Svaneti
Tbilisi 0 0 0 0 0 0 1,160 1,160
Total 64400 35560 10920 5456.5 46410 162746.5 16736 -146,011
Source: USAID Agriculture Program. All units in metric tons.
There is a clear cold storage capacity shortage in Georgia for fruits and vegetables and especially in Shida Kartli,
Ajara and Kakheti, the regions with the greatest production. To determine, generally, the specific infrastructure
needed, production is reorganized by temperature sensitivity with berries as high, and stone, subtropical, and
pome fruits as moderate. Gathering production data for other products that could be low value could be very
helpful to provide a more complete idea of the possibility of utilizing the cold storage throughout the year.
The current production figures for highly sensitive berries are listed in descending order.
Region Berry
Kakheti 3,586
Shida Kartli 1,681
Imereti 869
Kvemo Kartli 759
Samtskhe-Javakheti 224
Mtskheta-Mtianeti 222
P a g e 12 | Georgia Cold Chain Refresh 2019Guria 208
Samegrelo and Zemo Svaneti 147
Ajara 58
Racha Lechkhumi and Kvemo Svaneti 41
Kakheti leads the region in berry production followed by Shida Kartli. Based on product needs for these highly
sensitive products, precooling investments or on-farm cold storage critical first steps to enabling exports. This
would then be followed by refrigerated transport for export or distribution into the population centers (Gori or
Tbilisi).
The current production figures for moderately sensitive pome, stone, subtropical, and citrus are listed below in
descending order of total production for all product types.
Georgian Fruit Production (2018) in Metric Tons
Pome Stone
Region Subtropical Berry Citrus Total
Fruit fruit
Shida Kartli 74,700 13,300 300 1,681 0 89,981
Ajara 2,700 2,100 2,200 58 48,200 55,258
Kakheti 1,200 24,000 4,000 3,586 0 32,786
Guria 800 800 600 208 13300 15,708
Samegrelo and
3,400 2,300 4,500 147 4,400 14,747
Zemo Svaneti
Imereti 3,400 4,000 1,600 869 400 10,269
Kvemo Kartli 2,000 900 2,000 759 0 5,659
Samtskhe-Javakheti 1,800 1,600 - 224 0 3,624
Mtskheta-Mtianeti 1,000 1,600 400 222 0 3,222
Racha Lechkhumi
1,000 200 - 41 0 1,241
and Kvemo Svaneti
Source: Geostat
For the moderately sensitive products, Shida Kartli is the largest producer followed by Ajara and Kakheti. If
investments are made to support precooling for the highly sensitive berries that are close enough to allow these
products to be cooled within an approximate 8-hour window, these products could be transported to the
locations. If there is not an option available, potential facilities investments may be made to enable the
precooling and/or storage. One the product has been precooled, it has entered the cold chain, temperatures
should be maintained throughout the journey to the destination market. Investments in refrigerated transport,
combined with training for sanitary transportation and best practices may be necessary. Demand for the product
and available logistics will determine the facility size. If products move quickly upon precooling into transport,
there is less need for a large amount of storage. If they will be held for a time prior to transport, more storage
will be needed. The rolling inventory in Annex 4 will provide a structure that businesses can use to make this
determination.
However, while additional storage can meet a short-term need, it is the opinion of the WFLO team that Georgia
would benefit from an aggregation model such as packhouses or distribution centers. Should there be
investment in distribution centers, locations should be Tbilisi, Poti/Batumi, Kutaisi and Gori, as these locations
are close to population centers and/or would facilitate export (Poti or Batumi). One regional facility that is able
to provide distribution for these locations holds great potential for Georgia. The most important function of this
facility would be to efficiently export the high-value products, followed by efficient distribution to areas with a
P a g e 13 | Georgia Cold Chain Refresh 2019large number of customers. The combined population centers of Kutaisi, Batumi, and Poti should help support
a distribution facility.
It is critical that any facility be set up for year-round operations. The exported produce will be seasonal so
imports can help round out the year during the off seasons. In addition, data about value chains outside of the
focus for the Georgia Agriculture Program may need to be gathered. What should be avoided is the building of
facilities focused on a narrow number of commodities. This has occurred in several countries, notably in Egypt
among others. Many packhouse owners are seeking assistance to transition these facilities into multiple
commodity packhouses so that they can be utilized year-round.
Tbilisi is well suited for exports and imports. The area has the most potential customers and would support a
larger facility than one located in the western region. It will be more attractive to investors. However, again, it
is stressed that the financial models must include export, import, and regional distribution on a year round
operation.
Finally, continued project support to develop the small cold storage operations is applauded, especially to help
the operators of the facilities to meet export requirements. Investors in a distribution facility will want sufficient
supply of produce for both export and regional consumption. Investments or modifications to facilities should
be aimed at meeting export requirements combined with training in operations, maintenance, and food safety.
Additional factors will impact the facility size and design and should also be considered:
• Phased building approach. The 1st phase should be large enough to include expansion for 3 years
• Specific market and customer requirements. Incorporate elements, such as pre-cooling, size of rooms,
size of refrigerated dock, and an area for sorting, grading, and value-added packaging, into design to
account for customer requirements.
• Peak season volumes. The rolling inventory template will help demonstrate peaks and lows.
• Anticipated annual production. Volumes should be accounted for as follows:
o Exports: pre-cooled and remains in the cold chain
o Local markets: may not be pre-cooled if it will be consumed within lower range of the shelf
life, but best practice is to pre-cool all produce that will be put in cold storage
o Processors: produce that does not meet the standards for export or local markets should not
go into cold storage
o Inedible produce should be disposed
Recommendations
Georgia lacks the cold chain infrastructure that needs to successfully support the export of products. Using
production and capacity figures, the general recommendations are to focus on the regions of Shida Kartli and
Khakheti as these are the areas of highest production where products will need to enter the cold chain as soon
as possible (berries) and within an approximate 8 hour window (apples, mandarins, and stone fruits) in order to
reach export markets in an appropriate condition.
There is an opportunity for large-scale aggregation in the form of packhouses or a distribution center. Within
these centers, cold storage is a secondary function. Centralized fruit and vegetable distributors could efficiently
supply the export market as well as grocery stores and restaurants. They typically have the marketing skills that
are not usually a core capability of warehouse owners. Should there be private sector interest in the distribution
center model, the opportunities lie near the population centers of Gori or Tbilisi or in Poti or Batumi for export.
Important considerations for such a facility include:
• Cross docking
• Location near large markets and based on location of suppliers
• Proximity to a major highway
• Location should be also be considered based on the suppliers
• Year-round operations; should import as well as export
• Rail access where possible
• Warehouse Management System
P a g e 14 | Georgia Cold Chain Refresh 2019• Adoption of standards to meet customer requirements such as those required by European or Russia
buyers
• A system of collectors and aggregators to deliver produce to the distribution facilities; this may require
investments into refrigerated containers at remote locations
Specific recommendations for the project are summarized below.
1) Facility Investments. Potential investments in new cold storage should consider the temperature
sensitivity of the products. Those products with the highest sensitivity, such as berries, will require
infrastructure on-farm, or as close to the farm as possible. Products with an intermediate sensitivity to
temperature can be transported to a packhouse or a more centralized facility. Products with the lowest
sensitivity can travel to the built infrastructure with the right planning. Understanding this will help to
ensure the business is maximizing the investment.
2) Facility Operations and Size. Rolling inventories (Annex 4) should be used to determine the storage
capacity. This will help to ensure that facilities are operational beyond a few months per year and that
they are built to the right size. To complete the rolling inventory, it is imperative to know the current
and expected future volumes of product. Each location should be designed with a phased approach so
that businesses can expand as they grow, but they are not forced to operate an asset that is too large
for product supply and demand.
3) Existing Facilities. USAID support of cold storage in Georgia has prevented mistakes common to other
countries in the region. However, existing facilities may consider upgrades or new investments such as
enclosed, refrigerated docks. These facilities would benefit from technical consultations on design build
aspects as well as refrigeration systems. Any businesses considering retrofits, upgrades or expansions
should consult with neutral GCCA advisors. WFLO can assist with this by accessing GCCA members from
the Controlled Environment Building Association (CEBA) who can review specifications and drawings or
the International Association of Refrigerated Warehouses (IARW) who can offer peer-to-peer advice to
their own experience with refrigeration systems and operational investments.
4) Equipment. Where possible, pilot activities should be initiated to demonstrate the value of critical
equipment such as precoolers or refrigerated transport where possible. This is especially important for
the high value products. The Return on Investment (ROI) should be examined and reported on for each
pilot activity to provide business owners with a clear sense and understanding of expectations.
5) Education. Businesses that are currently operational, and especially for those already in the process of
exporting, education should be provided in the areas listed below. The target audience are CEOs and
facility owners who will be the primary decision makers when it comes to investing in human capacity.
The main takeaway is that neglecting to address food safety or operational best practices will cost
money in the long run. Appendix 3 contains suggested content outlines for the recommended training.
a. Cold Storage Operation and Maintenance
b. Food Safety and Quality Standards
c. Cold Storage Design and Construction
d. Business Models and Marketing
The Program may also consider laminated cards for drivers of temperature controlled produce that
summarize best practices in the Georgian language to encourage sanitary refrigerated transportation.
6) Aggregation. Investments in aggregation centers such as packhouses or distribution centers should be
considered. Aggregation could facilitate purchases from large buyers such as supermarkets, drive the
development of quality standards and be locations for piloting potential investments such as precooling
and refrigerated transportation best practices.
7) Regulations and Standards. There are two approaches that should be considered to address the lack
of regulatory standards. One option would be mandatory standards established by the government. A
second option would be to encourage the private sector to establish their own best practices that could
P a g e 15 | Georgia Cold Chain Refresh 2019serve as the standard. For standards involving produce, there are informal standards system in place:
high quality goods are exported, medium to high quality goods move into the local organized retail
sector, and mid to low quality are sold in the informal markets (bazaars). Using retailer quality
standards to guide farmers and aggregators during grading sorting and packing should be the short-
term solution with the end goal of having industry backed government guidelines adopted similar to
the USDA grades levels for agriproducts.
8) Data. Georgia should be included in the 2020 Global Cold Storage Capacity Report, a bi-annual report
published by the Global Cold Chain Alliance. This reports surveys members and cold storage networks
to determine the size of the cold storage industry within a country. The data is analyzed and published,
providing a helpful baseline to see where growth is occurring. The report includes an analysis that
highlights key findings and trends. WFLO will ensure that the Georgia Agriculture Project receive this
survey to ensure that country information is included in the 2020 report. This exercise will be repeated
in 2022 and in all subsequent reporting years beyond the life of the project as GCCA maintains contacts
in the country. To ensure that this happens, WFLO would request the contact information of those
grantees and stakeholders who received project support to enable us to maintain those relationships.
Conclusion
GCCA’s work in the cold chain in other emerging markets has proven that the development of the cold chain
happens incrementally and in response to market demand for better quality, longer lasting products where the
end consumer is willing to pay the cost associated to delivering that product. The first key step in that maturation
is to understand what products, what varieties and what quality standards that the market is demanding. Local
markets tend to be more price sensitive and chose lower quality for a lower price. Other markets, such as Russia,
demand a higher quality at a reasonable price. European and other sophisticated markets demand the highest
quality and will pay a premium for that quality provided it is consistent from box to box from shipment to
shipment.
That consistency starts with pre-harvest planting of the Cold Storage Development in Uzbekistan
varieties that the market demands, such as seedless grapes as
opposed to seeded grapes. It follows with pruning and In less than 10 years, cold storage
thinning to achieve size and color quality standards that are infrastructure in Uzbekistan has grown
exponentially, revealing its market
seen for apples, as an example. Once harvested, the
capabilities and agricultural growth. In 2012,
implementation of the cold chain is key. Berries will require
Uzbekistan was reported to have only
on-farm cold chain. Apples and stone frits will require near
258,000 cubic meters of refrigerated
farm and less sensitive commodities will need facilities that warehousing capacity. The most recent
allow for economies of scale where the commodity itself is so Global Cold Chain Capacity Report in 2016
inexpensive that adding cold chain impacts the price reports that Uzbekistan now has over 3.5
dramatically as in the case of potatoes and cabbage. million cubic meters of capacity. This growth
Once the production is matched to demand, it is important to is attributed to several factors. First, the
government recognized cold chain
consider not only seasonality and harvest months, but the
development as a critical component to
inventory. Because of the seasonality of fruits, the use of the
growing the agricultural sector and offered
facilities may only be used 3 or 4 months a year. This is a affordable credit options for cold chain
common mistake in emerging markets. developers. Second, with USAID support,
In the experience of the GCCA, the development of the cold producers grew large volumes of the varieties
chain has been most effective when the private sector leads demanded by the market. Third, exporters
investment of viable infrastructure with support of the grasped the entrepreneurial opportunity to
government. Governments in India and Uzbekistan, as make the necessary investments in their
capacity to build their business. And lastly,
examples, have stimulated the growth of the cold chain
market linkages created much needed access
effectively by providing access to low interest loans, reduced
to the international markets, to those willing
tariffs of equipment necessary to develop the cold chain as and able to pay for the value added that the
well as priority access to land and/or electrical energy in cold chain creates.
strategic locations. Another aspect to the sustainable growth
of an industry is the support of training for every level in cold
P a g e 16 | Georgia Cold Chain Refresh 2019chain organizations to ensure that best practices are widely distributed, and adoption is encouraged via strong food safety policy enforcement. When a cold chain business is armed with market demand data as well as supply data, cost effective decisions can be made with regards to size and location. These companies provide valuable services to the agribusiness industry; however, the level of trust needed to develop third party service providing, especially in the fruit and veg industry takes years to develop, even in the most sophisticated markets. P a g e 17 | Georgia Cold Chain Refresh 2019
Appendix 1 – Visits & Meetings for Operations
“Georgian Products” Ltd, Orkhevi, Tbilisi – Irakli Makharadze
Summary
The owner literally built this warehouse himself. As you can see from the photos, he has
quite a crew sorting and packing his nectarines for export. I was impressed with Irakli’s
entrepreneur determination, there is no question this guy will do well.
What worked well
He built a cooler that can adequately chill and store his fruit enabling him to export his
products. His site layout facilitates future growth and adequate space for tractor/trailer
staging and loading.
Thoughts for improvements
The immediate .5-meter perimeter of the facility “rat run” should be a surface that does not
grow weeds like concrete or weed freestone. Rodent boxes should be placed around this “rat
run”. As Irakli builds his business, facilities for precooling and temperature-controlled docks
should be considered. Enclosed is a photo of an aluminum dock plate that, if placed
between the truck and the edge of the dock, might add convenience and safety to the
loading of the trucks.
P a g e 18 | Georgia Cold Chain Refresh 2019P a g e 19 | Georgia Cold Chain Refresh 2019
SE “Natela Turashvili”, Village Chumlaki – Valeri Turashvili
Summary
The owner built this facility with help from his friend Irakli so the design of these first two
facilities is similar. This facility was just finished in time for this year’s harvest. These first
two facilities demonstrate how well government support for business can work.
What worked well
He built a cooler that can adequately chill and store his fruit, enabling him to export his
products. His site layout facilitates future growth.
Thoughts for improvements
There are many small layout/design thoughts that could enhance these types of facilities.
The immediate .5-meter perimeter of the facility “rat run” should be a surface that does not
grow weeds like concrete or weed free stone. Rodent boxes should be place around this “rat
run”. As Valeri builds his business, facilities for precooling and temperature-controlled docks
should be considered. Enclosed is a photo of an aluminum dock plate that, if placed
between the truck and the edge of the dock, might add convenience and safety to loading of
the trucks.
“Gold Kakheti”
Ltd, Village Chumlaki – Oleg Javakhishvili
Summary
The operator rents this facility to sort, cool, and ship his fruit. He is hand sorting and packaging with
temporary labor.
What works Well
P a g e 20 | Georgia Cold Chain Refresh 2019Oleg’s fruit is being cooled, sorted and packaged for export. The warehouse was clean and organized.
The dock well was covered, keeping fruit out of the direct sun during open truck loading and
unloading.
Thoughts for improvements
Operational training would help in the areas of organization, sanitation, and layout of the sortation
operation. The docks were open yet covered, but the layout into the docks appeared to be
inadequate for a 16-meter tractor/trailer to utilize safely. Rat runs, weed control and rodent control
would also enhance food safety.
“Georgian Fruit Compani” Ltd, Goga Akhaladze, Village Chumlaki
Summary
This is Georgian Peach Company. They have a new juice puree line that takes fruit that
doesn’t make the grade for the various markets and produces a high-value puree. Across the
parking lot, they had a modern cold storage warehouse with some precooling fans and a new
laser fruit grader system.
What worked well
This puree line was well designed and most basic food safety procedures were designed into
this facility. The fruit grading system eliminated a lot of temporary labor, labor training for
the grading procedures, and produced higher quality grading. The cold storage warehouse
was clean, racked, computer-controlled, and well laid out.
Thoughts for improvements
Rat runs, weed control, and rodent control are a few items that would enhance food safety.
Enclosing the existing dock/fruit sortation system and adding refrigeration would enhance
the shelf life of all the fruit and produce coming through this facility.
P a g e 21 | Georgia Cold Chain Refresh 2019SE “Elguja Gioegadze”, Village Akhasheni
Summary
This facility is 5-6 years old, the owner takes a lot of pride in his orchards and cold storage
facility.
What worked well
The layout of the facility provides adequate access for straight trucks and it appears to have
room for expansion. The cold storage was clean and well maintained.
Thoughts for improvements
The immediate .5-meter perimeter of the facility “rat run” should be a surface that does not
grow weeds like concrete or weed freestone. Rodent boxes should be placed around this “rat
run”. Facilities for precooling and temperature-controlled docks should be considered.
P a g e 22 | Georgia Cold Chain Refresh 2019Enclosed is a photo of an aluminum dock plate that, if placed between the truck and the
edge of the dock, might add convenience and safety to loading of the trucks. Long term
storage of apples and a few other types of fruit in a Controlled Atmosphere space might offer
more year-round business and could enable a farmer to have fresh produce in non-harvest
seasons, enhancing profitability. The cost to modify a couple of this operator’s rooms into
C/A enabled rooms is not too high.
“Soma” Ltd, Village Sagarejo – Mamuka Mlkashavidze
Summary
This new cold storage facility was just completed.
What worked well
This warehouse was built with a rack refrigeration system which offers more flexibility and
efficiency compared to individual condensing unit systems.
P a g e 23 | Georgia Cold Chain Refresh 2019You can also read
