ISLAMABAD, Nov 7: The government is considering a proposal to make considerable “initial investment” in the creation of a chain of cold storages in conjunction with private sector parties willing to invest in fruit and vegetable grading, packaging and processing facilities.

Informed sources told Dawn on Wednesday that the government is also reviewing its role in procurement, storage, distribution and export and import of fruits and vegetable so as to offer increased role to the private sector.

The government has been advised to clearly define its role in this behalf and then stick to it.

Government storage facilities, it was said, needed to be run on corporatised and business-oriented basis, with strong performance and outcome-based incentives.

The government of Punjab has already taken some steps in this direction through the creation of a company, Punjab Agricultural Marketing Company (Pamco), as a public-private sector initiative.

This company has been given the task of developing the cold storage chain as well as facilitating development of processing of fruits and vegetables, especially for export purposes. Similar, initiatives were needed in other provinces as well.

Storage and warehousing form a very important part of the supply chain of a modern economy. This is true of modern manufacturing and service provision concerns.

Storage of agricultural grains is seen as a key to maintaining prices of important items, like wheat, rice and sugar and storage of cotton is important for both domestic textiles as well as direct and indirect exports.

Storage and warehousing sector has traditionally been ignored in Pakistan. For most of the country’s history government used to be the almost monopoly buyer for grains and so almost all large scale storage of grain used to be in the public sector. The government allowed the private sector to enter into grain markets a few years ago, but most of the storage continue to be with the public sector still.

Fruit and vegetable storage though in the private sector, was mostly restricted to storage for only short periods needed to transport goods from the farms and orchards to factories and wholesale and retail markets.

Traditionally, government was the major buyer of major grains in the country. Apart from being responsible for managing stores, it also managed export and import needs of these grains. But over the last decade, as a part of the structural adjustment packages and the need to redefine the role of the government in these markets, some private sector participation in grain buying storage and export and import has been allowed. But this participation is still at a small scale.

More importantly, conversations with private sector players in the area suggest that it is the unclear and vacillating policies of the government of Pakistan and the provinces that is making private investment in the area difficult.

The government was told by the officials of the ministry of commerce that perishable items, especially fruits and vegetables, require a cold storage chain to extend their life beyond a few days after picking.

The cold chain has to include, for some goods, even refrigerated trucks as well. But even when these are not needed, a cold chain might need to have facilities near main centres from where the fruits or vegetables are collected, facilities near factories where processing needs to take place, and facilities near dry and sea ports as well.

The entire cold chain is therefore an expensive proposition and would need a fairly high level of bulk and business activity to make sense of the large fixed investment.

So far, in Pakistan, even though there are centres from where large amounts of certain fruits could be collected (citrus in central Punjab, apples in the North, mangoes in the South of Punjab and some parts of Sindh), there are no large scale exports of fruits directly or even facilities for processing these fruits and vegetables into paste and/or juice. So where there is one cold storage facility available here and there, there is no integrated cold chain at a large scale and there is no demand for these as yet as well.