Cold storages in UP may give way to realty

Land housing cold storages in urban areas of Uttar Pradesh can turn into real estate properties such as residential and commercial complexes. Sharp appreciation in land prices is responsible for this. Over the years, almost 240 cold storages have closed down in UP, mostly in urban areas, since the owners saw more profit in unlocking value. Besides, running a cold storage in a city is challenging and fraught with operational risk, since there is ‘no entry’ to trucks carrying agricultural produce during the day.

“It would be wrong to say that the cold storages are turning into real estate properties only because their owners see more value in it ... there are reasons like no entry during daytime,” UP Cold Storage Association President Mahendra Swaroop told Business Standard.

In Lucknow alone, about 14 cold storages have closed down and in Kanpur, about 10. In times to come, cold storages in urban areas will close down, and new units will come up near the farm land. G P Tiwari, who owns a cold storage in Kanpur, has already entered into an agreement with a builder to turn the property into a complex.

At present, there are about 1,400 cold storages in UP and almost 200 more are likely to come up in the current fiscal. Most of these units are coming up in the potato-growing belt of western UP, since there is stable demand for the vegetable throughout the year.

Under the National Horticulture Mission, the state government gives a subsidy of Rs 50 lakh or 25 per cent of the cost of setting up of a new cold storage, whichever is lower.

The new cold storages are coming up in Muzaffarnagar, Sultanpur, Agra, Mathura, Aligarh, Ghazipur, Etawah, Ballia, Pratapgarh, Lucknow, Barabanki, Hardoi and Kanpur districts.

State horticulture and food processing department nodal officer S K Chauhan noted there was a urgent need to upgrade cold storages from being mere godowns to complete agri produce solution. “The cold storages should have proper backward and forward linkages, such as the collection units, processing plant, pack houses etc to make the business viable in the coming times.”

Meanwhile, Swaroop claimed that public sector banks were not encouraging credit to upcoming new cold storages in the last two years.