Cold storage warehousing as a risk mitigation strategy in the chilli value chain of Guntur, India

Abstract

Seasonal price fluctuations, post-harvest losses, and inadequate infrastructure pose inevitable risks in agribusiness. Cold storage helps in stabilizing their supply chains by reducing market volatility and preserving product quality. This study examines the role of cold storage as a risk management strategy in the chilli capital of India (Guntur). The article draws upon extensive field-based evidence from 45 operational cold storage warehouses (CSWs) of varying scales (small, medium, and large) and combines performance insights across physical, seasonal, and financial dimensions. Results indicate that small-sized warehouses show better capacity utilisation and profitability due to lower fixed costs, early establishment, and scale advantages. Data Envelopment Analysis further reveals that small CSWs operate closer to the efficiency frontier, while medium and large units face underutilisation and capital inefficiencies. The DEA efficiency assessment highlights varying operational efficiency, with small and medium CSWs showing higher values than larger facilities. The findings call for policy interventions (warehouse receipt financing, cooperative storage models, tailored cold chain subsidies, and eNAM integration) to enhance sector-wide resilience. Smaller warehouses deliver superior returns, supporting their suitability for sustainable cold chain development in a rural context. While the study is contextually limited to the Guntur region, it provides strong empirical insights for improving cold storage strategies in similar agribusiness contexts. Overall, the research underscores the potential of CSWs as a part of a broader infrastructural and financial framework to establish sustainable agricultural value chains. The optimally scaled CSWs have a critical role as an ex-post risk mitigation strategy in the chilli value chains, enhancing post-harvest resilience.