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Solar-Powered Cold Storage Technologies and Agrifood System Modernization: Evidence from Nigeria

Food loss and food waste continue to pose a serious challenge for sustainable agricultural growth and food and nutrition security around the world. In many developing countries, lack of modern storage and transportation infrastructure plays a large role in food loss and waste, particularly for more nutritious and profitable but perishable foods like fruits and vegetables. The inability to reliably and cost-effectively get these horticultural products to market before they spoil reduces both producers’ incentives to invest in higher-value nutritious products and consumers’ access to healthy, affordable foods. Concerns over cold storage technologies’ carbon emissions and subsequent environmental impacts add an additional layer of complexity. A recent paper published in Agricultural Economics shows how investments in solar-powered cold storage technologies are helping overcome these challenges in Nigeria.

Northeast Nigeria, the studied region, is among Nigeria’s largest producers of horticultural commodities, helping to fill rising demand for these higher value products in the country’s burgeoning cities. Despite its importance to the country’s agricultural system, however, the region itself continues to experience high levels of micronutrient deficiencies and lack of access to electricity. The study examined whether the installation of solar-powered cold storage technologies could help producers overcome these challenges and improve horticulture production and sales.

A pilot program installed seven cold storage units in seven horticulture markets in the region between December 2020 and January 2021. Seven comparable markets were used as the control group. The program utilized existing cold storage technology designed by the Nigeria-based company ColdHubs Ltd., which is in use in other markets across the country. These units can store up to three tons of product and is powered by solar panels and environmentally friendly refrigerant.  Interested producers and traders were required to participate in a five-day post-harvest training, which covered cold storage best practices for storage and handling. In the end, 251 market agents – farmers, traders, and wholesalers – made up the initial cold storage user pool.

Agents paid rental fees of ₦100 (approximately 28 US cents) per day per crate. The construction of each cold storage unit cost approximately 40,000 USD, while operational costs were around 150 USD per month. The solar panels used on the units cost around 58 US cents per watt.

Analysis shows that agents were more likely to use cold storage when their stalls were located closer to the units, closer to drainage facilities, farther from piped water sources, and farther from tall buildings. Cold storage usage was also more likely for agents with higher levels of education, more access to credit, fewer business assets, less access to electricity in their stall, and less exclusive space.

According to the study results, cold storage increased agents’ net gross sales revenues and sales volumes by nearly 70 percent, while share of net revenues to gross revenues rose by almost 13 percentage points. The share of the value of loss to gross revenues fell by around 11 percent. Agents using cold storage also saw their sales prices increase by as much as 20 percent and their price margins rise by 15 percentage points.

Agents using cold storage reported seeing their products stay fresh for between 7 and 11 days. They also were more likely to engage in improved grading and sorting, packaging, washing and cleaning, and chemical preservation practices that improved product quality. The authors suggest that the use of cold storage gives market agents more time to engage in such practices by slowing produce spoilage; this makes these value-adding practices more cost-effective and cost-efficient. These findings, combined with the increase in prices and price margins, supports the hypothesis that the use of cold storage produces higher quality horticultural goods that can be sold for higher prices. Analysis also showed that this also benefitted farmers, with traders and wholesalers more likely to pay higher prices for quality horticultural products; in turn, farmers are incentivized to invest in activities to enhance the quality of their produce in order to take advantage of these premiums.

After operational and maintenance costs were taken into account, the study found that the cold storage units generated a net profit of around 8,000 USD per year, meaning the original investment for each unit (40,000 USD) and applicable interest could be recouped in around 10 years. Because the solar panels used can upwards of 25 years, the technology has the potential to be a viable solution for reducing food loss and waste, increasing producer and trader incomes, and encouraging modernization of Nigeria’s agrifood system in an environmentally sustainable manner.