CONTINUED investments in cold storage facilities could play a crucial role in curbing rising inflation.
Emilio Neri Jr., BPI’s lead economist encouraged members of the Mandaue Chamber of Commerce and Industry (MCCI) as well as players in the logistics sector, to pour in investments in the cold storage sector to help improve the country’s supply chain efficiency on top of other infrastructure such as farm-to-market road, irrigation and credit facility for farmers, among others.
“Cold storage facilities help in maintaining price stability…They are becoming more important now,” Neri said during MCCI’s first Logistics Conference.
MCCI president Mark Anthony Ynoc said whatever happens in the logistics sector affects consumers as costs in delays caused by traffic and port congestions, among others are passed on to consumers.
With reliable cold storage infrastructure, goods can be transported and stored efficiently, reducing logistical delays that can cause price hikes due to supply chain disruptions.
Neri said improving logistics services can lead to deflation not just disinflation.
Deflation is when the overall prices of goods and services in an economy go down over time. Disinflation, on the other hand, is when the rate at which prices are rising (inflation) slows down but prices are still increasing. Prices are still going up but at a slower pace than before.
Cold storage allows for the stockpiling of goods during harvest or peak production seasons when prices are lower, making it possible to distribute these goods during off-seasons or periods of scarcity, which helps stabilize prices year-round.
These facilities also minimize spoilage, preventing shortages that drive up prices. More importantly, in times of natural disasters or other disruptions, cold storage ensures that there is enough stock to meet demand, preventing sudden price spikes caused by supply shocks.
Past months’ rise in food inflation was due to El Niño and other external factors.
Neri said conglomerates like the Ayala Group have been aggressive in expanding their cold storage business.
The company, through Ayalaland Logistics Holdings Corp. (ALLHC), is building a new facility of ALogis Artico in Consolacion, the firm’s second cold storage facility in Cebu after ALogis Artico Mandaue in 2022.
This new facility will add 6,000 pallet positions to ALLHC’s cold storage portfolio to help meet the increasing demand for temperature-controlled facilities in the Central Visayas region.
This site in Consolacion is slated for completion by the third quarter of 2025.
“Our focus is on meeting the rising demand for dependable modern cold storage solutions, which are vital for the preservation of the quality of perishable goods to reduce food waste and post-harvest losses,” said ALLHC chief operating officer Patrick Avila.
Property advisory firm, Colliers projects the cold chain sector likely sustaining demand for industrial and warehouse assets.
“We see this subsegment thriving even post-pandemic,” the firm said.
The Cold Chain Association of the Philippines expects the country’s cold storage capacity to grow by eight percent to 10 percent annually until 2025. By 2024, the industry’s capacity will likely reach 750,000 metric tons (MT), from 600,000 MT in 2021. / KOC