Cold chain businesses fail in a particular way: everything is fine until the temperature is not, and then an entire warehouse of someone else's stock is worth nothing.
Who bears that loss is decided by a contract signed months earlier, and by whether the operator can prove the failure was not theirs.
Licensing and approvals
Food authority licence. Processing, packaging, storage and distribution of food require registration and licensing with the provincial food authority — in Sindh, the Sindh Food Authority — with premises standards, hygiene requirements, medical certificates for handlers, and labelling rules for packaged product.
Dairy specifically attracts additional attention: milk quality standards, adulteration enforcement, pasteurisation requirements, and the ongoing regulatory scrutiny of loose milk supply. Adulteration is a criminal matter, not a compliance lapse.
Standards and certification. PSQCA requirements apply to certain products, and export markets impose their own — HACCP, ISO, halal certification, and buyer audits.
Premises approvals — building approval and permitted use, fire safety, electrical safety for compressors and refrigeration, and ammonia handling where industrial refrigeration is used. Ammonia systems are a serious safety exposure and need proper installation, maintenance and emergency procedures.
Environmental — effluent from processing and washing, waste disposal, emissions, and refrigerant handling under the applicable rules. See environmental compliance for factories in Sindh and food and pharma licensing.
The storage contract: who bears the loss
If you operate a cold store for third parties, this document is your business.
It must state:
- Temperature range guaranteed, and the tolerance
- Monitoring — how temperature is recorded, at what interval, and whether the customer gets access to the log
- Alarms and escalation — who is called, and when
- Power failure — backup generator capacity, fuel holding, and what is guaranteed. Given load shedding, a cold store without a properly sized generator and fuel contract is not a cold store
- Liability, with a cap. Uncapped liability for the value of stored goods is not insurable in practice and not survivable
- Insurance — whose responsibility, and what limits. Say explicitly whether the customer must insure its own goods
- Force majeure, and whether extended grid failure qualifies. See force majeure and price escalation
- Inspection rights and the customer's right to remove goods
- Lien over stored goods for unpaid charges — a valuable right, but exercise it carefully where the goods are perishable
- Notification and claim deadlines for damage
Customers storing goods should read the same clauses from the other side, and insure independently rather than relying on the operator's cap.
See logistics, warehousing and freight contracts and the contracts every business should have in writing.
Supply contracts
For processors buying from farms and collection points, and selling to retailers and institutional buyers:
- Specification and quality standards, and the testing method that decides a dispute
- Rejection rights and the window to exercise them
- Pricing, and adjustment where input costs are volatile — dairy and produce prices move sharply
- Volume commitments, minimums and exclusivity
- Payment terms, credit limits and security. Receivables are where processors lose money. See dealership and distribution agreements and recovering money owed
- Traceability obligations, batch coding and record retention — required both by regulators and by any serious buyer
Recall
Have a written recall procedure before you need one: batch traceability, the decision-maker, how distributors and retailers are notified, how stock is retrieved and quarantined, what is reported to the authority, and what is said publicly.
A business that can trace a batch and act within hours survives a contamination incident. One that cannot loses its licence and its customers at the same time.
Exporting
Food and dairy exports face destination-market requirements — sanitary and phytosanitary certification, plant approval and listing in some markets, labelling, shelf life, and residue limits — layered on top of Pakistani export requirements.
Buyer contracts increasingly add supply-chain audits covering labour and environmental practice. See import and export registration and trade compliance, permits and restricted imports and sustainability and ESG requirements for exporters.
Structure, staff and finance
Structure. A company, given product liability and the value of stored goods. See choosing a business structure.
Staff. Appointment letters, EOBI and SESSI, medical certificates for food handlers, and safety training for refrigeration and machinery. See employment contracts and employer registrations.
Equipment finance and imports. Refrigeration plant is usually imported; check duty, any concessionary regime for the sector, and the LC terms. See bank guarantees and letters of credit and customs valuation and duty demands.
Insurance — plant breakdown, stock, business interruption, and product liability. Read the exclusions, particularly around power failure and refrigeration breakdown, because that is precisely the risk. See a rejected insurance claim.
Tax. Sales tax treatment differs across food categories and processing stages, and getting the classification wrong produces large assessments. Take advice early. See sales tax registration and compliance.
When stock is lost
Move fast: preserve the temperature logs and alarm records, photograph the condition, arrange an independent survey before anything is disposed of, notify insurers within the policy period, and give any contractual notice on time.
The party with contemporaneous records wins these disputes. The party that discarded the stock and argued afterwards does not.
How the firm can help
We obtain food authority and sector licences, draft storage, supply and distribution contracts with workable liability and insurance allocation, prepare recall procedures, act in spoilage and quality disputes, and advise on export requirements and buyer compliance agreements.