Food and drinks industry call for CO2 deal to head off shortages on shelves
The food and drink industry has warned the UK of potential shortages on supermarket shelves and increased costs for the hospitality sector, unless a new deal is to secure the country’s CO2 supplies.
Industry leaders argue the government need to reach a fresh agreement with CO2 suppliers to head off another round of shortages.
Three months ago, production was effectively bailed out by an eleventh-hour three month deal between the government and US firm CF Fertilisers, which produces three-fifths of the country’s stocks from two plants in Northern England.
CO2 is used across numerous industries, including stunning animals for humane slaughter, extending the shelf life of food, making drinks fizzy, aiding surgical operations and cooling nuclear power plants.
The short-term arrangement saw the factories reopen and supplies return to normal days later, with Downing Street providing financial support to cover operating costs for three weeks.
However, the deal is set to conclude on 31 January, with no plans announced on maintaining long-term supplies.
CF Industries, the parent company of CF Fertilisers, previously blamed rising gas prices for making its operations unviable.
In the intervening three months, gas prices have remained high amid geopolitical pressure between Russia and Ukraine, meaning that supply pressures have not faded.
A Food and Drink Federation spokeswoman told the Press Association (PA) that while the previous deal was “very welcome”, there was increasing need for a new deal to be reached.
She said: “We are concerned that with just days now remaining before that agreement comes to an end, and energy prices still very high, there will be further CO2 shortages once again.”
She further cautioned that a lack of deal could lead to shortages in products expected by UK consumers, adding further pressures to families already coping with high food-price inflation.
British Meat Processors Association chief executive Nick Allen told the news agency it has been assured that animal welfare will be prioritised, along with the NHS and the nuclear power industry.
On potential price rises, he said it is too early to tell if any shortages will lead to shelf prices rising, but gloomily added: “We’ve already seen a four-fold increase in CO2 prices since three months ago.”
He warned the situation could get “considerably worse” if Russia cuts off supplies of gas to Europe.
British Beer and Pub Association chief executive Emma McClarkin argued that the government needs to establish a full-scale plan to secure CO2 production rather than hop from successive last-ditch deals to prevent shortages.
She said: “The sector urgently needs a longer term solution to avoid further, sudden outages – particularly as energy prices are likely to remain high for some time.”
While McClarkin recognised that supply chain disruption could hinder the recovery of the hospitality sector, she said: “However, beer drinkers and pub-goers can rest assured there is still plenty of beer to go round.”
When approached for comment about the current situation, a spokesperson for the Department for Business, Energy and Industrial Strategy said a longer-term, industry-led agreement should be sought between businesses without further taxpayer support.
They said: “It is for the CO2 industry to ensure supplies to UK businesses.”