CF Industries decided last week to shut down operations at its UK fertilizer plants because soaring natural gas prices had made them unprofitable. The announcement sparked warnings of a food supply crisis, as its factories also produce around 60% of Britain’s food-grade carbon dioxide.
The gas is used to stun animals for slaughter, as well as in packaging to extend the shelf life of fresh, chilled and baked goods, and in the production of soft drinks. The British Meat Processors Association warned on Friday that the supply shock could lead to food shortages within 14 days of current stocks of CO2 gas running out.
The UK government said on Tuesday it would provide ‘limited financial support’ for CF Fertilizers’ operating costs for three weeks, after which food producers will have to pay more for CO2 to reflect rising global natural gas prices. .
UK natural gas futures have almost quadrupled since April, according to data from the Intercontinental Exchange. Gas prices are also rising sharply elsewhere in Europe, due to depleted supplies, competition with Asia for liquefied natural gas and weak supplies from Russia.
“Fragility” of the food supply
The arrangement with CF Industries will cost British taxpayers “several million pounds”, according to Environment Secretary George Eustice. Without government intervention, there would have been a risk to Britain’s food supply chain, Eustice told the BBC on Wednesday.
He said he believed the rising cost of CO2 was unlikely to drive up food prices, which are already rising due to rising global commodity prices and pressure on wages related to the labor shortage.
The National Pig Association (NPA) said last week that its members were facing their biggest crisis in two decades due to Brexit and pandemic-related labor shortages.
A shortage of lorry drivers and slaughterhouse staff meant pig farms ran out of space to house their herds and were two weeks away from having to slaughter animals, the association’s chief executive told ITV News on Monday. , Zoe Davies.
“Many EU workers have returned home due to a combination of new Brexit and Covid restrictions and are unlikely to return,” the NPA said in a statement last week. Meat processing plants say national labor recruitment efforts have been insufficient to fill “thousands of vacancies at their sites”, according to the NPA.
The impending CO2 shortage “has starkly exposed the fragility of the [food] supply chain,” National Farmers Union President Minette Batters said in a statement on Tuesday.
“Carbon dioxide users received little or no warning that supplies were going to be cut – an indication of market failure in a sector supporting our critical national infrastructure,” she added.
CF Industries CEO Tony Will said the company would work with the UK government to develop a “longer term solution” to the limited CO2 supply.