CF Industries last week decided to shut down operations at its UK fertilizer plants as rising natural gas prices made them unprofitable. That announcement warned of a food supply crisis as its plants produce about 60% of Britain’s food-grade carbon dioxide.
The gas is used to stun animals for slaughter, as well as to increase the shelf life of fresh, chilled and baked goods in packaging and in the production of carbonated drinks. The British Meat Processors Association warned on Friday that a supply shock could lead to food shortages within 14 days once current stocks of CO2 gas are exhausted.
The UK government said on Tuesday it would provide “limited financial support” for the operating costs of CF fertilizers for three weeks, after which food producers would have to pay more for CO2 to reflect higher global natural gas prices. .
UK natural gas futures have risen nearly four times since April, according to data from the Intercontinental Exchange. Gas prices are rising faster than elsewhere in Europe, due to dwindling stocks, competition with Asia for liquefied natural gas, and short supplies from Russia.
Food supply ‘fragility’
According to Environment Secretary George Eustis, the arrangement with CF Industries would cost UK taxpayers “several million pounds”. Eustice told the BBC on Wednesday that without government intervention there would have been a risk to Britain’s food supply chain.
He said he believes the increased cost of CO2 is unlikely to drive up food prices, which are already rising due to high global commodity price inflation and pressure on wages associated with labor shortages .
The National Pig Association (NPA) said last week that its members were facing their biggest crisis in two decades as a result of labor shortages linked to Brexit and the pandemic.
Association chief executive Joe Davis told ITV News on Monday that a shortage of truck drivers and slaughterhouse workers meant that pig farms were running out of space to keep their flocks and were two weeks away from raising the animals.
“The combination of new Brexit restrictions and COVID-19 has left many EU workers home and are unlikely to return,” the NPA said in a statement last week. According to the NPA, meat processing plants say efforts to recruit workers domestically are insufficient to fill “thousands of vacancies at their sites”.
Rising CO2 depletion “clearly exposed the fragility in it” [food] supply chain,” Minette Batters, president of the National Farmers Association, said in a statement Tuesday.
“There was no warning given to users of carbon dioxide that supplies were being cut – a sign of market failure in a sector that supports our critical national infrastructure,” she said.
CF Industries CEO, Tony Will, said the company would work with the UK government to develop a “long-term solution” for limited CO2 supplies.
Credit : www.cnn.com