UK food supply under threat as US CO2 supplier shuts down due to soaring gas prices


Based in Illinois CF Industries (FC) said last week it would shut down operations at its two UK factories indefinitely due to the high price of natural gas.

Those factories provide 60% of the UK’s food-grade CO2 as a by-product of fertilizer production, according to the British Meat Processors Association (BMPA), which warned on Friday that the supply shock could cause food shortages within 14 days of current CO2 stocks the gas runs out.

The gas is used to stun animals for slaughter, as well as in packaging to extend the shelf life of fresh, chilled and baked products, and in the production of carbonated drinks.

BMPA CEO Nick Allen told the BBC on Saturday he had been “inundated” with calls since the factories closed. “Retailers are really worried about this, he added.

“This crisis highlights the fact that the UK food supply chain is at the mercy of a small number of large fertilizer producers (four or five companies) spread across northern Europe,” Allen said in a press release.

Another European producer, the Norwegian Yara (YARIY), said on Friday it was cutting its ammonia production in Europe by about 40% due to “record natural gas prices”.
UK Business Secretary Kwasi Kwarteng met CF Industries CEO Tony Will on Sunday to discuss the crisis. “We discussed the pressures the company is facing and explored possible avenues to secure vital supplies, including for our food and energy industries,” Kwarteng tweeted.

The UK government official was also due to meet with energy industry bosses on Monday amid growing fears that many gas and electricity suppliers would go bankrupt as wholesale prices rise, leaving businesses and individuals without a reliable supply.

The looming CO2 shortage is the latest issue facing UK food producers, who are already grappling with a severe shortage of truck drivers and booming supply chains. The British Poultry Council on Friday warned of a threat to national food security if CO2 production is not supported by the government as Christmas approaches.

“It’s not about whether Christmas is going to be okay anymore, it’s about keeping the wheels on and the lights on so that we can actually get to Christmas,” Richard Walker, managing director of supermarket chain Iceland Foods, told the BBC on Monday. “It’s not a problem in months.”

UK natural gas prices jumped 420% on an annual basis in September, according to S&P Global Platts. Gas prices are also up sharply elsewhere in Europe, due to depleted stocks, competition with Asia for liquefied natural gas and weak supplies from Russia.

But the problem is particularly acute in the UK, where the supply shortage has been exacerbated by a lack of large storage facilities and significantly lower UK production this year due to a busy schedule of planned maintenance and delays in new projects, said S&P Global Platts. in a research note last week.



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