Food and drink bosses have warned of potential “long-term” supply problems in the UK following the government’s “temporary fix” subsidising a carbon dioxide (CO2) manufacturer.
Business secretary Kwasi Kwarteng brokered a deal worth tens of millions to support CF Fertilisers to carry on supplying C02 for the food and drink sector amid the energy crisis prompted by a surge in global gas prices.
It comes after US-owned CF had halted production, causing supply issues. It has plants in Cheshire and Teesside that produce 60% of the UK’s C02.
However, Downing Street’s taxpayer-funded deal only lasts for three weeks.
Watch: Government admits emergency C02 deal 'will cost millions'
Gavin Partington, director general of the British Soft Drinks Association, welcomed the deal but warned: “We need more than a temporary fix – it can’t be right that a company whose products are critical to the food and drink supply chain can be allowed to close without adequate warning or apparent consideration of the wider impacts.
“Long-term, the government needs to create or support conditions that prevent such damaging fluctuation in the market.”
The government has said the three-week deal will give the C02 market time to “adapt” to the surge in prices.
But the British Poultry Council, while also welcoming the government’s intervention, warned: “Our member businesses have worked tirelessly to mitigate the issues brought on by shortages these past few days but we must now start thinking longer term.”
The C02 produced as a by-product at the CF plants is vital to the food industry. It is used to stun animals in slaughterhouse, and to keep packaged products fresh.
On Wednesday, environment, food and rural affairs secretary George Eustice defended the short-term intervention, which will prevent shortages in Britain’s supermarkets for at least a few weeks.
He told Sky News: “If we did not act, then by this weekend, or certainly by the early part of next week, some of the poultry processing plants would need to close, and then we would have animal welfare issues – because you would have lots of chickens on farms that couldn’t be slaughtered on time and would have to be euthanised on farms. We would have a similar situation with pigs.”
Eustice also insisted on LBC that “Christmas is safe”, although the Food and Drink Federation has warned “any other shock” may “do in” supply chains.
Watch: Boris Johnson says energy crisis is a 'short-term problem' and dismisses risk of Christmas disruption