Fears for food and drink stocks as government deal to secure CO2 supply ends

Gas required to keep food fresh may once again be in short supply, food industry warns

CO2 is used to keep food fresh (Reuters)

UK meat packers and fizzy drinks makers fear they will once again be left without vital supplies of CO2 as a government deal to subsidise a major producer of the gas runs out on Monday.

CO2 is used to keep food fresh and add fizz to drinks, but supplies have been threatened by soaring energy prices.

In September, US firm temporarily shut down its fertiliser plant - which produces CO2 as a byproduct - because high energy prices made it unprofitable.

The government agreed to suspend parts of UK competition law and guarantee a price for CO2 so that CF Industries would continue producing it. The company supplies around 60 per cent of UK CO2 supplies.

Kate Halliwell, chief scientific officer at the FDF, said the security of food-grade CO2 supplies has been a “concern for our industry for some time” and warned that this could be another crunch point.

“Last year’s government intervention which guaranteed CF Industries production of CO2 until the end of this month was very welcome,” she said.

“But 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.

“This could lead to shortages in the products we find on our supermarket shelves - adding further pressures to families already coping with high food-price inflation.

“We will continue to work with the Government on this.

“It is critical that together we ensure supply can continue and that we build long-term resilience into the production of food-grade CO2.”

Last year, CF Industries temporarily shut its facilities in Cheshire and Billingham, prompting panic in the food industry.

Businesses feared supplies of fresh meat and carbonated drinks would be disrupted until the government’s last-minute deal.

The government pointed out on Monday that additional supplies had since become available, including from UK company Ensus, based in Wilton, Cheshire.

A spokesperson from the Department for Business, Energy and Industrial Strategy said: "We are continuing to work closely with both the hospitality and food and drink industries, and do not expect any significant disruption to essential food supplies."

CF Industries has been contacted for comment.