Government energy support measures “a relief” for UK food industry

Government energy support measures “a relief” for UK food industry

Meat and food industry bodies have confirmed their support for the latest government financial package to tackle rising energy costs; however many say that more detail is needed about the plans which are being put forward to help industries over the coming year.

The Scheme will see gas and electricity costs for UK food and drink businesses capped, according to a government announcement. The Scheme covers those on fixed-term contracts, agreed on or after 1st April, and will see wholesale prices for electricity capped at £211 per megawatt hour (MWh) and £75 per MWh for gas.

Businesses on other contracts, including those on variable rates, will come under a maximum discount band around £405/MWh for electricity and £115/MWh for gas. Suppliers are to apply the reduction automatically to all eligible non-domestic customers, with the government compensating the suppliers for the cost.

Much-needed relief

Provision Trade Federation director general Rod Addy said: “We are pleased business secretary Jacob Rees-Mogg has responded to the PTF-led letter to government, which the heads of many concerned trade bodies signed.

“Any reduction in projected energy costs will provide suppliers and customers alike with much-needed relief. The news that this automatic relief will be applied to contracts fixed since 1st April this year for as long as the contract was agreed will also be welcome.

“However, we still await more details about how the Energy Bill Relief Scheme will apply to individual businesses.”

Addy went onto say that the energy crisis will not “cease any time soon,” and that the PTF are asking government to continue the outlined support beyond the six-month period. He said that by doing so, government can “offer longer-term certainty [to businesses] to enable them to plan ahead more effectively, as well as looking to it to develop sustainable long-term energy security for UK industry.”

He added: “Government also needs to recognise the special and vital role of food manufacturing in considering support beyond the initial period.”

Addy said that the PTF is looking forward to government continuing to work with food and drink businesses to address other serious issues such as labour costs and availability, rising input costs across the board and a more secure landscape for affordable trade credit insurance.

He concluded: “We also want a trade environment that fosters fair and healthy competition between domestic and overseas suppliers, delivering affordable food that doesn’t compromise on quality and building a strong base for exports.”

Ease pressures

Chief executive of the National Pigs Association (NPA) said: “This is very welcome news for an industry that is facing eye-watering energy prices over the winter, on top of continued high input costs. In the last two years, the sector has lost £600 million and contracted by at least 20%. Energy price inflation has been the final nail in the coffin for some producers but this new scheme will hopefully ease the financial pressures on others who have survived up to this point.”

Important intervention

NFU Scotland President Martin Kennedy said that the trade body welcomed the publication of the Scheme, saying that NFU Scotland will share the details with members to gauge the impact. 

He said: “This important intervention must be seen as the first step taken by the UK government, on behalf of all hard-pressed consumers, to providing essential support to underpin domestic food production, tackle inflation and the ongoing food security crisis.  Electricity is just one of the increased input costs that is driving farmers and crofters to restructure businesses and reduce production.”

Kennedy explained that a recent NFU Scotland survey on electricity prices had identified that, for nine out of ten farming families, electricity supplied to the farmhouse comes as part of the business “so previous and future domestic price caps have provided absolutely no benefit or relief so far.”

The survey also identified that some businesses faced electricity bills increases by tens of thousands of pounds this autumn.

Kennedy added: “Under the proposals, energy prices will still be going up, but the package announced will limit that increase for six months and provide a short-term degree of cost certainty and stability. Importantly, it will have significant benefits for those further up the food chain who process and package food.

“For the cap to be judged as effective, it must give all farming and food businesses confidence to go on, or food security will continue to be undermined and prices at the shop shelf will continue to climb.”

More detail needed

Chief executive of the Food and Drink Federation Karen Betts commented: “We welcome the scope of the government’s Energy Relief Scheme and the speed with which it’s being rolled out.

“It addresses the largest and most volatile cost pressure facing our industry right now. Although some aspects of the scheme are still to be clarified, it offers relief to food and drink manufacturers across the UK.”

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