2 Sisters Food Group owner Ranjit Singh Boparan has warned that this year’s CO2 shortages have now intensified from a producer shut down issue to a wider price shock for consumers.
Boparan expressed concern for consumers at a ‘surcharge’ introduced by a major UK supplier that will see a hike in price of up to 20 times current levels, which he said is costing his businesses an extra £1 million a week.
He said that the decision taken by the UK supplier will ultimately compound the food inflation environment for shoppers and his businesses “will have no choice but to swallow the increases.”
Boparan said: “This is a price shock just like we’ve seen with energy and all companies and households are feeling the pain right now. What is very sad is that it’s the UK shopper who will ultimately pay the price and CO2 suppliers are, in effect, holding consumers hostage.”
“UK food security is under threat”
CO2 is used in the despatch of poultry and in packaging to extend shelf-life. It is also vital in cooling systems for refrigeration purposes.
According to 2 Sisters analysis, the UK uses approximately 2000 tonnes of CO2 a day. With plants in Billingham and Wilton due for imminent closure, this accounts for 1300 tonnes alone. The current import capacity from Europe is around 600 tonnes, resulting in a huge supply squeeze and a £1 million a week on-cost.
Boparan added: “This is a very serious situation we are facing. Once again, UK food security is under threat and the shopper ultimately loses - we simply have no choice other than to pay to keep supply. C02 suppliers are saying these increases happen immediately. They say it’s a take it or leave it situation.
“When poultry cannot be processed, it means birds must be kept on farms where there is a potential implication for animal welfare. The overall effect is welfare is compromised, and there is a reduced supply. My businesses are resilient, and we will navigate our way through this current CO2 crisis in partnership with our customers and suppliers. But make no mistake - negotiation is not an option here with the suppliers.”
Action must be taken
Boparan has urged the government to take the current crisis seriously. He added: “This is clearly a National Security issue and has to be dealt with as a matter of urgency. I’d like to see an acknowledgement of the problem and action to regulate the CO2 market, or at least consider price capping.”
This news comes following an announcement by CF Fertilisers UK that it will temporarily halt ammonia production at its Billingham Complex due to market conditions.
In a statement, CF Fertilisers UK said that, at current natural gas and carbon prices, its ammonia production is “uneconomical”, with marginal costs above £2,000 per tonne and global ammonia prices at about half that level. The current cost of natural gas at NBP is more than twice as high as it was one year ago, with the NBP forward strip suggesting that this price will continue to rise in the months ahead.
This story was originally published on a previous version of the Meat Management website and so there may be some missing images and formatting issues.
