Following last week’s news that supplies of CO2 gas were under threat again after the UK’s leading producer announced plans to temporarily halt some of its operations, the owner of the 2 Sisters Food Group has warned that inflation-hit shoppers will ultimately pay the price with further rises on supermarket shelves.
CO2 is used in carbonated drinks, for keeping food fresh, and to stun livestock before slaughter. However, supplies are expected to be squeezed after US fertiliser group CF Industries, which is the UK’s largest CO2 producer, announced a temporary halt to production at its Billingham plant in north-west England.
Carbon dioxide is produced there as a byproduct of ammonia manufacture, which CF Industries said it was suspending because the surging price of natural gas, the main feedstock for the process, had made production uneconomical.
Ranjit Singh Boparan, who also owns Bernard Matthews, expressed “dismay and concern” for consumers after an unnamed CO2 supplier subsequently hiked prices by up to 20 times current levels – costing his businesses an extra £1m a week.
The UK’s largest chicken producer suggested the move will ultimately compound the food inflation environment for shoppers. 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.”
According to analysis by 2 Sisters Food, the UK uses approximately 2,000 tonnes of CO2 a day. With plants in Billingham and Wilton due for imminent closure, this accounts for 1,300 tonnes alone. The current import capacity from Europe is around 600 tonnes, resulting in a major supply squeeze and a £1m 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. CO2 suppliers are saying these increases happen immediately. They say it’s a take it or leave it situation.”
CO2 is used by the company in the despatch of poultry and in packaging to extend shelf-life.
Boparan commented: “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.”
Boparan is calling for the government to take the current crisis seriously. He said: “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.”
