Pressure to secure CO2 supplies came to a head this week, as the expiry of the Government’s deal to secure production of the gas until the end of January 2022 loomed.
Speaking on BBC Radio 4's Today programme on 28 January, British Meat Processors Association (BMPA) chief executive Nick Allen shared Government assurances that animal welfare – and in turn, meat processors – would be not suffer from a lack of CO2.
However, no mention was made of other sectors of the food and drink industry that rely heavily on CO2, particular alcoholic and carbonated drinks.
Problems along the line
“CO2 is widely used, so if a deal isn’t struck between industry and the suppliers, somewhere there’s going to be some problems and prices are going to have to go up considerably,” Allen said.
A spokesman for the BMPA told Food Manufacture if CF Industries decided to completely pull out of the market, brewers could be at the end of the queue when it came to CO2 supplies.
“Having said that, we may end up with a bit of a bidding war because that’s just how the pricing mechanism works,” said the spokesman. “If somebody’s prepared to pay a lot more, we could see the price jump again – it’s already up fourfold as it is.
“But it’s really difficult to gauge what’s going to happen. If they [CF Industries] don’t pull out of the market, I think we’ll be okay.”
While the Government bailed out the industry three months ago, the ongoing energy crisis has left a question mark over the future of CF Industries’ presence in the UK market. Allen admitted progress had been made to fill in the gaps, but if CF Industries did decide to pull out, shortfalls were going to happen.
Lack of clarity
A big issue has been the lack of clarity afforded to the food and drink industry surrounding the deals between suppliers and wholesalers of CO2 gas.
As the BMPA spokesman explained, processors are once removed from the negotiations, and are at the whim of whatever deal is struck between the two sectors. The Government might make assurances that meat processors were being prioritised, but it would mean little if the supplies were insufficient to begin with.
“There has been some new supply come on stream, but again, we’re once removed from all that because it’s a bit of an opaque market – you don’t know how much supply is out there in the system and where it is, where it’s coming from. We don’t have a clear picture of what the market supply looks like.
“Government won’t be intervening like they did previously, so it’s really down to the industry to sort out how the price will shake out.”
Meanwhile, the lack of information surrounding the end of the Government’s deal with CF Industries has created uncertainty among food manufacturers, with concerns of higher prices and sudden shortages.
CO2 is used for humane stunning of pigs and poultry before slaughter; modified atmosphere packaging (MAP) of products such as cheese; carbonated soft and alcoholic drinks and refrigerant in temperature controlled storage.