Food shortage fears rise as CO2 deal deadline nears

Food and drink firms have raised fears over shortages as a deal that secured vital carbon dioxide (CO2) supplies is about to end without an extension.

A supply chain crisis was averted last year when the government stepped in to broker a three-month price-fixing deal between CO2 producers and industry.

That deal will end in a few days, with the Food and Drink Federation warning of possible shortages on store shelves.

The government said it is now for CO2 firms to ensure continued supplies.

CO2 is essential across industry and the National Health Service. In the food sector, the gas is used is used in fizzy drinks and packaging, as well as to stun animals before slaughter.

If shortages - caused last year because of the rising price of gas used in the CO2 manufacturing process - reappear, the food industry feels certain sectors, such as the NHS, will have to be prioritised.

Last year, CF Industries suspended production at two sites - Cheshire and Billingham - which make 60% of the UK's commercial carbon dioxide. CO2 is a by-product of producing ammonia for fertiliser.

To get production re-started, the government made available a three-week financial support package to CF and then brokered a deal to keep prices down until the end of January.

A Food and Drink Federation (FDF) spokesperson said: "The security of food-grade CO2 supplies in the UK has been a concern for our industry for some time.

"Last year's government intervention which guaranteed CF Industries production of CO2 until the end of this month was very welcome. 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."

However, it would appear that the government is unlikely to put up more money to secure supplies.

In a statement to the BBC, the Department for Business said: "It is for the CO2 industry to ensure supplies to UK businesses."

CF Industries said it "continues to negotiate with our industrial gas customers to extend CO2 off-take and pricing agreements".