Government strikes CO2 deal after food shortage warnings

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The government has struck a deal with a US firm that supplies 60% of the UK’s food-grade carbon dioxide to restart production after being warned of imminent food shortages.

CF Industries caused panic across an already stretched food supply chain late last week when it stopped production of CO2 at two of its fertiliser factories due to soaring natural gas prices.

It is unclear what incentives the government has offered CF Industries to restart production, but earlier today business secretary Kwasi Kwarteng said the government would likely subsidise the company.

However, he ruled out mentions of either nationalising CO2 production or giving failed energy companies government bailouts as rising gas prices have stoked fears that smaller firms will be put out of business, in turn leading to a difficult winter.

The move comes days after the government was warned by numerous food producers and supermarket bosses that food shortages on shelves were a matter of days – not weeks or months – away.

Carbon dioxide, produced by CF as a byproduct at its two plants, is used to stun pigs and chickens before slaughter. It is also used to carbonate beer and soft drinks and in the vacuum-sealing process.

Andrew Opie, director of food and sustainability at the British Retail Consortium, welcomed the deal but said it was “vital” that production “is restarted as soon as possible and [CO2 is] distributed quickly to food manufacturers in need of it”.

“We welcome the announcement of a deal to get CO2 production back to normal levels. By taking decisive action on this important issue, the government will help prevent availability issues arising from CO2 shortages.

“It is vital that production at the Cheshire and Stockton-on-Tees plants is restarted as soon as possible, and distributed quickly to food manufacturers in need of it.

“To support this issue, and other supply chain disruption arising in recent weeks, the government must also find a solution to the shortage of HGV drivers.

“Retailers are helping to train tens of thousands of new British delivery drivers, but government must keep its foot on the gas by introducing temporary work visas to allow drivers from abroad to fill the gap and keep our supply chains moving.”