Iceland boss warns C02 shortage will hit food supplies ‘within DAYS’

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The CO2 shortage will devastate supermarkets within days, with fizzy drinks, cheese, meat, fruit and veg all at risk of running out, the boss of Iceland has warned. 

Britain is in the grip of an energy crisis with soaring wholesale gas prices – up 70 per cent since last month – leading to CF Fertilisers stopping production at two fertiliser plants. 

These two foreign-owned plants produce 60 per cent of the UK’s CO2 with the decision to stop production plunging the food industry into chaos. 

CO2 is used to stun animals for slaughter, package meat and also in refrigeration systems.  It is also used in fizzy drinks, beer, cheese, fruit and vegetables and crumpets, among other items. 

Now, Iceland boss Richard Walker has warned: ‘This is no longer about whether Christmas will be OK. This is more about keeping the wheels turning and the lights on so we can actually get to Christmas.’

Discussing the available CO2 supply, Nick Allen of the British Meat Processors Association told Sky News: ‘My members are saying anything between five, 10 and 15 days supply.  

‘The animals have to stay on farm, they’ll cause farmers on the farm huge animal welfare problems and British pork and British poultry will disappear off the shelves.

‘We’re two weeks away from seeing some real impacts on the shelves. On the poultry side we’re hearing they’re even tighter supplies so we might see poultry disappearing even sooner.’ 

Meanwhile, the chairman of the National Pig Association warned that if the situation facing the pork industry does not change, farmers will be forced to ‘slaughter their own animals’ due to a lack of space and feed. 

Rob Mutimer said: ‘If the situation doesn’t change, it’s going to spiral completely out of control.

‘And the only end game there is we as farmers are going to end up slaughtering our livestock – not for the food chain but to put them into rendering, to dispose of carcasses like what happened in foot and mouth. And that’s a terrible situation to be in.’

The British Meat Processors Association added: ‘We already have this situation in the pig industry which is now facing the imminent prospect of a humane cull on farms.’ 

Farms across the UK are ‘facing a really dark day’ as gas shortages could mean pigs being culled because there is not enough CO2 at abattoirs, according to one farm manager.

Around 100,000 pigs are currently left on farms as the industry already contends with staffing shortages caused by Brexit and the pandemic.

But a shortage of CO2, used to stun pigs before slaughter so they can be killed humanely, could deal yet another blow to British farmers.

Kate, who runs a pig farm in the south east of England, said: ‘Over the weekend its come out that two big CO2 plants are ceasing production.

‘CO2 is really important within the UK abattoirs because the majority of the UK abattoirs use CO2 to stun the pigs before they’re then slaughtered. It’s also used in packaging of the meat.

‘If abattoirs are unable to use CO2 for stunning they won’t slaughter many pigs at all, so that again is gonna add to this backlog on British farms.

‘We’re facing a really dark day on UK farms because if we get to a point that we have to euthanise pigs on farm simply because they can’t then get butchered, that would be devastating.’

Farming industry sources estimate that about 100,000 pigs are on farms across the UK at the moment.

Wholesale prices for gas have surged 250% since January, with a 70% rise since August alone, leading to calls for support from the industry and the collapse of some smaller energy firms.

Concerns over gas come as farms across the nation struggle to attract enough staff following Brexit and the pandemic.

Farm manager Kate added: ‘We have relied heavily in the past on EU workers, they’ve gone home with Covid and Brexit on the horizon and they just haven’t come back.

‘We’re asking Government to do something, such as like a Covid recovery visa or putting butchers on the shortage list of occupations because we simply don’t have the people at the moment to fill those spaces.’

The British Poultry Council also warned that the crisis would start to bite this week if the gas shortages weren’t addressed. The body said that millions of poultry would have to be culled if the situation didn’t improve.   

Speaking to the BBC, Iceland boss Walker added: ‘What shocked me is that 60% of CO2 production is in two factories that are actually owned by a foreign business who have shut down because of gas prices.

‘This is critical to national security, not just food but also healthcare, and it’s quite perplexing that it’s at the whim of an private enterprise as to whether it’s profitable or not.

‘The government needs to prioritise CO2 to get these factories up and running to limit disruption to food supplies.’

Warning that a crisis is looming, he said: ‘In isolation this is a serious issue but it is compounded by the HGV driver shortage as well. All of this comes as we are working towards Christmas. This is no longer about whether Christmas will be ok. This is more about keeping the wheels turning and the lights on so we can actually get to Christmas.

‘Speaking to suppliers this could become a problem over the coming days and weeks – this is not an issue that is months away. We’re building up stocks of frozen meats and we are currently fully stocked.

‘The problem is that as a supermarket industry we can’t just pile up stock – there is only so much we can do.’ 

Mr Allen, CEO of the British Meat Processors Association also highlighted the gas supply problem.

He said: ‘This crisis highlights the fact that the British food supply chain is at the mercy of a small number of major fertiliser producers (four or five companies) spread across northern Europe. We rely on a by-product from their production process to keep Britain’s food chain moving.’ 

Ranjit Singh Boparan, the owner of Great Witchingham-based Bernard Matthews and 2 Sisters Food Group, warned the gas shortage will affect the supply of turkeys for Christmas. 

Mr Boparan said: ‘There are less than 100 days left until Christmas and Bernard Matthews and my other poultry businesses are working harder than ever before to try and recruit people to maintain food supplies.

‘Nothing has fundamentally changed since I spoke about this issue in July. In fact, I take no pleasure in pointing out that the gaps on the shelves I warned about then are getting bigger by the day.

‘The supply of Bernard Matthews turkeys this Christmas was already compromised as I need to find 1,000 extra workers to process supplies. Now with no CO2 supply, Christmas will be cancelled.

‘The CO2 issue is a massive body blow and puts us at breaking point, it really does – that’s poultry, beef, pork, as well as the wider food industry.

‘Without CO2, the bottom line is there is less throughput and with our sector already compromised with lack of labour, this potentially tips us over the edge.’

The British Poultry Council Chief Executive Richard Griffiths, added: ‘With fewer than 100 days to go until Christmas, and already facing mounting labour shortages, the last thing British poultry production needs is more pressure. 

‘If CO2 supplies become tighter and more unpredictable then supply chains will have to slow down. Ultimately, no CO2 means no throughput. 

‘CO2 is vital for hugely important sectors such as nuclear power, healthcare, and food production. 

‘These sectors are part of a priority list for CO2 supply. We need the Government to help facilitate and financially support that prioritisation to maintain food supply and avoid bird welfare issues. 

‘The possible effect on food supply remains uncertain. We are working closely with Defra and BEIS to assess stock, implement contingency plans and mitigate any major impact on a sustainable supply of food. 

‘Our members are on a knife-edge situation at the moment. When birds cannot be slaughtered and must be kept on farm there is the potential for welfare, food supply and food waste issues to arise. 

‘If vital sectors like the poultry meat industry face CO2 shortages that compromise their performance, it will very quickly become an issue of national security. We hope this can be avoided through swift Government action.’ 

Ministers were warned that they must act to keep the ‘lights turned on’ today amid fresh crisis talks over gas shortages – with taxpayers facing pumping billions of pounds into stricken energy firms.

Fears are mounting about the consequences of soaring wholesale gas prices – up 70 per cent since last month – that are sending providers to the wall and causing chaos for a range of industries.

Experts say that as well as spiralling bills for household energy, food supplies and even medical procedures are at risk as the pressures cause shockwaves across supply chains. One consultant said the problems are so huge they could ‘easily see a three-day working week’ across affected companies this winter. 

Business Secretary Kwasi Kwarteng is expected to hold more discussions with the energy industry later amid calls for bailouts. Five energy suppliers have gone bust recently, and there are reports that customers of those on the brink of collapse could be temporarily transferred to another company.

The Government could provide a loan to other firms taking on their customers, or even effectively nationalise small suppliers on the verge of collapse by appointing a ‘special administrator’.

However, there are concerns that other firms will still refuse to take on the consumers. Other options include creating a ‘bad bank’ to take control of entities that can no longer operate on their own. 

The UK’s sixth largest energy company, Bulb, was among those seeking help today.

The FTSE 100 tumbled to a two-month low this morning as gas supply fears combined with rising inflation to send a chill through financial markets.

Energy stocks were also among top losers, with shares of heavyweights Royal Dutch Shell and BP falling 1.5 per cent and 0.9 per cent respectively.

Tory MPs have joined energy firms in demanding Boris Johnson scraps or suspends green levies on consumer bills.

London Mayor Sadiq Khan insisted the government must ensure vulnerable customers are protected from price rises.  

But the PM, who is at the UN general assembly in New York, tried to quell rising panic by insisting the problems should be ‘temporary’. 

He said the energy squeeze was a result of the ‘world waking up from pandemic shutdown’, comparing it to everyone ‘going to put the kettle on at the end of the TV programme’. 

The NEW Winter of Discontent: How Russian-inflated gas prices, two fertiliser plants closing, shortage of HGV drivers and an energy network ‘not fit for purpose’ has created ‘perfect storm’ to cripple UK

BY RORY TINGLE HOME AFFAIRS CORRESPONDENT FOR MAILONLINE 

Rising natural gas prices, an energy network ‘not fit for purpose’ and a shortage of lorry drivers are creating a ‘perfect storm’ to cripple the UK, experts warned today.

The price of wholesale gas has surged by 250% since the beginning of the year and added 70% just since August as demand increases while the economy opens up, according to figures from Oil & Gas UK.

Amid fears of soaring domestic bills and a ‘three-day working week’, five small energy suppliers have already gone bust, and there are warnings more will follow unless taxpayers stump up billions.

A cocktail of other factors are also at play, including gas supplies drying up from Russia, high demand in Asia, wind turbines not spinning due to still weather conditions and North Sea platforms closing for maintenance that was paused during the pandemic.

Natural gas is required to produce fertiliser, with carbon dioxide as a bi-product. The UK relies on just two foreign-owned fertiliser plants for 60% of its CO2 production – both of which have shut because they cannot break even.

This has in turn hit a food production sector already suffering from a shortage of HGV drivers. It needs CO2 for a wide range of uses including refrigeration, carbonating beer and fizzy drinks and preserving meat.

The gas is also used to stun animals before slaughter. Many abattoirs will not switch to other methods either due to animal welfare concerns or because their equipment is only set up to work with CO2, industry sources told MailOnline.

Any animals not stunned will be culled instead and their meat wasted, two bodies representing poultry and pig producers warned today.

Meanwhile, medics use carbon dioxide during surgery to enlarge and stabilise body cavities, risking the nightmare scenario of some procedures having to be delayed by an NHS that is already struggling to process a huge Covid backlog.

Carbon dioxide could be scrubbed from the air in a process known as carbon capture, but scientists say the infrastructure to produce enough of the element through this method is not in place because it is so expensive.

Today, Iceland boss Richard Walker, expressed his horror that Britain was so reliant on just two fertiliser plants to supply the majority of a substance that is critical to the nation’s wellbeing.

He told BBC Radio 4: ‘What shocked me is that 60% of CO2 production is in two factories that are actually owned by a foreign business who have shut down because of gas prices.

‘This is critical to national security, not just food but also healthcare, and it’s quite perplexing that it’s at the whim of a private enterprise as to whether it’s profitable or not.

‘The government needs to prioritise CO2 to get these factories up and running to limit disruption to food supplies’.

Warning that a crisis is looming, he said: ‘In isolation this is a serious issue but it is compounded by the HGV driver shortage as well. All of this comes as we are working towards Christmas.

‘This is no longer about whether Christmas will be ok. This is more about keeping the wheels turning and the lights on so we can actually get to Christmas.’

He said the CO2 shortage will hit meat products, baked good and chilled products such as salad as well as cans of fizzy drinks and bottled beers. 

CRISIS 1: GAS PRICES SPIKE

– Energy firms go bust 

– Risk of ‘3-day week’  

Business Secretary Kwasi Kwarteng is holding a fresh round of crisis talks with the energy industry today amid fears more small suppliers could go to the wall.

But while industry leaders said more needed to be done, Foreign Office minister James Cleverly would not confirm which measures could be taken.

Mr Kwarteng previously said consumers would be protected from sudden price hikes through the Government’s energy price cap.

However that puts pressure on the suppliers – particularly smaller companies – who are unable to pass on the increases in wholesale gas prices to their customers.

Four firms have already folded and there are fears that more could follow.

Some analysts have reportedly predicted that the UK’s energy companies could be reduced to three-quarters over the coming months leaving as few as 10.

Tory MPs have joined energy firms in demanding Boris Johnson scraps or suspends green levies on consumer bills. 

Today, Peter McGirr, chief executive of small energy firm Green, said ‘the outlook is looking bleak’.

Mr McGirr told the BBC’s Today programme: ‘It is not that I have a bad business model or I have a bad business.

‘We just don’t have as deep pockets to keep going through this crisis. I think that all suppliers are feeling the pinch of this but some of them just have a lot deeper pockets to try and ride out the storm.’

He said: ‘I feel that without any support mechanism being put in place by Government, it’s unlikely we will see the winter through.’

Jonathan Maxwell, CEO and Founder of Sustainable Development Capital LLP, said the crisis was being caused by a ‘number of unconnected issues occurring at once. 

He told MailOnline: ‘The issues include high natural gas prices – the result of a number of factors including winter supply concerns, a storm in the US shutting down a gas supply terminal in Texas, disruption to the UK’s main power cable from France and historic lows in windspeed.

‘This is the latest in a long line of energy disruptions in the UK and provides further evidence that the current energy system is no longer fit for purpose. 

‘A fundamental change is required to ensure a cheaper, cleaner and more reliable energy future that meets the UK’s objectives for COP26.’

Mr Maxwell suggested the centralised nature of the National Grid had exacerbated the problems. 

‘The solutions are relatively simple – reduce energy wastage by generating cheaper, cleaner and more reliable power and heat closer to the point of use, improve energy efficiency, energy storage and backup solutions and enable smarter use of renewable energy sources, which will all reduce the reliance on natural gas.  

‘This serves to reduce the significant generation, transmission and distribution losses associated with a centralised grid, saving money and reducing the carbon intensity associated with large energy-users.’ 

Today, Mr Cleverly said he was ‘not going to speculate’ over whether the Government would step in.

The rise in gas prices has been blamed on a number of factors, including a cold winter which left stocks depleted, high demand for liquefied natural gas from Asia and a reduction in supplies from Russia.

Lower solar and wind output is another factor driving up prices. The UK and Europe has phased out coal plants in recent years, while less windy weather in recent weeks has lowered their contribution to the grid, driving up gas demand. 

Mr Cleverly said the shortage was due to the pandemic, and told Good Morning Britain: ‘Because the global economy is kind of waking up from this hiatus imposed upon us by Covid, we’re suddenly seeing a surge in demand and therefore surging gas prices that has affected all kinds of parts of the economy, it has had an impact on food production and we are looking to ensure that we protect those food suppliers.’

However Emma Pinchbeck, head of Energy UK, a trade association for the energy industry, told Times Radio the issue could not be blamed on one factor.

Speaking to broadcasters on the tarmac of New York’s JFK airport overnight, Prime Minister Boris Johnson said: ‘I think people should be reassured in the sense that yes there are a lot of short-term problems not just in our country, the UK, but around the world caused by gas supplies and shortages of all kinds.

‘This is really a function of the world economy waking up after Covid.

‘We’ve got to try and fix it as fast as we can, make sure we have the supplies we want, make sure we don’t allow the companies we rely on to go under. We’ll have to do everything we can.

‘But this will get better as the market starts to sort itself out, as the world economy gets back on its feet.’

Clive Moffatt, a gas consultant and former government energy adviser, told the Telegraph prices for industry could go ‘through the roof’.

He said some companies could ‘easily see a three-day working week’ this winter if the situation gets worse.  

At the same time ministers are grappling with warnings of potential shortages on the shelves as the knock-on effect of the gas price rise ripples through the economy. 

British Gas has agreed to take on an extra 350,000 domestic customers from collapsed energy firm People’s Energy, regulator Ofgem confirmed today. 

The company went bust last week, leading to Ofgem finding another supplier to take on the firm’s customers.

Outstanding credit balances including money owed to both existing and former domestic customers of People’s Energy will also be honoured.   

CRISIS 2: C02 PRODUCTION PLUMMETS

– Meat production could stop

– Culled animals will be binned

– Surgical procedures at risk 

Producers have warned that supplies of meat, poultry and fizzy drinks could all be hit due to a shortage of carbon dioxide (CO2).

It follows the shutting down of two large fertiliser plants in Teesside and Cheshire – which produce CO2 as a by-product – with the American owners citing the increase in gas prices. 

Scientists Peter Styring and Katy Armstrong, from the University of Sheffield, has said carbon capture could be used to supply the industry but it would be incredibly costly – not least because the technology is in a relatively early stage of development. 

‘It is possible to take CO2 from the atmosphere using a process known as direct air capture,’ they wrote in an article for the Conversation. 

‘There are a number of companies across the world, including one in Switzerland and another in Canada, that can already carry out this process. In theory, it could turn a problem into a valuable resource, particularly in developing countries with little other natural wealth.

‘The problem is the cost. While the amount of CO₂ in the air is damaging the climate, relatively speaking there are so few CO₂ molecules in the air that sucking them out is very expensive. ‘  

On Sunday, Mr Kwarteng met with Tony Will, the global chief executive of CF Industries, the UK’s biggest supplier of CO2 and the owner of the two fertiliser plants.

He said they had discussed the pressures the business was facing and ‘explored possible ways forward to secure vital supplies, including to our food and energy industries’.

Today, meat processing firm Cranswick warned it may have to half production. 

Carbon dioxide is needed to stun animals. It is also injected into meat products to prolong their shelf life. 

The British Poultry Association and the British Pig Association have both warned that animals that cannot be stunned and then slaughtered may need to be culled instead.  

Shockingly, this would mean that the animals are disposed of because processors do not send culled meat to retailers. 

Asked why other methods beyond CO2 could not be used, a meat industry source told MailOnline: ‘It’s all to do with animal welfare. 

‘Even within the C02 market it’s a certain grade of CO2 that’s used. It’s about making sure that the most humane methods are used.’ 

A second source said many abattoirs also did not have the equipment to carry out alternative culling methods. 

CO2 is also used to keep food at low temperatures. 

Online grocer Ocado said it has been forced to cancel frozen food deliveries due to shortages. 

Nick Allen, chief executive of the British Meat Processors Association, has said the country could be two weeks away from British meat disappearing from supermarket shelves.

Mr Allen told Sky News said meat manufacturers have said they have between five and 15 days’ supply left.

Mr Cleverly said: ‘We’ll continue working with the sector to ensure that there is food on the table and gas in the pipes and that will remain a priority for Government.’

Health bosses have warned that NHS operations face being cancelled due to the CO2 shortage.  

Lord Adebowale, chairman of the NHS Confederation, yesterday urged ministers to ensure the NHS is prioritised for supplies.

He told Times Radio: ‘What I am concerned about – and I think [Business Secretary] Kwasi Kwarteng and others will be focused on this – is making sure there’s enough CO2 for the NHS.

‘CO2 is used in a number of interventions in the NHS – invasive surgery and endoscopy for instance. Stabilising body cavities so that surgeons can see what’s going on inside.

‘So we have to prioritise the NHS in all this because otherwise people will suffer.

‘But what it does really show is how interconnected it all is and we have to look at things systematically. It’s not just one thing, it’s a number of things.’

The NHS Confederation represents the healthcare system in England, Wales and Northern Ireland. 

CRISIS 3: LORRY DRIVER SHORTAGE

–  Gaps on shelves continue

The problems above are being exacerbated by the well-documented shortage of lorry drivers, which has created gaps on supermarket shelves.  

Britain is currently facing its own 100,000 shortfall of HGV drivers, which retail bosses have partly blamed on changes to migration rules post-Brexit and EU employees returning home.

The Road Haulage Association said the total number of people in the UK with HGV licences this summer is 516,000. 

But the latest Department for Transport data shows 278,700 HGV drivers were employed in 2020, equivalent to 54 per cent of the total.

They put the shortage largely down to Brexit and the pandemic, which led to 14,000 European drivers going home and just 600 of those returning.

Since last year, the industry has also seen large numbers of drivers retiring, while lockdown has hit the training of new drivers with 40,000 HGV driver tests cancelled.

The average age of a UK lorry driver is put at 56 to 57 and not enough young people have joined the industry due to its long hours, unattractive conditions and poor pay.

Drivers’ median hourly pay has risen 10 per cent since 2015 to £11.80 – below the 16 per cent average across other sectors, with new tax changes also not in their favour.

Lorry drivers can only drive for nine hours each day, but many are away from home up to 15 hours a day – putting off many young people who do not want such hours.

Last week, Tesco drivers and warehouse workers at four distribution centres rejected the offer of a 2.5% pay increase. 

If members vote for strike action then the supermarket giant could see empty shelves this winter which could potentially affect the Christmas period.Unite said its members voted against a 2.5 per cent offer, arguing it was lower than the RPI rate of inflation so represented a real-terms pay cut.