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Thursday, October 28, 2021

Christmas dinner to cost more amid CO2 crisis, warns meat industry

Meat producers have warned of spiralling prices this Christmas triggered by a surge in the cost of carbon dioxide after a rescue deal was struck to protect the flow of the vital gas.

Industry leaders are bracing for a possible fivefold spike in the cost of CO2 – essential in the production of pork, turkey and chicken – following an agreement to keep manufacturing plants owned by CF Industries running over winter. 

The Exchequer has been bankrolling CF for the last three weeks to keep production going after surging wholesale gas prices made it uneconomic.

Ministers have now brokered a longer-term deal between CF and the middlemen which it supplies, allowing the plant to charge significantly more for CO2 in coming months.

Meat producers which then buy the gas from these middlemen fear they will be forced to bear the extra costs – potentially giving them no choice other than to put up their own prices, ultimately hitting consumers in the pocket.

Industry sources said that there was speculation that CO2 prices could jump from £200 to as much as £1,000 a tonne.

The British Meat Processors Association said: “The industry has been given no detail on what the price will be or how it will be calculated going forward.

“We understand that Business Secretary Kwasi Kwarteng took the decision to temporarily exempt parts of the CO2 industry from competition law to facilitate this agreement.

“What we need now is some detail and transparency around how the new pricing structure will work.”

Meat companies spoke to officials at the Department for Environment, Food and Rural Affairs on Monday night but sources said they struggled to secure details about the nature of the deal with American-owned CF.

Ian Wright, chief executive of the Food and Drink Federation, said: “Although welcome news, the increased cost of buying CO2 is yet another burden on the food and drink industry, which is already facing enormous stresses. This will of course add more pressure on prices for shoppers and diners.”

CF makes fertiliser and produces roughly 60pc of the UK’s CO2 as a byproduct. This is then used in the slaughter of animals as well as to preserve food, carbonate drinks and cool nuclear reactors.

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