The founder of one of Britain’s largest poultry producers has said consumers are being “held hostage” following a massive supplier cost hike in carbon dioxide (CO2).
Owner of 2 Sisters Food Group, Ranjit Singh Boparan, warned that this year’s CO2 crisis has intensified from a producer shut-down to a wider price shock for consumers and CO2 users following the announcement by a key supplier of an eye-watering price hike of up to 20 times current levels.
Boparan said the decision taken by a major UK supplier will ultimately compound the food inflation environment for shoppers, and his businesses will have no choice but to swallow the increases.
The move followed an announcement last week that CF Fertilisers is to stop production at its remaining UK ammonia plant in Billingham, near Middlesborough, after soaring energy costs made production “uneconomical”.
“This is a price shock just like we’ve seen with energy, and all companies and households are feeling the pain right now. What is very sad is that it’s the UK shopper who will ultimately pay the prices and CO2 suppliers are, in effect, holding consumers hostage.”
CO2 is a vital component in food production and is used in the despatch of poultry and in packaging to extend shelf-life. It’s also vital in cooling systems for refrigeration purposes.
2 Sisters said its analysis has revealed that the UK uses 2,000 tonnes of CO2 a day. With plants at Billingham and Wilton due for imminent closure, this accounts for 1,300 tonnes. The current import capacity from Europe is around 600 tonnes, resulting in a huge supply squeeze and a £1 million a week additional cost for the business.
“This is a very serious situation we are facing. Once again, UK food security is under threat, and the shopper ultimately loses. We simply have no choice other than to pay to keep supply. CO2 suppliers are saying these increases happen immediately. They say it’s a ‘take it or leave it’ situation.
“When poultry cannot be processed, it means birds must be kept on farms where there is a potential implication for animal welfare. The overall effect is welfare is compromised, and there is a reduced supply. Many businesses are resilient, and we will navigate our way through this current CO2 crisis in partnership with our customers and suppliers. But make no mistake – negotiation is not an option here with suppliers.
Boparan said this was clearly a national security issue which needed to be dealt with as a matter of urgency. He added a cap on prices and action to regulate the CO2 market was necessary.
The British Poultry Council said CO2 was critical to the UK’s national food security, and the government, in the midst of a cost-of-living crisis, was allowing supplies to be jeopardised. “The arbitrary price hikes we are seeing will hit our food producers, and ultimately consumers, very hard.”
Nick Allen, British Meat Processors Association, said it was impossible for the government to remain on the sidelines and insist it was for companies to work out a solution: “They are going to need to step in,” he insisted.