A three-month deal allowing the CF Industries’ plant – a key production site – to continue operating expired on Monday (31 January). This sparked industry-wide concern, as CO2 is necessary to fizzy drinks, food packaging and animal slaughter.
However, the Government have reached a fresh agreement with the Billingham-based CF Industries. Not many details are known, however it is understood the deal will last until at least spring and come at no cost to the taxpayer.
Responding to the new deal, BBPA chief executive Emma McClarkin said: “We are encouraged by the agreement made between suppliers and CF industries, however we urgently need further details on the nature of the arrangement in order to understand the impact on our sector and the longer term sustainability of CO2 supply for the UK drinks sector”.
The brief closure of the Billingham-based CF Industries’ plant last year threatened CO2 supplies to the food and drinks sector, with a knock-on effect for pubs and breweries.
Key to recovery
“Our sector is still reeling from the impact of a devastating winter and face rising cost pressures from all angles. A swift resolution to the CO2 supply issue is crucial in ensuring a strong and sustainable recovery for the beer and pub sector,” said McClarkin.
In a statement, the business department commented: "The CO2 industry has come to an agreement to ensure UK businesses have access to a sustainable supply of CO2 - an essential component of the national economy.
"The deal will enable CF Fertilisers' Billingham plant to continue to operate while global gas prices remain high. It means key sectors, including food processing and nuclear power, are ensured supplies of CO2".
Last September, the Government financially backed Billingham. A deal was then struck between CF Industries and its customers to keep the plant open for three months without further subsidies.
Trade bodies were concerned that there would be food shortages if this deal was not continued.
On Monday, Food and Drink Federation chief scientific officer Kate Halliwell said last year’s Government intervention was “very welcome”, but was worried that without an extension of the agreement, there could once again be CO2 shortages.
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.
British Institute of Innkeeping chief executive Steve Alton commented on Monday: “After two years of closures and disruptions and with prices rising significantly across the board in food & drink, utilities and staffing, our members’ businesses are incredibly fragile. The latest challenge presented by the shortage of CO2 will place further pressure on their supply chains and their ability to operate effectively.
“As we have seen over the course of the pandemic, pub operators are resilient and resourceful, but they need support across all areas of their businesses to enable them to recover and rebuild.
Alton said pubs needed the certainty of ongoing support, particularly with an extension of lower VAT, a suspension of crippling business rates and a rapid introduction of a reduction in duty for beer served at pubs.