“Quite Alarming” – UK Energy Crisis Sparks Fresh Chaos For Food Suppliers

Last week Fertilizer producer CF Industries Holdings Inc suspended operations at two UK plants because of soaring natural gas prices. As a result, these fertilizer plants that make carbon dioxide as a byproduct are in sudden shortages and are rippling through the UK food sector, according to Bloomberg. 

The shortage of carbon dioxide has forced Online grocer Ocado Group Plc to halt all deliveries of frozen products to customers, and the meat industry warned slaughterhouse operations could “grind to a halt” in weeks. 

The UK food industry, already stressed from supply chain woes and labor shortages due to Brexit and the pandemic, is under even more pressure with the lack of carbon dioxide. It’s an important chemical used to stun chicken and pigs before slaughter, as well as packaging to extend shelf life and dry ice that keeps perishable items frozen during delivery. Without it, food supply chains break. 

The British Meat Processors Association warned carbon dioxide supplies could be exhausted by the end of the month, forcing slaughterhouses to close and result in a mass culling of animals. 

Last Friday, Ocado halted deliveries of frozen food to customers because of the dry ice shortage. 

“It’s quite alarming,” said Nick Allen, head of the meat association. “We’re talking between days and weeks from this really hitting hard, unless somewhere in the world — ideally here in Europe — there are supplies of this that can replace that amount of CO2 very quickly.”

The ripple effect continues as British Soft Drinks Association monitors the carbon dioxide situation as the industry could go flat. 

Besides CF Industries, Norwegian fertilizer maker Yara said it would soon reduce ammonia output capacity by 40% because of record-high natural gas prices. 

The broader impact could be soaring food and energy inflation across the UK, threatening the country’s post-pandemic economic recovery and financially strain consumers.