Fury as ministers pump millions into US firm to avoid food crisis

Food crisis fixed… but only for THREE WEEKS: Fury as government agrees to pump tens of millions of pounds of taxpayers cash into US firm run by a millionaire to avoid supermarket food shortages amid fears it could simply happen AGAIN next month

  • Soaring gas prices have left energy companies struggling over the last few days 
  • Two fertiliser manufacturing plants shut down as they cannot operate at a profit
  • They supply 60% of Britain’s CO2 – essential for food production and packaging
  • But Business Secretary clinched a deal to resume production on Wednesday 

Ministers are facing fury after agreeing to pour tens of millions of pounds of taxpayers money into a US firm run by a millionaire to avoid supermarket shortages. 

An deal is being finalised that will see CF Industries paid to restart production of CO2 after it closed down two UK sites because a surge in natural gas prices made them unprofitable.

The Teesside and Cheshire sites supply 60 per cent of Britain’s carbon dioxide (CO2) – which is essential for food production and packaging. 

Environment Secretary George Eustice today insisted the deal would be ‘temporary’ lasting three weeks and had been agreed after a ‘perfect storm’ hit production.

He claimed that ‘Christmas is safe’ from the impact of soaring energy prices, and the increase in the price of carbon dioxide would not have a ‘major impact on food prices’ because it was only a ‘tiny proportion’ of overall costs.

But the deal currently being hammered out by lawyers, was blasted by Tory MPs and free market organisations, who said reform of the market was required to prevent one firm having such a hold on the market.

Former Tory leader Sir Iain Duncan Smith told the Sun: ‘This should be a very time-limited operation and must be suspended as soon as they can ship CO2 into the UK from elsewhere.

‘The bigger longer term problem is supply of energy – successive governments have taken their eye off the ball of energy security, which we are no longer producing here in this country. We won’t survive if we go on like this.’   

Environment Secretary George Eustice today insisted the deal would be ‘temporary’ lasting three weeks and had been agreed after a ‘perfect storm’ hit production.

Former Tory leader Sir Iain Duncan Smith told the Sun: ‘This should be a very time-limited operation and must be suspended as soon as they can ship CO2 into the UK from elsewhere’

The CF Fertilisers plant in Billingham, Cleveland, one of two such plants which has been shut down down due to high energy prices

CO2 is used for everything from the humane slaughter of chickens and pigs, to putting the fizz in soft drinks and creating packaging that keeps foods fresh.

And it is critical for cooling nuclear reactors and as well as keeping certain medicines and vaccines cold.

Industry leaders had warned that the shortage could bring the entire meat processing system to a halt.

Mr Eustice told Sky News the deal is ‘going to be into many millions, possibly the tens of millions, but it is to underpin some of those fixed costs.’

He added: ‘It’s going to be temporary … at the end of the day we need the market to adjust. 

Mr Eustice said there had been a ‘perfect storm’ caused by two plants in the UK and Norway being closed for maintenance at the same time as CF suspended operations of its two factories due to high energy costs.

He added: ‘The truth is if we did not act then, by this weekend, or certainly by the early part of next week, some of the poultry processing plants would need to close and then we would have animal welfare issues – because you would have lots of chickens on farms that couldn’t be slaughtered on time and would have to be euthanised on farms, we would have a similar situation with pigs.

‘There would have been a real animal welfare challenge here and a big disruption to the food supply chain, so we felt we needed to act.’

But Dr Eamonn Butler, director of the freemarket think tank the Adam Smith Institute, said: ‘Since we put the government in charge of setting prices on the energy industry, it has taken less than five years for a shortage.

‘Only the government could screw up the energy market then use taxpayer funds to bailout companies. 

‘The merry-go-round of subsidy and regulation that gives security only to the most powerful and well connected at huge cost to everyone else has got to stop.’

Under the short-term arrangement, the taxpayer will financially support the factories so they can operate again.

Only one plant – the plant in Billingham – will reopen initially, Mr Eustice admitted, but he anticipated the other in Chshire also restarting. It is expected to take up to 48 hours to start CO2 production.  

The British Retail Consortium (BRC) welcomed the resolution of the CO2 crisis, but food industry leaders said problems remain because of a massive shortage of labour, from pickers and packers on farms, to workers in meat processing and delivery drivers. 

Andrew Opie, director of food and sustainability at the BRC, said: ‘It is vital that production at the Cheshire and Stockton-on-Tees plants is restarted as soon as possible, and distributed quickly to food manufacturers in need of it.

‘To support this issue, and other supply chain disruption arising in recent weeks, the Government must also find a solution to the shortage of HGV drivers.

‘Retailers are helping to train tens of thousands of new British delivery drivers, but the Government must keep its foot on the gas by introducing temporary work visas to allow drivers from abroad to fill the gap and keep our supply chains moving.’

The British Poultry Council’s chief executive, Richard Griffiths, said CO2 production should be considered something that is in ‘the national interest’ and both prioritised and financially supported by the Government to keep food moving.

Director general of the British Soft Drinks Association, Gavin Partington, warned that some shortages are still likely.

‘With the likelihood that it may take a few days for production to resume, combined with ongoing HGV driver shortage issues, it’s possible that supply of certain products won’t be as abundant as usual over the next week or so,’ he said. 

Kwasi Kwarteng leaves the Business Department in Westminster on Tuesday morning

The president of the National Farmers’ Union, Minette Batters, added that ‘urgent clarity’ is needed on the detail of the agreement to restart the manufacturing plants.

It came as the International Energy Agency (IEA) last night called on Russia to send more gas to Europe to help alleviate the energy crisis, becoming the first major international body to address claims that Moscow has restricted supplies. 

The Paris-based group said that while Russia was fulfilling long-term contracts to European customers it was supplying less gas to Europe than before the pandemic.

The group, which advises on energy policy and security, said: ‘The IEA believes that Russia could do more to increase gas availability to Europe and ensure storage is filled to adequate levels in preparation for the coming winter heating season.’ 

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