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Only one of two shut down CO2 plants will restart under government deal to avert food crisis

·4-min read

The government has confirmed a deal with a key US firm to restart carbon dioxide production after a shutdown that had sparked a food supply crisis - but it will cover only one of its two UK sites.

A late night announcement on the agreement with CF Industries said there would be an immediate restart at its fertiliser factory in Billingham on Teesside but made no mention of a second plant at Ince in Cheshire which has also been shut down.

A government spokesperson confirmed that Ince was not covered "as we can get enough CO2 from Billingham only".

CF produces around 60% of the UK's CO2 supply, which is why the closure of the sites last week, blamed on a surge in gas prices, had prompted fears that shoppers could start noticing shortages in poultry, pork and bakery products within days.

Norwegian company Yara also said it was reducing production at ammonia factories across Europe, including one in Hull.

CO2 - a by-product of the fertiliser manufacturing process at the factories - plays a critical role in stunning poultry and pigs for slaughter and in vacuum packing.

Earlier on Tuesday, the government appeared to have struck a deal with CF, an American firm, to restart production at both of its UK facilities.

But official confirmation of the deal mentioned just Billingham - and the government spokesperson was unable to say how the 60% of CO2 supply provided by CF was split between it and the Ince site, saying it was "commercially sensitive".

The department for business, energy and industrial strategy (BEIS) said Whitehall would provide "limited financial support" for CF's operating costs for three weeks "whilst the CO2 market adapts to global gas prices".

Business Secretary Kwasi Kwarteng said the government had taken "quick and decisive action" to resolve the issue.

Earlier, the Food and Drink Federation (FDF), representing manufacturers in the sector, welcomed reports of the deal.

FDF chief executive Ian Wright said: "If production can restart at appropriate scale before the end of the week, this should be enough to ensure pig and poultry production can continue at close to normal.

"There will be some shortages, but these will not be as bad as previously feared."

Andrew Opie, director of food and sustainability at the British Retail Consortium, 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."

The deal came as the prime minister told Sky News the energy crisis was a "short-term problem" and said he did not think there would be disruption to food supplies at Christmas.

The gas price spike is also having a big impact on domestic energy suppliers - with two smaller players going out of business last week.

Sky News revealed on Tuesday that another firm, Green, had lined up insolvency advisers.

The government has made it clear that it will not offer bailouts to those firms that go bust.

But the crisis could result in state-backed loans being offered to the larger suppliers, which will have to pick up the pieces by taking on their customers.

Buying gas on the wholesale market for all of those households affected - who could number in the millions - will prove costly at current inflated prices.

The related crisis in CO2 supply follows a previous shortage in 2018 - and the meat industry had voiced fears that the latest one could be worse.

It has said the product plays a "critical and irreplaceable role in the food and drink manufacturing process".

The food industry has already been wrestling with other big supply chain challenges created by Brexit and the pandemic - including a shortage of 100,000 HGV drivers and a lack of workers in meat processing factories.

Richard Griffiths, chief executive of the British Poultry Council, welcomed earlier reports of the government's deal with CF but said it was "waiting for Defra to facilitate how this will work in practice".

"This is just the start of a long road ahead," Mr Griffiths said.

"This episode has demonstrated the importance of CO2 in British poultry production, to avoid both bird welfare and supply issues.

"The whole poultry meat industry is working tirelessly to avoid food shortages or the worst case scenario of empty supermarket shelves."

Zoe Davies, chief executive of the National Pig Association, said: "Obviously we are very relieved that a resolution has been found but still unsure at what cost - we don't know the details of the deal that has been done yet, but hopefully it won't resort in exorbitant CO2 prices (as we suspect it will)."

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