BRITS will face higher food prices despite a taxpayer-funded bailout of carbon dioxide plants, a Cabinet minister admitted today.
Environment secretary George Eustice said it’s inevitable the price of people’s weekly shop will go up due to the energy crisis gripping the UK.
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He revealed that a Government-backed deal to get two major CO2 producing plants up and running again will cost tens of millions.
But even so the shuttered factories won’t reopen for at least another 48 hours even though food producers are facing a crisis point.
Mr Eustice warned the cost of carbon dioxide is set for a “big, sharp” rise by fivefold from £200 a tonne to more like £1,000.
He admitted that will have a “modest” impact on food prices in the shops.
But he added Co2 is “a very, very small part” of the overall cost of producing grub compared to labour and fuel.
Ian Wright, boss of the Foot and Drink Federation, warned costs at the till will rise and Britain has had a “close shave” with “serious” food shortages.
He said: “Prices of carbon dioxide from that company will rise and the customers will have to pay those prices.”
“But as long as that happens I think we’ll see production resume and I think we’ll see pretty quickly the danger of shortages disappear.
“We were pretty close to a really serious problem of quite lengthy periods of empty shelves but fortunately expeditious government action seems to have avoided that.”
Mr Eustice defended the cost of the bailout of US-owned CF industries and insisted it will prevent empty shelves in supermarkets.
The firm has two plants in Teeside and Cheshire that manufacture 60% of the UK’s carbon dioxide.
They’ve been shuttered since last week because the spiralling price of natural gas made production unprofitable.
Crisis talks
Ministers have now agreed to subsidise the cost of running the factories for the next three weeks to get them up and running again.
Carbon dioxide gas goes into supermarket packaging to help food last longer and puts the fizz in drinks like pop and beer.
It is also used by abattoirs to stun animals before they are slaughtered. Separately it is needed during some NHS operations.
CF industries agreed to restart production after crisis talks between billionaire owner Tony Will business secretary Kwasi Kwarteng.
Despite the reprieve, food industry chiefs said the scare showed the UK is too reliant on foreign companies for its CO2 supply.
Iceland boss Richard Walker said he was “shocked” to discover the American business provides 60% of Britain’s stock.
He said: “This is something that’s clearly critical to national security – not just food but also healthcare as well.
“It seems quite perplexing that it’s at the whim of a private enterprise in terms of whether it’s profitable or not and therefore whether they produce the stuff or not.”
Nick Allen, CEO of the British Meat Processors Association added: “This crisis highlights the fact that the British food supply chain is at the mercy of a small number of major fertiliser producers spread across northern Europe.
“We rely on a by-product from their production process to keep Britain’s food chain moving.
“We’ve had zero warning of the planned closure of the fertiliser plants in Ince and Stockton-on-Tees and, as a result, it’s plunged the industry into chaos.
“We urgently need the secretary of state for business to convene the big CO2 manufacturers to demand that they coordinate to minimise disruption, and provide information to Britain’s businesses so contingency plans can be made.”
