'Some food and drink manufacturers are still struggling to access the supplies that they need', ITV News Business and Economics Editor Joel Hills reports
Some food and drink manufacturers are struggling to access the supplies of carbon dioxide they need despite production having resumed at CF Industries.
The government agreed to temporarily subsidise the reopening of the company’s Billingham site last Tuesday but a second factory at Ince remains closed.
Some of CF Industries customers are concerned with both the quantity and the quality of the gas since production restarted.
The Suntory Group is having supply problems. It uses the gas to carbonate Lucozade and make it fizzy.
Sources had told ITV news that brewer AB Inbev, who produce Budweiser, Stella and Becks, were also struggling with supply problems but a spokesperson for the group later denied this, saying:
“We are fortunate that we have invested in Co2 Recovery Systems at our breweries so we can continue to brew our beers, and we have not and are not experiencing any supply shortages. We are currently brewing our beers at our 3 UK breweries and are proud that we are able to maintain supply to our customers”
CF Industries closed both of its fertiliser plants on September 15 because a sharp increase in the wholesale price of natural gas had made both of its factories loss-making. Between them, they supplied nearly 60% of the CO2 the UK uses.
Faced with a sudden crisis in the food industry, on Tuesday 21st September the government agreed to subsidise the operation of the Billingham site for three weeks, at a cost to the taxpayer of around £30 million.
Production resumed immediately and ITV News understands that, at the weekend, CO2 output at Billingham reached a record high. But, with Ince still mothballed, as of Tuesday 28th September, total output by CF Industries was still below pre-shutdown levels.
The government has received complaints about both the amount and the purity of CO2 being produced. There has, apparently, been an issue with high levels of moisture.
The company says Billingham is now running at maximum production and the gas meets the required standards.
“Billingham is producing 750 tonnes of CO2 per day, which is greater than the average daily demand served by both plants prior to the halt of operations on September 15th. As of yesterday (September 29th) morning, CF Industries had shipped nearly 1700 tonnes of CO2 since restart,” says Chris Close, the company’s Director of Corporate Communications.
He added: “all product that we have produced and released has been batch tested before release and has been within specifications of our certification”.
Not all food and drink manufacturers are experiencing CO2 shortages.
And the big picture isn't clear.
Heineken and Carling claim to be self-sufficient, they installed carbon capture facilities at their sites after production was disruption by a Europe-wide shortage of CO2 in 2018.
On Wednesday night, the Provision Trade Federation (PTF) told ITV News that some of its members use the gas to keep packaged food fresh and are being impacted.
“Food producers sometimes use CO2 as part of their modified atmosphere packaging processes, to increase the shelf life of food,” said Andre Kuyk, Director General of the PTF. “A number of our bacon, cheese and fish processors cannot access supplies in sufficient quantities”.
Toby McKeever, Suntory Beverage & Food GB&I Chief Operation Officer told us: “A lot of companies are experiencing problems getting hold of CO2 which puts bubbles into drinks.
"We do have access to CO2 to make drinks like Lucozade Energy but not at the levels we would like.
"We’re working hard with industry partners to find solutions to ensure we have the right quantity of ingredients to supply the nation with the drinks they love”. In a statement, The British Soft Drinks Association said: ”The high-quality, food-grade CO2 soft drinks manufacturers require to make their products is currently not being produced in the quantity required.
"We strongly urge the government and CF Fertilisers to ensure access to all grades of CO2 required by customers and reiterate our call for longer-term support to prevent such market disruption from happening again in future.” On Wednesday night, the chief executive of the British Beer and Pub Association, Emma McClarkin, told me: “There is plenty of beer to go around but supplies of CO2 are getting very tight.”
ITV news approached the government’s Business, Energy and Industrial Strategy (BEIS) department for comment and were referred to a statement issued on September 21 when a deal was struck between the government and CF Fertilisers to restart production after the plant initially closed. In it, Environment Secretary George Eustice said: "We have acted decisively to ensure that CO2 supplies, which are critical to some of our food sectors, continue to be available following some exceptional events."
Business Secretary Kwasi Kwarteng added: “In our ongoing response to manage the impact of global gas price rises, we will continue to protect businesses and consumers.”
Ian Wright, FDF Chief Executive, said: “The government and CF Industries are aware of the issue. We continue to work with both of them to resolve concerns quickly.
"We will ensure there is the widest and deepest supply for the food and drink supply chain.”