New industry deal on carbon dioxide supplies

09 February 2022

Farm business Food supply chain
An image of Tom Bradshaw

CO₂ suppliers have agreed another deal to pay CF Fertilisers a price for the CO₂ it produces that will enable it to continue operating while global gas prices remain high. 

The UK’s leading CO₂ producer and commercial suppliers of the gas have struck a second deal that should ensure stocks remain available for a variety of UK businesses.

The deal will enable the CF Fertilisers plant in Cheshire to continue to operate while global energy prices remain high, safeguarding supplies of its CO₂ by-product for uses including those in meat processing and glasshouse cropping and salad packaging in horticulture.

The closure of CF Fertilisers’ two UK sites in September 2021 due to high production costs led to the government supporting its operations for three weeks, after significant disruption in several sectors reliant on CO₂. An initial industry agreement followed, at no further cost to the taxpayer, but those arrangements were due to end on 31 January.

CF Fertilisers currently meets around 60% of the UK’s CO₂ needs.

New deal

The latest deal between CO₂ suppliers and the fertiliser giant was revealed in a short government statement. Few details have been released, prompting concern in some quarters about the longer-term implications for CO₂ costs.

“In the longer term, the government would like to see the market take measures to improve resilience, and we are engaging on ways this could happen,” the Department for Business, Energy and Industrial Strategy statement said.

NFU Vice President Tom Bradshaw said: “We welcome the stability this new agreement brings to ensure UK food businesses have access to a continued supply of CO₂ needed for packing and processing.

“We look forward to engaging with Defra on future resilience of supplies of CO₂, which includes confidence and robustness in the related fertiliser market.”

Why is carbon dioxide so important in the supply chain?

Carbon dioxide supplies are of critical importance in the food industry for:

  • Protecting animal welfare in processing
  • Avoiding knock on impacts on farm
  • Maintaining production of glasshouse fruit and vegetables to avoid mothballing production

How else has the NFU been working for farmers on this issue?

We engaged with the supply chain and our members to assess the situation and understand the likely impacts when the issue first arose in September 2021.

On Tuesday 21 September we joined other representatives from the UK’s food supply chain in an emergency summit to decide a course of action.

Attendees at summit meeting

The industry bodies who took part in the emergency summit alongside the NFU included:

  • 2Sisters Food Group
  • APS Group
  • Association of Independent Crop Consultants
  • Association of Independent Meat Suppliers
  • Avara
  • Billingtons
  • British Egg Industry Council
  • British Meat Processors Association
  • British Poultry Council
  • British Veterinary Association
  • Food and Drink Federation
  • Hook2Sisters
  • Kelly Turkeys
  • Kepak
  • Lidl
  • M&S
  • Maelor
  • Morrisons
  • Moy Park
  • Muller
  • National Pig Association
  • NFU Cymru
  • NFU Scotland
  • Noble Foods
  • Northern Ireland Meat Exporters Association
  • Pilgrims
  • Provision Trade Federation
  • Sainsburys
  • Scottish Association of Meat Wholesalers
  • Sodexo
  • Tesco
  • Thanet Earth
  • Traditional Norfolk Poultry
  • Ulster Farmers Union
  • Waitrose

Ammonia nitrogen shortages

Mr Bradshaw previously highlighted the likely impacts a shortage of ammonia nitrogen will have now and on future crops. When CF Fertilisers suspended production on 17 September, he said:

“This news will be of immense concern to farmers. Due to the recent high price of fertilisers, some growers will not yet have placed orders or taken delivery of much-needed fertilisers. The timing of reducing artificial fertiliser supply is particularly unfortunate just as Defra reinforces strict rules on the use of organic manures.”

fertiliser

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