U.K. Facing Food Shortage as Rise in Energy Costs Forces Some Companies to Halt Production

The United Kingdom is facing possible shortages in meat, poultry and packaged foods as a rise in energy costs may lead some companies to stop production, the Associated Press reported.

British Business Secretary Kwasi Kwarteng said Tuesday that he's trying to ink a deal with CF Industries, the main provider of food-grade carbon dioxide, which is used to stun animals preceding slaughter, preserve fresh produce and carbonate beverages. The company stopped production at its U.K. plants last week because of high natural gas prices and said that it couldn't provide an estimate for when operations would resume.

"We're hopeful that we can get something sorted today and get the production up and running in the next few days," Kwarteng told the BBC. "It may come at some cost. We're still hammering out details. We're still looking at a plan."

Ian Wright, chief executive of the Food and Drink Federation, said that unless a deal is worked out soon with food-grade carbon dioxide providers, U.K. residents could start seeing food shortages "in about 10 days. Meanwhile, the production of poultry and pork is projected to decline by the end of the week.

For more reporting from the Associated Press, see below.

U.K. Food Shortages
The U.K. is facing food shortages as a rise in energy costs forced some companies to halt production. Above, empty shelves at a supermarket in London on September 20, 2021. Frank Augstein/AP Photo

Four small energy providers have failed in recent months, and the U.K. government is in talks with larger firms to ensure that gas and electricity keeps flowing to customers this winter if any other suppliers collapse.

The squeeze on Britain's food processing industry is among the most visible impacts of a spike in natural gas prices as the global economy recovers from the COVID-19 pandemic—boosting demand for energy. Wholesale gas prices have tripled this year in Britain.

The government is also under pressure to protect consumers from spiraling energy costs at a time when the fallout from the pandemic is already putting British household budgets under strain.

Energy prices for many consumers are set to rise next month after regulators approved a 12% increase in the price cap for 15 million customers who don't have long-term contracts. That comes after Britain's annual inflation rate jumped to 4.1 percent last month, the highest in almost a decade.

In addition, the Conservative government is preparing to end two programs that have cushioned the economic impact of the recession. A temporary 20-pound ($27.40) a week increase in public benefit payments and a program under which the government subsidized the wages of millions of workers during the pandemic are both being phased out at the end of this month.

"Now heating bills are going to go up and that's going to affect millions of people across the country," said Ed Davey, leader of the Liberal Democrats, who are holding their annual party conference this week. "What I want to see from the government is action on that. What are they doing to help people on low incomes?"

Kwarteng said the government is discussing a range of options to bolster carbon dioxide supplies, including subsidizing production at CF.

The just-in-time supply system that underpins both supermarkets and the hospitality industry "is under the most strain it has ever been in the 40 years it has been there," Wright told the BBC. "It is a real crisis."

Richard Griffiths, chief executive of the British Poultry Council, said 20 million birds are grown and slaughtered each week, the majority of which are chickens.

"It will be a real challenge if there is a shortage of CO2 to the point that slaughterhouses cannot process the birds,″ he said. "That is really the worst-case scenario, which is why we are so hopeful that the government can step in here."

U.K. Business Secretary
British Business Secretary Kwasi Kwarteng will hold emergency talks with industry leaders and consumer groups as the government looks for ways to support energy companies threatened by soaring natural gas prices. Above, Kwarteng (center) participates in the first Cabinet meeting since the reshuffle, at 10 Downing Street, London, on September 17, 2021. Ben Stansall/Pool Photo via AP