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UK bails out an American company to prevent food supply crisis

The UK government has agreed to subsidize a major US fertilizer manufacturer at a cost of several million pounds to taxpayers in order to restart carbon dioxide production vital to Britain’s food supply.

The government announced the extraordinary intervention in a statement late on Tuesday. The plan should allow Illinois-based CF Industries (CF) to restart one of its two UK plants and resume CO2 supplies to the food and drink industry. Safely restarting the ammonia plant is expected to take “several days,” CF Industries said in a statement. CF Industries decided last week to halt operations at its UK fertilizer plants because soaring natural gas prices had made them unprofitable. That announcement sparked warnings of a food supply crisis because its plants also produce about 60% of Britain’s food-grade carbon dioxide.

The gas is used to stun animals for slaughter, as well as in packaging to extend the shelf life of fresh, chilled and baked goods, and in the production of carbonated drinks. The British Meat Processors Association warned Friday that the supply shock could cause food shortages within 14 days once current stocks of CO2 gas run out. The UK government said Tuesday that it will provide “limited financial support” for CF Fertilisers’ operating costs for three weeks, after which food producers will have to pay more for CO2 to reflect higher global natural gas prices. UK natural gas futures have increased nearly fourfold since April, according to data from the Intercontinental Exchange. Prices for gas are also rising sharply elsewhere in Europe, due to depleted stocks, competition with Asia for liquified natural gas and low supplies from Russia.

The arrangement with CF Industries will cost UK taxpayers “many millions of pounds,” according to environment secretary George Eustice. Without government intervention there would have been a risk to Britain’s food supply chain, Eustice told the BBC on Wednesday. He said he believed that the increased cost of CO2 was unlikely to lead to higher food prices, which are already rising due to higher global commodity price inflation and pressure on wages linked to worker shortages. The National Pig Association (NPA) said last week that its members were facing their biggest crisis in two decades as a result of labor shortages tied to Brexit and the pandemic.