The UK’s largest chicken producer faces paying £1million a week in additional costs for the carbon dioxide used to stun birds for slaughter, the company said on Thursday, after a supplier pushed prices up following news of a large British factory that stopped production.
Ranjit Singh Boparan, founder of 2 Sisters Food Group, which processes more than 10 million birds a week, said “besieged shoppers . . . will eventually pay the price with further price hikes” for the rising cost of the gas.
“Again, food security in the UK is under threat, the shopper loses and we just have no choice but to pay to keep the stock,” said Boparan.
The UK faces a potential shortage of carbon dioxide, which is used in the poultry and pig industries, as well as in brewing, carbonated drink production, food packaging and refrigeration.
Inventories are expected to come under pressure after CF Industries, the US fertilizer group that is the UK’s largest carbon dioxide producer, announced a temporary shutdown of production at its Billingham plant in the north west of England.
There, carbon dioxide is normally produced as a by-product of ammonia production, which CF Industries said would be suspended as the price of natural gas, the main feedstock for the process, has reached record levels and made production uneconomical.
The gas is not sold by CF Industries to food and beverage companies in the UK, but through a range of industrial gas groups that trade domestic and imported carbon dioxide. CF had produced about a third of the total.
Boparan said a major supplier in the UK had raised prices by “up to 20 times current levels”, without naming the company.
He called for government intervention, saying: “This is clearly a matter of national security and needs to be addressed urgently. I would like to see the problem recognized and action taken to regulate the CO₂ market, or at least consider price cap.”
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Officials have ruled out further state funding after introducing a three-week package to enable production in September last year.
An official told the Financial Times last week that “it’s up to the industry to fix this. If they haven’t sorted[ed] out of their stocks since October then that’s their problem, but most of them have”.
High prices for natural gas have also led to carbon dioxide shortages across Europe after ammonia producers in Italy and Germany cut production.
In the year to July 2021, 2 Sisters reported £95.5m in losses, up from £34.3m a year earlier, according to the latest accounts filed with Companies House.
Boparan has previously warned of sharp increases in chicken prices due to rising input costs, saying that “the days of feeding a family of four with a £3 chicken are coming to an end”.