A deal to prevent another carbon dioxide crisis in the food and drink industry has been extended until January next year, it has been confirmed.
Gas firms have agreed to pay CF Industries, a key CO2 producer in the UK, a higher price for the CO2 it produces that will enable it to continue operating.
The US fertiliser manufacturer produces around 60 percent of the UK’s commercial CO2 requirements, a gas which is used in the slaughter process, packaging, and chilling stages of meat production.
The deal runs until January 2022 and means that key sectors, including food processing and nuclear power, are ensured supplies of CO2 until that date.
In September, the government agreed to subsidise one of CF Fertilisers' plants to enable the firm to continue operating while the industry moved toward a deal.
Last week, Business Secretary Kwasi Kwarteng temporarily exempted parts of the CO2 industry from competition law.
The government said: "CO2 suppliers have agreed to pay CF Fertilisers a price for the CO2 it produces that will enable it to continue operating while global gas prices remain high, drawing on support from industry and delivering value for money for the taxpayer."
But food and farming industry groups have warned that the public could start seeing gaps on retailers' shelves and higher prices for food despite the new deal.
According to The Telegraph, there is speculation that prices of CO2 could jump from £200 to as much as £1,000 a tonne.
Responding to the development, the British Meat Processors Association (BMPA) said the deal provided "some reassurance that supplies will be maintained".
"However, industry has been given no detail on what the price will be or how it will be calculated going forward," a spokesperson said.
"We understand that Business Secretary Kwasi Kwarteng took the decision to temporarily exempt parts of the CO2 industry from competition law to facilitate this agreement.
"What we need now is some detail and transparency around how the new pricing structure will work."
While the British Poultry Council (BPC) welcomed the deal between CF Industries and gas wholesalers, it called for a "longer-term solution to build resilience into our supply chains".
Chief executive Richard Griffiths said: Our member businesses have worked tirelessly to mitigate the issues brought on by the recent CO2 episode and the announcement of a deal provides some respite for sectors like our own.
"We are waiting for more information from government on the deal and look forward to working with them upon hearing further detail.”
Meanwhile, major commercial CO2 producer Ensus reopened its Wilton plant last week following temporary closure for planned maintenance.
The Wilton plant can produce up to 40 percent of the UK’s CO2 requirements.
