UK’s top chicken producer warns on spiralling CO₂ costs

The UK’s largest chicken producer faces having to pay £1mn a week in extra costs for the carbon dioxide used to stun birds for slaughter, the company said on Thursday, after a supplier pushed up prices following news of a big UK plant halting production.

Ranjit Singh Boparan, founder of 2 Sisters Food Group, which processes more than 10mn birds a week, said “beleaguered shoppers . . . will ultimately pay the price with further price rises” for the increasing cost of the gas.

“Once again, UK food security is under threat, the shopper loses, and we simply have no choice other than to pay to keep supply,” Boparan said.

The UK faces a potential shortage of carbon dioxide, which is used in the poultry and pig industries as well as brewing, carbonated drinks production, food packaging and refrigeration.

Supplies are expected to be squeezed after CF Industries, the US fertiliser group which is the UK’s largest carbon dioxide producer, announced a temporary halt to production at its Billingham plant in north-west England.

Carbon dioxide is normally produced there as a byproduct of ammonia manufacture, which CF Industries said would be suspended because the price of natural gas, the main feedstock for the process, has hit record levels and made production uneconomical.

The gas is sold to food and drinks companies in the UK not by CF Industries but by a series of industrial gas groups which trade domestic and imported carbon dioxide. CF had produced about a third of the total.

Boparan said a big 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 national security issue and has to be dealt with as a matter of urgency. I’d like to see an acknowledgment of the problem and action to regulate the CO₂ market, or at least consider price capping.”

Officials have ruled out further state financial support after putting a three-week package in place in September last year to enable production to continue.

One official told the Financial Times last week that “it is for the industry to resolve this. If they haven’t sort[ed] out their supplies since October then that’s their problem, but most of them have”.

High prices for natural gas have also led to carbon dioxide shortages around Europe after ammonia producers in Italy and Germany cut production.

In the year to July 2021, 2 Sisters reported £95.5mn of losses, up from £34.3mn a year earlier, according to its latest accounts filed at Companies House.

Boparan has previously warned of steep rises in chicken prices as a result of input cost rises, saying that “the days when you could feed a family of four with a £3 chicken are coming to an end”.