Deal won’t stop food price rises

SHOPPERS should be braced for higher food prices, despite taxpayers footing a multi-million pound bill to avert supermarket shortages, ministers admitted yesterday.

Environment Secretary George Eustice insisted the impact on consumers would not be ‘major’ – but conceded a five-fold rise in carbon dioxide prices would have a knockon effect for consumers.

CO2 is essential for food production and packaging, and is used for everything from the humane slaughter of chickens and pigs to keeping salads fresh for longer.

Soaring energy prices last week forced the closure of two USowned fertiliser manufacturing plants which are responsible for supplying 60 per cent of Britain’s CO2. But the Government struck a deal late on Tuesday worth ‘tens of millions’ of pounds to resume production at CF Fertilisers’ Teesside plant.

The agreement will be in place for three weeks while the CO2 market ‘adapts’ to the surge in global gas prices, ministers said.

CO2 supplies are set to resume today, but Mr Eustice said companies will have to accept prices of the gas could rise from £200 a tonne to £1,000.

He stressed that CO2 is a small proportion of overall costs for producers, though industry leaders said shoppers would see prices rise.

‘Even if we see a significant increase in the unit cost of CO2, it’s not going to have any major impact on food prices,’ Mr Eustice told BBC Radio 4’s Today programme.

The Cabinet minister also defended the decision to pump taxpayers’ cash into the US firm, whose chief executive Tony Will was reportedly paid £7million last year.

Mr Eustice told Sky News: ‘If we did not act, then by this weekend, or certainly by the early part of next week, some of the poultry processing plants would need to close, and then we would have animal welfare issues.’

He said it was ‘justified for the Government to intervene in this way, in a very short-term, targeted way’ because ‘if we didn’t, there would be a risk to our food supply chain – that’s not a risk the Government is willing to take’.

Business Secretary Kwasi Kwarteng said the decision would avert disruption in the ‘many critical industries that rely on a stable supply of CO2’.

Richard Griffiths of The British Poultry Council said: ‘It’s great that we are moving towards a solution for this urgent CO2 issue but in reality it just puts us back to where we were two weeks ago still facing labour shortages, rising costs of supplies, logistics problems, and so on.’

‘We’d have animal welfare issues’