The fallout from the energy crisis in Europe sent new waves of shocks to the food sector in the United Kingdom, after the Ocado Group, an online grocer, stopped supplies of frozen products to customers, Bloomberg News reported yesterday.
According to Bloomberg, the meat industry has warned that companies could be out of business within two weeks.
The latest shock to the industry comes from a sudden shortage of carbon dioxide, which is used when slaughtering cows and chickens, as well as in packaging to extend product shelf life and in the manufacture of “dry ice”, which preserves frozen products during delivery.
Supplies were hit after fertilizer maker CV Industries last week responded to rising natural gas prices by closing fertilizer plants in the UK, which make carbon dioxide as a by-product.
Yesterday, Yara International, rival ASA, said it would also reduce its production capacity in Europe.
The UK food industry is already struggling to keep shelves and menus stocked due to a shortage of workers, caused in part by Brexit and the coronavirus pandemic.
The International Energy Agency recently warned that natural gas prices may continue to rise during the next month, adding to pressures on consumers in Europe before the onset of winter.
“We may still see a limited rise in gas prices in the coming days and weeks,” Fatih Birol, the executive director of the agency, said in an interview with Bloomberg TV, adding that “the most important factor here in the short term will be the conditions that will prevail during the winter.”
Energy prices rose in Europe, the United States and Asia, as economies emerged from the Corona pandemic and consumption recovered. Gas prices in Europe have tripled this year as countries tend to replace their depleted reserves, which in turn has led to higher electricity costs across the continent.
“In the event of a severe winter, gas prices may continue to rise in Europe and Asia, mainly because of the very strong demand as a result of the economic recovery,” Birol said.
The British Bank Barclays also warned of the danger of the continued high European energy prices, saying that prices should be controlled in the interest of consumers and corporate profit margins at this stage, according to the “Bloomberg” news agency.
“The industries most vulnerable to rising energy prices are transportation, metals, mining, electricity generation and raw materials,” Emmanuel Cao, a strategist, wrote in a note to clients yesterday.
Analysts at Barclays said earlier this week that less regulated northern European shares in the services sector could be potential beneficiaries of a halt to higher energy prices.
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