Energy Crunch Hits Pig Slaughter and Fertilizers in Risk to Food
Europe’s Energy Woes Hit Fertilizers in Another Threat to Food
(Bloomberg) --
Europe’s energy crisis is spreading to the fertilizer and meat industries, risking tighter food supplies and even higher prices.
Major fertilizer producers Yara International ASA and CF Industries Holdings Inc. said soaring energy costs are forcing them to halt some output of nutrients crucial for growing crops. The shutdowns also risk hitting other parts of the food supply chain by crimping supplies of carbon dioxide, which is used in stunning animals for slaughter and food packaging that boosts shelf life.
It’s the latest threat to abattoirs, where labor shortages have caused a backlog of pigs on farms, and comes as global food prices are near a decade-high. The British Meat Processors Association warned that CO2 supplies could run out within two weeks, forcing slaughterhouses to close just as pig producers are already facing the imminent prospect of culling animals.
“It’s quite alarming,” said Nick Allen, head of the meat association. “We’re talking between days and weeks from this really hitting hard, unless somewhere in the world -- ideally here in Europe -- there are supplies of this that can replace that amount of CO2 very quickly.”
Carbon dioxide -- a byproduct of fertilizer production -- is also used in packaging products such as meat and vegetables. Beef and lamb would be less affected by a CO2 shortage, but could lose five days of shelf life due to the packaging issues, the BMPA said. Soft-drink makers are also monitoring the CO2 situation and looking at alternative sources, the British Soft Drinks Association said.
U.K. government officials are in talks with the meat sector about the CO2 issue, according to a person familiar with the matter, who asked not to be identified.
The halted production in the fertilizer sector shows the impact exorbitant energy prices are having on U.K. energy intensive industries, the Energy Intensive Users Group said. It urged the U.K. to take immediate steps to keep British industry competitive as energy costs rise.
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Fertilizer Cutbacks
Earlier this week, CF Industries said it’s halting two U.K. plants due to soaring energy costs. On Friday, Norwegian fertilizer maker Yara on Friday said that it will by next week have curtailed about 40% of its European ammonia output capacity as record-high gas prices are hurting its production.
Yara trades about one-third of the world’s ammonia, which is used in fertilizers, but also relied on in industries such as automotives, textiles, healthcare and cosmetics. The company, which said it will curb output at a number of plants, produces ammonia in Europe at sites in the Netherlands, Germany, Norway, Italy, France, U.K. and Belgium.
Fertilizer prices jumped in the past year as a crop rally helped farmers boost purchases. They’ve been further supported after Hurricane Ida struck the heart of the U.S. fertilizer industry and Storm Nicholas threatened more damage in the Gulf of Mexico. Higher nutrient costs risk exacerbating global food inflation at a time when hunger is on the rise, particularly in poorer nations.
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