Soaring energy bills in Europe are causing a wave of shutdowns at major fertilizer plants across the continent, leading to disruptions to farms, food processors, and even manufacturers beer production.
On August 26, the world’s largest fertilizer company Yara, based in Norway, announced a 50% cut in production of nitrogen and urea made from ammonia in Europe, citing “record high costs”.
The decision comes less than 24 hours after Britain’s largest fertilizer plant CF Fertilizers said it would “suspend production” at its Billingham plant. Two other major fertilizer producers in Poland also announced the suspension of operations at the beginning of the week.
Fertilizer is not only important in enhancing soil fertility, but its production produces a by-product, CO2, which is used to add beer and soft drinks to hospitals. surgery and permit humane slaughter (CO2 is used to stun pigs and chickens before slaughter).
As a result, farmers, food producers and even pub owners are extremely worried about the larger impacts that are about to erupt from the fertilizer crisis.
Carlsberg Polska, the third-largest brewing company in Poland and a subsidiary of the Danish multinational group, said it plans to stop brewing beer almost immediately – and brewers It’s also hard to avoid it.
“Few people realize that CO2 is a by-product of fertilizer production. And it cannot be stored for long periods of time, so we only have a few days of stock left,” said Carlsberg Polska, a spokesman for Carlsberg Polska. “We will stop brewing now, but we are not the only ones. Unless they have the means to produce their own CO2, most beer companies have to do the same.”
The energy-intensive fertilizer sector was one of the first European heavy industries to cut output amid the deepening energy crisis.
Jacob Hansen, head of fertilizer industry lobby group Fertilizers Europe, said that rising gas prices, which industry observers fear will remain high until at least the end of the year, are causing for the maintenance of fertilizer production is “impossible”.
The closure of fertilizer plants has raised concerns across many food and beverage sectors. Minette Batters, President of the UK’s National Farmers Union, said the closure of Britain’s largest fertilizer plant was “extremely worrying”. The fertilizer market “plays an important role in maintaining and enhancing food production in the country,” she added, and urged the government to rethink the sustainable supply of CO2 products.
Britain’s brewing industry said the timing of the closure of fertilizer plants “couldn’t have been worse” and “could lead to a nationwide beer shortage”.
Emma McClarkin, Chief Executive of the British Beer and Pub Association said: “Our pubs and brewers are facing severe difficulties and pressures on their supply chains. This decision raises serious concerns for a sustainable CO2 supply.”
Energy prices hit a record high, causing many fertilizer plants to close or cut output. Photo: Reuters
Brewers and pubs are both facing “tremendous” energy costs, which threaten to close and affect livelihoods across the UK, she warned.
Polish Minister of Agriculture Henryk Kowalczyk said on August 26 that he was working on a plan to help fertilizer producers buy gas at a reasonable price. “We’re working on this. Right now, I don’t want to talk about the details, we’ve got some ideas there and we’re agreeing on some solutions,” Mr. Kowalczyk said.
To ease the pressure, the European Commission has proposed to temporarily suspend tariffs on key products for fertilizer production, which governments in the EU Council will discuss in September.
In the UK, CF Fertilizers parent company CF Industries has received a short-term bailout from the government, with a payment last September to cover three weeks of operating costs as energy prices rise.
Some UK businesses have diversified their CO2 supply through imports since the first crisis last autumn. As prices rose, other industries stepped in to capture industrial by-products and refine their own food-grade versions for sale. Last year, the Billingham factory supplied 60 per cent of UK supplies. They currently only offer 30%.
Nick Allen, Chief Executive of the British Meat Processors Association (BMPA), also said: “While we are in a much better position now than we were a year ago, the UK meat industry there are serious concerns” if CF Industries stops production.
CF Industries closed its plant in Cheshire in June, making the UK’s CO2 supply “vulnerable to whatever happens to the remaining Billingham plant”, Mr Allen said, adding, the UK meat processing industry has been “heavily reliant on overseas suppliers to make up the shortfall”.
Since late July, ammonia producers in Italy and Germany have also cut output, leaving European food and beverage companies scrambling to secure tight CO2 supplies.
Mr. Allen said that without an adequate supply of CO2 for humane slaughter, farmers are likely to face an animal welfare problem, as an increasing number of pigs and poultry cannot be accommodated sent for processing.