Shoppers could face gaps on supermarket shelves this Christmas despite government assurances that the festive season is “safe” from labour shortages and surging enrgy prices, food industry bosses have said.
“Our members are telling us they are weeks behind with Christmas preparations, they are really not optimistic about being able to deliver,” said Nick Allen, chief executive of the British Meat Processors’ Association.
Mr Allen said an ongoing labour shortage had not been resolved and he questioned government claims that a deal reached to protect supplies of CO2 would be enough to ensure stocks of meat remained strong.
CO2 is used for stunning animals before slaughter and keeping produce fresh, making it vital for the meat industry.
The consequences of running out of CO2 would have been “absolutely unthinkable” for animal welfare and for the food supply chain, Mr Allen said.
However, the issue had been a “very unwelcome distraction” from much more urgent concerns about an ongoing lack of workers.
“It’s a really serious problem. That’s what is going to cause the shortages on the shelves.”
The British Poultry Council said producers had “breathed a sigh of relief” that CO2 would now be available, even if prices will be far higher.
“But we are only back to where we were a week ago,” a spokesperson said. “Issues around labour are still going on. Major food companies are saying we are in the worst position we have ever been in.”
The BPC estimates there will be 20 per cent fewer turkeys to go round this Christmas.
The BMPA and BPC were among 12 food and drink trade bodies that signed a letter this week calling on the government to urgently introduce a Covid-19 recovery visa so they can recruit staff from abroad.
The letter reads: “Without it, more shelves will go empty and consumers will panic buy to try to get through the winter.
“That is why we must have an urgent commitment from you to enable the industry to recruit from outside the UK over the next 12 months to get us through the winter and to help us save Christmas.”
Food companies are calling for one-year visas that would enable companies in the supply chain to recruit for critical roles. They also want a commitment to a permanent, revised and expanded seasonal worker scheme for UK horticulture.
On Thursday, the labour shortage caused some petrol forecourts to run out of petrol, with BP and Tesco forced to shut down some sites and ration fuel.
BP will restrict deliveries of petrol and diesel to its forecourts to ensure supplies do not run out.
BP‘s head of UK retail Hanna Hofer described the situation as “bad, very bad” and warned the government it was important it understood the “urgency of the situation”.
It came as experts warned that the UK’s gas supply crisis looks set to continue for months, with little sign of a fall in record-high gas prices that have threatened supplies of fresh food, forced steel plants to halt production and left 1.5 million gas and electricity customers in limbo after their suppliers went bust.
Graham Freedman, principal energy analyst at Wood Mackenzie, said prices were likely to remain high throughout the winter.
“There are a lot of question marks around supply. I don't think there is any prospect of prices dropping dramatically. It’s very unlikely that they will go back towards historic norms in the next few month.
“The basic dynamics of the market are not changing.”
One thing that could help alleviate the situation is if UK production which has gone offline for necessary maintenance was brought back online, Mr Freedman said.
There is also the prospect of Russia – Europe’s most important supplier of gas – boosting supplies.
“We think there will be some flows through the new Nord Stream 2 pipeline from Russia before the end of the year. The question is, how much spare capacity does Russia have. We don't think Russia is holding back that much supply.”
Publicly quoted prices show that natural gas for delivery in October is at £181 per therm, down slightly on the record price reached on Monday but still well above normal levels. The November price is £186, December £188 and January £189. Prices are not expected to fall significantly until April next year.
UK Steel, an industry trade body, warned that sustained high prices for gas and further spikes could bring a winter of temporary shutdowns as plants become unviable.
Spokesperson Frank Aaskov said some firms had been forced to halt production temporarily last week and early this week because prices for gas surged to 50 times their normal level. For short times, the price spikes to £2,500 per Megawatt hour, compared to an average of £50 per MWh last year.
“The cost of producing steel effectively doubled at those times,” Mr Aaskov said. He added that UK steel plants risk losing out to competitors in countries like France and Germany where gas price increases have been smaller.
One producer, British Steel, said: “These colossal, unprecedented rises make it impossible to profitably make steel at certain times of the day. And with winter approaching, when demand will rise, prices could get significantly worse.”
“We’re maintaining production at normal levels but huge extra costs like these can’t simply be absorbed or ignored.”
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