Industry sources have warned that shoppers could end up paying more their meat as manufacturers are facing a sharp rise in costs for carbon dioxide (CO2).
The government struck a deal on Tuesday with CF fertilisers which is a part of a US-owned CF industries which will see CO2 return on Thursday.
An executive at a major meat supplier told the PA news agency that his company will have to fork out an extra £1m every month in costs due to the soaring prices.
Environment, Food and Rural Affairs Secretary George Eustice warned companies will have to accept the steep rise in costs of CO2, which could jump fivefold from £200 to £1,000 a tonne.
But despite the fivefold increase Eustice insists that there will be no “major impact on food prices,” for shoppers.
The executive at a major meat supplier said, “They have mentioned a sharp potential price rise and we use 600 to 700 hundred tonnes a week, so that’s probably going mean more than a £1 million extra a month.
“We are still finding out exactly what prices will be and are due to have conversations with retailers now, but a jump like that is obviously going to be a bad thing for consumers in the long run.
“Suppliers can try to take some of that but there is so much pressure elsewhere and the margins are so tight.”
The executive said that his firm has around a week of CO2 left so believes empty shelves will be avoided, assuming the supply is restarted without significant further disruption.
The British Meat Processing Association (BMPA) also echoed the warning that CO2 price shifts could “prompt price distortion in other markets.”
A spokeswoman for the BMPA said, “Yesterday’s announcement that the Government has secured a deal with CF Industries to reopen one of their fertiliser plants comes as a huge relief in the short term and will allow meat producers to continue their operations beyond next week.
“But, we do not underestimate the challenge that faces us over the next three weeks.
“If we are to return to a normal functioning of the CO2 market, there will need to be some complex discussion on how to re-negotiate and restructure CO2 supply and pricing in the UK.”