Pressure on food industry as carbon dioxide supplies tighten

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26th August 2022

Bite-sized business news from the UK and beyond

Good morning It's a bank holiday weekend (hurray!) — the last one before Christmas (boo!) Here's a timely guide of how to maximise your annual leave in 2023.

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Today's stories

Pressure on food industry as carbon dioxide supplies tighten
Why investors’ eyes are on remote American resort

INDUSTRY
Pressure on food industry as carbon dioxide supplies tighten

What happened?
Yesterday the UK’s biggest manufacturer of carbon dioxide, CF Industries, announced it would halt production amid rocketing energy prices.

CO2 is a crucial input in many areas of the food and drink industry from creating fizzy drinks to preserving the shelf life of food and stunning animals before slaughter. CF has large fertiliser plants in the UK that produce carbon dioxide as a by-product of production.

We’ve been here before
Last September CF shutdown operations at two sites after rising natural gas prices meant it became too expensive to run them. The government then stepped in with tens of millions of taxpayer cash to ensure the company could continue production.

This time round the government said it was looking at options to secure CO2 production but that “since last autumn, the CO₂ market’s resilience has improved, with additional imports, further production from existing domestic sources and better stockpiles”. This has led many to believe it won’t be bailing out CF like it did last year.

Food and drink manufacturers are calling for more support. The industry is already facing surging energy bills and supply chain issues that threaten to put many companies out of business.

Zooming out: There are carbon dioxide shortages across Europe. Producers in Norway, Italy and Germany have also cut production, forcing firms to compete for more limited supplies across the continent.

Other stories to keep you in the loop

Government to review Czech billionaire's plan to increase stake in Royal Mail
Peloton shares plummet after quarterly losses top $1.2bn
Heinz UK workers receive 11% pay rise and three extra days off at Christmas
Lidl and Waitrose to sell ‘wonky’ UK fruit and vegetables amid drought
Train commuter rewards scheme to end this month
Shell fined £536k for overcharging retail energy customers
Train drivers at three more operators vote to strike
Citigroup to close Russian bank
Deezer loses 300k subscribers after rocky market debut

ECONOMY
Why investors’ eyes are on remote American town

What happened?
Today financial markets will be closely watching the Federal Reserve's annual meeting aka policy symposium in Jackson Hole, Wyoming.

Every year, the US central bank hosts the biggest names in global economics and policymaking in a resort in outskirts of the small American town. This year’s event will be the first in person meeting since 2019.

What’s the purpose?
They discuss what they see as the most pressing issues in economics and interest-rate policy. And when the who’s who of economics get together to talk shop for three days, investors pay close attention.

Jerome Powell, the head of the Federal Reserve, is the keynote speaker later today where he’ll discuss his plans for interest rates in the world’s biggest economy. His counterpart at the Bank of England, Andrew Bailey, will also be delivering a speech.

Like the UK and Europe, the US has been grappling with decades high inflation and the Federal Reserve has hiked rates at a pace not seen since 1981 to slow down prices.

But central bankers are facing the dilemma of raising the cost of borrowing to tame inflation - when economies are showing signs of weakness - which could tip countries into a recession.

There is a chance that Powell will commit to another large rate hike, but experts say stock markets could bounce if he delivers a less aggressive message.

Zooming out: Investors and economists are looking to get a sense of the path forward for interest rate increases amid a fragile global economy. As the world’s most influential central banker, Powell’s comments have the power to either rally or discourage stock markets.

Stat of the day

A third of pensioners have given money to their family or friends in the past six months, with those helping their grandchildren giving an average of £15,000

Interesting links from around the web

7 signs you’re in a toxic work environment – and what you can do about it
Your doppelgänger is out there—and you might share DNA
6 ways to reduce gas consumption

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rising natural gas prices remote American town Bitesized business news bank holiday weekend remote American resort large fertiliser plants existing domestic sources carbon dioxide supplies CF shutdown operations

Pressure on food industry as carbon dioxide supplies tighten

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