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The energy crisis in Europe threatens the food industry

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The energy crisis in Europe threatens the food industry

From German tomatoes to Swedish bread. energy crisis in Europe now it threatens the survival of industries that are far from its most obvious victims, such as housing and communal services, on the one hand, and the most energy-intensive enterprises, on the other. In fact, the impact on food and beverage stocks is expected to worsen as temperatures drop and households need to warm up, forcing businesses and consumers to make difficult decisions. Brewery Huyghe, which produces Delirium Tremens beer in a Belgian countryside, was considering shutting down production when the price of the liquid carbon dioxide (CO2) it uses for foam rose 13 times. She now hopes that the court, whose decision is expected on Wednesday, will dismiss her supplier’s force majeure claim. “I have enough carbon dioxide to last the day before a decision is made,” Alain de Laet, owner of the family business, told Bloomberg when looking for a last-minute alternative. “I may have to stop production until I find an alternative design, and this will be the first time since 1906.”

The problems of the Belgian brewery are the result of a series of misfortunes that show that in European economy everything is connected to each other. Norwegian fertilizer giant Yara International has stopped ammonia production at its plant in the Netherlands. This, in turn, hurt Huyghe’s supplier Nippon Gases, which raised the price of carbon dioxide from €250 to €3,350 per tonne. And Hugh is not alone. Major brewer Carlsberg has said it may have to significantly cut or even halt beer production in Poland due to shortages of liquid carbon dioxide. Several more Belgian breweries have been affected by the situation, and fears about the spread of the crisis are growing. “A few months ago, the industry was running like clockwork,” Crishan Montgal, head of the Belgian Brewers Association, told Bloomberg. “Due to the new situation with rising natural gas prices, problems have spread along the chain.” Ammonia, produced from natural gas, is an industry that has been hit hard by reduced flows from Russia. Several factories have closed, leaving at least half of Europe’s production capacity unusable. The consequences are serious for the fertilizer industry, as well as for carbon dioxide, which is a by-product of the manufacturing process.

A one-second power outage affected the production of the Swedish bakery Pagen for 4 weeks.

Carbon dioxide is critical to the food industry. It is used to anaesthetize animals before slaughter, in packaging to extend the shelf life of products, and in dry ice to keep food frozen during transport. For Wittenberg Gemuese, which produces tomatoes, strawberries and peppers in Germany, ammonia production problems mean it lacks the heating and hot water it needs to run its greenhouses. The German company relies on SKW Piesteritz for both heating and carbon dioxide, but found itself in the air when Germany’s largest ammonia and urea producer shut down production last week. “Nothing works here without heating,” says Kevin van Eyperen, director of the massive manufacturing complex. “We were lucky because last week the temperature was moderate. If it had happened later that year, we would have suffered huge losses.”

Finally, in Sweden, Pagen, one of the country’s largest bread producers, warns of the risks the sector is facing due to rising energy prices as well as power outages. A one-second power outage in June affected Pagen’s production for four weeks, said Berit Apelgren, chief communications and sustainability officer, explaining that any repeated power outages would have unimaginable consequences.

Author: BLOOMBERG

Source: Kathimerini

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