The energy crisis that is threatening food and drink businesses
11 August 2022
There has been several media reports in recent weeks on energy prices going up, the price-cap on consumer bills increasing and the scenario planning that the National Grid is undertaking ahead of its Winter Outlook publication in October.
- News & media
Soaring energy prices are having a significant impact on food and drink businesses and many of our members are extremely concerned about the impact rising prices will have – both for the cost of production into the autumn and winter period – and the viability of the supply chain and wider UK food security. Energy suppliers are offering fewer fixed term contracts, some are not taking on new business customers, further adding to the cost and uncertainty you are facing.
To date, our conversations have centred on the National Grid, BEIS, Cabinet Office, and Energy UK in terms of supplier action. Other than very general discussion with many of our members around autumn and winter preparedness, Defra has not been engaged directly in this work with manufacturers or retailers. The FDF is now pressing government for a more joined up discussion on the concerns of food and drink manufacturers.
Scenario planning by the National Grid will feed into government discussions and includes looking at the impacts from the very worst-case scenario of a gas emergency. Our understanding is that in the event of gas supply disruption, the first sites affected would be those connected to the National Transmission System – National Grid notes none are in the food and drink sector. If system balancing is subsequently required at the regional level, then it would be sites with a registered annual gas demand of at least 25,000 therms that would be approached. We believe (subject to confirmation) that this minimum threshold would exclude many if not most food and drink manufacturers.
Chief executive of the the FDF Karen Betts has provided the following comment to media which we will keep under review:
"The soaring costs of energy are putting food and drink manufacturers under extreme pressure, with no price cap on the energy that businesses use. Energy prices have been rising steeply for over a year, making food and drink more expensive to produce and putting further pressure onto UK households through higher prices in the shops.
"Manufacturers are all looking at where they can make efficiencies to reduce their energy consumption – but there are limits. There are further conversations to be had with government as we approach the autumn on how they can best support manufacturers and producers, as a critical part of UK food security."
In the meantime, we continue to work with Government, National Grid and Energy UK, and on a communications programme for our members to provide information directly and an opportunity for Q&A. This includes a National Grid webinar on 8 September.