Lorry driver at night

Chancellor Jeremy Hunt has been warned there is a “significant risk” of food shortages and further inflation if the government fails to extend its energy bailout beyond the winter.

The Cold Chain Federation has written to the Chancellor, as well as new business secretary Grant Shapps, demanding reassurances that food will be treated as a “critical industry” in a forthcoming review of the scheme.

The government’s Energy Bill Relief Scheme will provide support to eligible organisations until 31 March 2023, but the federation said there was an overwhelming case for that to be extended. It warned of disruption to food and pharmaceutical supply chains, as well as a significant risk of further food inflation for products like meat, dairy, fruit and vegetables.

“Crucially, unlike other sectors, cold stores use significantly more energy in the summer rather than the winter to keep products cool, so the continuation of support beyond March 2023 will be vital,” said Cold Chain Federation CEO Shane Brennan.

With more and more cold chain businesses no longer being able to rely on forward-bought or hedged electricity, and massive increase in prices forecast well into 2023 and beyond, there are serious questions about the viability of some cold chain operations.

“We are urging ministers to provide reassurance that whatever government support is in place beyond March next year, the critical businesses in food and pharmaceutical supply chains will remain supported.”

Ian Gadsby, MD of energy specialist Ylem Energy, said: “The current scheme runs until the end of April with only the most vulnerable non-domestic customers continuing to receive support.

“As a result of Jeremy Hunt’s statement this is going to be a very small number of businesses essential to keeping the food industry and other key sectors running. Companies hoping for Covid-style support are in for a rude awakening.

“Businesses now have less than six months to reduce their energy consumption and look at ways of generating their own energy. Energy costs will be volatile and uncertain well into next year. So, businesses need to act now to develop an energy strategy and look at measures such as installing solar panels and other generation options.”

Such measures often take well over six months to deliver, so every day or delay is another day of avoidable costs for business.”

Rod Addy, director general of the PTF, added: “The energy review will need to recognise that food supply could be constrained if parts of the food chain are not protected.”