Side effects: Fuel demand crash shuts U.S. ethanol plants, meatpackers lack refrigerant

  • In Business/Economy
  • 2020-04-07 15:17:50Z
  • By By Stephanie Kelly and Tom Polansek

By Stephanie Kelly and Tom Polansek

NEW YORK/CHICAGO (Reuters) - A slew of U.S. ethanol plants have shut down as fuel demand has collapsed during the coronavirus outbreak, and meatpackers have been hit by a worrying side-effect: less carbon dioxide is now available to chill beef, poultry and pork.

"We're headed for a train wreck in terms of the CO2 market," said Geoff Cooper, president of the Renewable Fuels Association industry group. The RFA said 29 of the 45 U.S. ethanol plants that sell carbon dioxide, or CO2, have idled or cut rates. The U.S. ethanol sector is the top supplier of commercial carbon dioxide to the food industry, accounting for around 40% of the market, according to the American Farm Bureau Federation.

That has put the U.S. meat industry on high-alert. It uses carbon dioxide as a refrigerant and preservative for meat, and also uses the gas to stun animals before slaughter.

The CO2 crunch is the latest supply chain disruption threatening the food industry as it struggles to keep workers on the job during the coronavirus outbreak while meeting rising demand at grocery stores. [nL1N2BU1AH]

Cargill Inc [CARG.UL], the world's biggest supplier of ground beef, and chicken processor Perdue Farms said they are seeking to make sure they have enough supplies.

"We are working with our partners to ensure they understand that we offer an essential service to the world - providing the ingredients, feed and food that nourish people and animals - and maintain our supply," Cargill spokesman Daniel Sullivan said. He added that the company is aware of "potential shortages or limited allocations" in certain areas.

Perdue Farms has enough CO2 "for now" and back-up plans if supplies run low, spokeswoman Andrea Staub said.

But if shortages of carbon dioxide worsen, meat companies may not be able to produce food at regular rates, said Rich Gottwald, president of the Compressed Gas Association.

"If they don't have CO2, then it will slow their production of those food products," he said.

The North American Meat Institute, an industry group that represents processors like Tyson Foods Inc <TSN.N> and WH Group Ltd's <0288.HK> Smithfield Foods Inc [SFII.UL], said it was helping connect carbon dioxide suppliers with meat companies that anticipated possible problems obtaining CO2.

While supplies remain available, Veronica Nigh, a farm bureau economist, said some meat companies already were paying more for CO2.

"They're certainly feeling the impact of limited supply and the price that ends up translating to," she said on a conference call on Friday.

(Reporting by Stephanie Kelly in New York and Tom Polansek in Chicago. Additional reporting by PJ Huffstutter in Chicago; Editing by David Gregorio)


More Related News

From Vietnam to COVID-19, the Arrogance of Ignorance Keeps Killing Americans
From Vietnam to COVID-19, the Arrogance of Ignorance Keeps Killing Americans

On the morning of May 8, 1970, around a thousand mostly young people gathered at the junction of Wall Street and Broad Street to honor four students who had been shot on the campus at Kent State University four days earlier by the Ohio National Guard during a demonstration against Richard Nixon's escalation of the Vietnam War.Trump Has Failed, Let Bill Gates Take Over Virus ReliefI was in Lower Manhattan that day and watched as the streets became a battleground that foreshadowed the sort of political polarization in America that remains to this day.The student demonstration was disrupted suddenly by about 200 construction workers who materialized from nearby sites. Their response had...

As coronavirus deaths near 100,000, Trump makes America exceptional in all the wrong ways
As coronavirus deaths near 100,000, Trump makes America exceptional in all the wrong ways

Trump has transformed America well beyond COVID-19 and the economy. He's eviscerated transparency, accountability, accuracy and competence, for a start.

A 'new Cold War?' China blames U.S. for growing tensions

The ratcheting up of tensions comes as Beijing is hounded by questions over alleged missteps in its initial response to contain the virus.

U.S. Stock Futures Open Flat as Tensions Mount: Markets Wrap
U.S. Stock Futures Open Flat as Tensions Mount: Markets Wrap

(Bloomberg) -- Currency markets and U.S. equity futures saw a placid start to trading early on Monday as traders monitored more signs of economies reopening around the world against a deepening of tensions between the U.S. and China.The Australian dollar and the offshore yuan edged lower, though trading will be light with holidays in the U.S., U.K. and Singapore. The U.S. should give up its "wishful thinking" of changing China, Chinese Foreign Minister Wang Yi said, warning that American leaders are potentially pushing toward a new Cold War. All eyes will be on equities in Hong Kong, where riot police clashed with protesters marching against China's move to crack down on dissent. Stocks...

WHO official:
WHO official: 'I cannot imagine' U.S. pulling out of the international body

The official's comments come nearly a week after President Donald Trump sent a letter to the WHO threatening to permanently halt funding.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply


Top News: Economy