“Food Production To Come to a Halt” was the title of an article published by Le Figaro back in September 2022. Unfortunately, what seemed unbelievable for many yesterday, has become reality today. After heavy industries, such as the rare French zinc, aluminum and glass producers—hit by impossible energy price spikes and artificially kept alive government support—agro-food processors are now on the chopping block.
Yesterday, the French canned food specialist Cofigeo, which has a €300 million turnover, announced it will “temporarily” shut down 4 of its 8 factories in France as of Jan. 2, which represent about 80% of its production. Consequently, 800 of Cofigeo’s 1,200 employees will receive an agreement of partial activity of long duration (APLD).
The decision is a response to “the dramatic increase in energy costs (gas and electricity needed for cooking and sterilization of dishes), which will be multiplied by 10 from the beginning of the year,” said the group in a statement. “It will go from €4 million to €40 million overnight,” Mathieu Thomazeau, its president, told Le Figaro.
This is a lightning strike to the food sector, and other food groups could be in great difficulty in January. Everybody has warned it would happen, but the government refuses to listen. Already in September, Le Figaro reported that “After the prices of electricity and natural gas supplying dairies, sugar factories, and canneries in France have risen by 350% and 380% respectively in one year, the first cracks in the food industry are showing up.” At that time, dairy producers warned that power cuts could lead them to throw out milk. The giant French dairy industry Lactalis’ energy bill reaches €1 billion per year. For the Breton group Sill (Petit Basque, Malo), it has jumped 800% since 2021. In sugar factories, the fear of winter load shedding has led sugar producers to launch their sugar beet harvesting and processing campaigns earlier, even if it means sacrificing yields.
Besides soaring energy costs, the other worry is that production lines simply will grind to a halt for lack of products coming from farms. Drought has melted production of field vegetables (green beans, peas, etc.) by up to 50% this year. As a result, canneries that process and package them are now receiving only half of their needs. Already, some of them are only working three days a week. Enough to fear shortages on the shelves before the next harvest of 2023.
In recent days, the fragile balance of the sector has become even more tense, with major threats of disruption of fertilizers for the next crop year. European fertilizer factories have stopped production of 50% of their products and have severely limited their production of ammonia due to the prohibitive price of gas. That raises the threat of shortages for the coming winter. To avoid total collapse, many sectors (milk, meat) plead to be recognized as “trades of general interest” and be exempted from energy rationing.