If CO 2 shortages remain serious enough , it could also have negative impacts on health , safety and medical concerns .
CONTRIBUTORS
INCORPORATING COLD CHAIN
What ’ s causing the CO 2 shortage and how to remedy it
John Bell of University of Tennessee , Knoxville ’ s Haslam College of Business
If CO 2 shortages remain serious enough , it could also have negative impacts on health , safety and medical concerns .
One of the prevalent supply chain themes of 2023 has been the shortage of carbon dioxide , a compound that in itself is tasteless , odourless and colourless and yet is a core ingredient in the food and beverage industries . The brewery industry , in particular , relies on CO2 for the carbonation of its beverages and has been struggling to keep up production due to the shortage . But the implications of this shortage go beyond just not being able to enjoy your favourite beverage . If CO2 shortages remain serious enough , it could also have negative impacts on health , safety and medical concerns , making it all the more imperative to understand the causes of the shortage and implement measures to mitigate the problem .
CAUSES OF THE SHORTAGE At its core , the shortage of CO 2 is largely a result of what has caused other supply chain disruptions in recent years : a mismatch between supply and demand . It ’ s also important to remember that most of the CO 2 bought and sold on the market is a by-product of other processes and industries , namely ethanol and ammonia production , oil refineries and geological sources such as extinct volcanoes . Together these make up the four primary sources that are EPA-certified .
Now , take ammonia . As mentioned , CO 2 is a by-product of ammonia production , which itself relies on natural gas . With high gas prices and the disruption of the gas supply coming from Russia , much of ammonia production was shut down . The production of ethanol , another primary source of CO 2
, was also greatly reduced during the pandemic due to diminished demand caused by the stay-at-home orders . As if this weren ’ t enough , CO 2 reserves provided by an extinct volcano in Mississippi became contaminated , further exacerbating the CO 2 shortage . At the same time , the summer months traditionally lead to a surge of the beverage industries ’ demand for CO 2 due to increased beverage consumption by consumers . The record-breaking heat waves in particular further added to that higher consumption and demand . It ’ s not hard to see how the sum of all these factors could lead to a perfect storm of increased demand in the face of severe shortages , resulting in businesses scrambling to try and meet their customers ’ demands .
NOT JUST BEER AND SODA If shortages only affected the production of beverages like beer and soda , that would be one thing , but they impact agriculture and food manufacturing as well . In agriculture ,
CO 2 is used to support plant growth and pest control . In food manufacturing , it is used — both in its gaseous form and in solid forms via dry ice — for the production , packaging and transporting of many staple food products such as fresh meat , cold cuts , frozen foods and baby foods , the latter of which had already been suffering a shortage due to a myriad of factors . CO 2 also helps extend the shelf life of food and keep it fresh , an issue that becomes particularly important during the summer months , all of which is why large food companies have been desperately racing to procure enough to keep their supply chains running .
CO 2 shortages can also have some potentially serious consequences for medicine and public health . As many may remember , the rollout of Pfizer ’ s COVID-19 vaccine ran into some challenges in 2020 due to a shortage of the dry ice needed to transport the medication . Of course , in emergency situations such as these , whatever CO 2 is available would be necessarily prioritised for medical purposes since lives are at stake , but this also means additional strain on the food , beverage and other industries that also rely on CO 2 for their processes .
SOLUTIONS FOR THE CO 2 SHORTAGE
While simply paying exorbitant prices for CO 2 and passing them on to customers might be feasible in the short term , it ’ s clearly not sustainable . Fortunately , there are measures that can be taken to improve the situation .
First , brewers and food producers need to understand where their CO 2 is coming from . A common practice in the food and beverage industry is to source with a supplier that ’ s as geographically close as possible because shipping is expensive . With food and beverage , it ’ s also necessary to monitor the quality of storage and shipping in order to maintain freshness and prevent spoilage , which also adds to the costs . For these reasons , food and beverage manufacturers generally like to source locally and this leads to a tendency to rely on a single source . Well , this works fine enough until there is a crisis .
Manufacturers who relied on the volcano in Mississippi as their sole source for CO 2
, for example , were sent scrambling for new suppliers when the volcano ’ s reservoir of
CO 2 became contaminated . But without second or third suppliers already in place , any disruptions of this scale take longer to recover from , and manufacturers will either find themselves getting shut down overnight or paying extremely high prices for the CO 2 they need to prevent their product from getting wasted .
Aside from having visibility — knowing where your material is coming from and what the different price options are — one should also put risk management and contingency plans into place , and have them in place before disruptions occur ,
Doug Kelley / Unsplash Matthias Heyde / Unsplash not after . Trying to figure out if suddenly switching to a secondary or tertiary supplier is going to alter the quality or flavour of your product , for example , is not something you want to be doing in a panic at midnight . It would therefore be wise to cultivate relationships with backup suppliers , even if they ’ re more expensive , by giving them some of your business in advance . It ’ s easy to forget that much of resilient supply chain management is simply about cultivating relationships during non-crisis times so that when a crisis hits , you are already positioned to adapt . And while your backup suppliers may be slightly more expensive , it would be worth investing the expense in the short-term to avoid even more exorbitant costs in the long term when left without a supplier and paying ridiculously high prices just to procure any CO 2 at all ( as some food and beverage companies have indeed done ).
INVESTING FOR THE LONG TERM Finally , for the brewing industry specifically , the ideal long-term solution would be to invest in CO 2 recycling equipment , which would make it possible to rely less heavily on third-party supplies since you ’ re essentially recreating your own supply . The challenge with this solution is that it would
One of the prevalent supply chain themes of 2023 has been the shortage of carbon dioxide , a compound that in itself is tasteless , odourless and colourless .
In agriculture , CO 2 is used to support plant growth and pest control .
be very expensive in the short term and therefore may not make business sense for start-up breweries that only make very small batches . However , companies that have been around for several years and are experiencing steady growth would do well to at least consider this option . Ultimately , this would be the best long-term solution because even secondary and tertiary suppliers can suddenly become unavailable in a large-scale disruption . But it does require forgoing some short-term profits now since such technology can easily cost tens or hundreds of thousands of dollars .
Brewing good beer is often like an art , while effective supply chain management is more of a business and a science . Unfortunately , very talented artists are not always equally good at business or science as they are at their craft . Yet as the recent
CO 2 shortage has shown , lack of foresight and planning on the business side can have detrimental impacts on the artistic dimensions of brewing and other related food and beverage industries . Applying strategies to prevent this from happening , therefore , is one of the best ways to honour the artistry and craftsmanship that goes into the making of these products . CLA
This article is sourced from Food Logistics
30 www . coldlinkafrica . co . za COLD LINK AFRICA • June 2023