A major food producer in the Netherlands is to pause processing for a six week period due to escalating energy costs.
Dutch company HAK is one of the largest processed vegetables producers in northern Europe, but the process is energy intensive and the company announced this week that the energy crisis means they will close for six weeks in January to deal with high costs and uncertainty.
“With current energy prices, it is not feasible to continue production in winter,” the company said.
“It’s not just the high price, but also the uncertainty,” said managing director Timo Hoogeboom. “We plan the break at a time when the harvest season is over and there are no more fresh vegetables coming from the land. We can plan the other products such as dried legumes more flexibly and then produce them.”
It is unclear whether staff at the company will be obliged to take compulsory leave in January and February or what the shutdown will cost the company.
Hoogeboom hinted at at extension of some sort of shutdown, according to Euro Weekly News.
“Our applesauce has already become about 20 cents more expensive. If energy prices stay this high, you have to think that products across the board will become 30 per cent more expensive,” he said.
“For a 1.80 euro jar of applesauce, it will then soon become about 2.20-2.30 euros. If it is no longer possible to pass on higher energy prices to consumers, the availability of products may eventually also be compromised, he added.
The HAK managing director said that “If companies have to sell below cost for months on end, things will go wrong.”
He acknowledged that might lead to empty shelves for consumers.
“But for the chain, I don’t rule it out, especially in January, February and March.”
He was one of many calling for a cap on energy prices, and the Dutch trade association for the food industry, the FNLI, has already issued a warning that more and more companies in the Netherlands fear that they will have to halt food production because of high energy prices.
Last month, the Federation of German Industries (BDI) said the economy is experiencing a dramatic drop in output because of energy costs.
Food security concerns have led to the IFA calling for farmers to be excluded from a proposed extra charge on energy when used between the peak times of 5:00p.m to 7:00p.m.