The UK’s largest bioethanol producer has warned it may be forced to shut down within days unless the Government intervenes.
Vivergo Fuels, which has a plant at Saltend Chemicals Park, near Hull, has written to wheat growing farmers in its supply chain to inform them that wheat purchases will be scaled back from next month to meet only existing contractual obligations. The company says that, without Government action, the plant will no longer be viable, and wheat purchases will have to end.
Bioethanol is used as a renewable alternative to fuels such as petrol and diesel. It is a plant-based material that is produced by fermenting and distilling crops such as wheat and corn.
The US-UK trade deal announced earlier this month included the removal of the 19 per cent tariff on ethanol imports from the United States. Vivergo Fuels claims UK firms will struggle to compete with imports from the US.
Vivergo Fuels has warned of the side effects the collapse of the UK’s bioethanol industry could trigger, saying it would leave the UK reliant on foreign markets and potential supply disruptions caused by weather events. It also warns the firm’s potential closure would heavily impact on the wider supply chain including its wheat growing partners.
Vivergo Fuels managing director Ben Hackett has written to suppliers explaining the difficulties the plant is facing. Mr Hackett said: “This is not a position we ever wanted to be in. This plant supports skilled jobs, a major regional supply chain, and provides a critical domestic market for British farmers growing non-food grade wheat, which is not destined for milling to make bread or pasta.
“We have asked Government to increase domestic demand for bioethanol through a simple change to regulation, and for the short term and affordable support we need until that demand materialises. So far, nothing has been forthcoming.
“The removal of tariffs on US ethanol, combined with ongoing regulatory obstacles, has left us unable to compete on a level playing field. As a result, we will have to scale back wheat purchasing to meet only our current contractual commitments.
“We still believe this situation can be turned around – but time is rapidly running out. With the right Government action in the coming days we can save a vital green industry and protect thousands of livelihoods.”
Responding to Vivergo Fuels’ concerns, a Government spokesperson said: “We signed a deal with the US in the national interest to secure thousands of jobs across key sectors. We are now working closely with the industry to understand the impacts of the UK-US trade deal on the UK’s two bioethanol companies and are open to discussion over potential options for support.
“The Business Secretary has met members of the bioethanol sector and senior officials continue to consider what options may be available to support the impacted companies.”
By: Andrew Spence, LDRS
