Britain's leading supermarket supplier has termed the shortage of carbon dioxide as a 'national security issue', media reports said.
Ranjit Singh Boparan, whose 2 Sisters Food Group provides poultry to M&S and Tesco, added that UK's food security is 'under threat' due to the crisis, the Mirror reported.
He also urged the government to take immediate action to resolve the issue.
According to Boparan, a key food industry CO2 supplier has threatened to increase prices up to 20 times from current levels after a rival said it will halt production.
Recently, CF Fertilisers, one of the UK's biggest producers of CO2, has announced that it stops production at its remaining UK ammonia plant in Billingham, near Middlesbrough, as the production is not viable due to soaring energy costs.
Two years ago, the government finalised an urgent supply agreement to ensure production of CO2 when CF first stopped production.
Carbon dioxide is a by-product from the production of ammonia. It is used to stun chickens for slaughter.
Boparan warned that the latest shutdown could lead to a reduction in supply and cost increase which will eventually lead to price hike for customers.
His company processes more than 10 million birds a week, and now faces a £1 million-a-week increase in the cost of CO2.
"This is a price shock just like we've seen with energy and all companies and households are feeling the pain right now," Boparan was quoted as saying in the media.
"What is very sad is that it's the UK shopper who will ultimately pay the price and CO2 suppliers are, in effect, holding consumers hostage. Once again, UK food security is under threat, the shopper loses, and we simply have no choice other than to pay to keep supply."
CO2 is also used in the food production industry, within packaging to extend shelf-life, and in refrigeration. It is used for pig and poultry production, as well as in brewing and making carbonated drinks.
Boparan said: "I'd like to see an acknowledgement of the problem and action to regulate the CO2 market, or at least consider price capping. It really beggars belief when such a key infrastructure operation can arbitrarily decide to switch off the taps because of price inflation. It is irresponsible and catastrophic for our sector."
Emma McClarkin, of the British Beer and Pub Association, has said that CO2 shortage could impact brewers and might lead to a shortage of beer in UK, adding that there are 'serious concerns about the sustainability of the supply of CO2'.
A government spokesperson has said that it is engaging with businesses across the food and drinks industry to understand potential impacts of the crisis.
“We are aware that CF Fertilisers has taken the decision to temporarily halt ammonia production Billingham. Since last autumn, the CO2 market’s resilience has improved, with additional imports, further production from existing domestic sources and better stockpiles," the spokesperson said.
“While the government continues to examine options for the market to improve resilience over the longer term, it is essential industry acts in the interests of the public and business to do everything it can to meet demand."
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