MARKET NEWS

(Bloomberg) -- The UK has drawn up plans to prepare for potential food disruption as the Iran conflict causes a drop-off in supplies of carbon dioxide used widely in the industry.

In a “reasonable worst-case scenario,” officials don’t foresee aisles of empty shelves but do expect a lack of product variety in shops if the Strait of Hormuz — the key waterway in the Gulf where trade has all but ceased since the war erupted — has not reopened by June.

Carbon dioxide, or CO2, is vital for the food industry because it’s used in packaging, brewing, fizzy drinks and the slaughter of animals such as pigs and chickens. It’s also critical for Britain’s health care sector — where dry ice, a solid form of CO2, is used to cool blood supplies, vaccines and transplant organs — as well as civilian nuclear production.

The scenario planning, codenamed “Exercise Turnstone,” was carried out by the government’s emergency committee, Cobra, according to a report in The Times on Thursday, confirmed by Business Secretary Peter Kyle.

“Now this information is out there, I hope people are reassured that we’re doing this work,” Kyle told Sky News. “You should expect government to be doing these sorts of things.”

Kyle said his decision in the early days of the Iran conflict to temporarily restart the mothballed Ensus bioethanol plant in northeast England had shored up the country’s CO2 supplies. The factory is now running at full production, he added.

“These are the things that have been going on: it hasn’t been public, but I’ve been working very hard when it comes to resilience,” Kyle said.

Tesco Plc, Britain’s biggest grocer, said Thursday that it’s working with the UK’s Department for Environment, Food & Rural Affairs, and other government divisions, on all of their scenario planning. The supermarket said it’s not seeing any food supply risks currently.

“We have a very strong sourcing team that spend a lot of time scenario planning, looking at weather patterns, demand patterns, shipping issues, whatever it may be, to make sure that we head off any issues well ahead of time,” Tesco Chief Executive Officer Ken Murphy said on a media call following the release of its annual results. “That’s a pretty well developed model and something that we’re absolutely continuing to do as we head into the summer.”

Murphy did warn that while Tesco’s not seeing any “meaningful inflation coming through” other than rising fuel prices “much will depend on the length of conflict and impact on households.”