Associated British Foods said the market for gas is not operating as intended, as it

complained of rising energy prices at its Annual General Meeting on December 9.

Chairman Martin Adamson said the market for gas had “simply failed to operate in the way intended”.

He commented: “For example, last week, despite sharply higher prices, the main gas pipeline from Europe operated at substantially below capacity and stocks consequently reduced further. If supplies to the industry had failed, this would have had serious consequences for the industry and customers alike.”

The company, which operates businesses including AB Mauri, British Sugar and Allied Bakeries, said overall trading in the early part of the current year has been a little ahead of the previous year. But competition in all ABF markets is strong and the current trend in energy prices is a particular concern, said Mr Adamson.

ABF spent a total of £1.5 billion on renewing plant and machinery over the year, expanding capacity and buying new businesses. Some £733m was spent on acquiring new businesses, of which the major part was in the yeast and bakery ingredients business that is now trading as AB Mauri.

Mr Adamson also referred to the proposed reform of the EU sugar regime as he made his presentation to sharehol-ders. An agreement, reached by the Council of Ministers on November 24 in Brussels, is welcomed by British Sugar, as it is one of the most efficient producers in the EU, he said.

“We envisage a continuing successful role for British Sugar which will be supported with investment, where appropriate, as it adapts to the new environment,” he commented.

The outcome is expected to be slightly better at the end of the period of transition than the £40m reduction in profit, which was estimated in June 2005 in response to the Commission’s first proposals, he said.

Trading in the current year for British Sugar UK and Poland has been difficult, added Mr Adamson.

“We expect volatility to continue during the transition to the new EU regime. We continue to work on cost reductions in both the UK and Poland and the exploitation of new revenue opportunities including the manufacture of bioethanol in the UK,” he concluded.