A shortage of toilet paper? Understandable. Computer chips? I guess. But why baby formula? Americans are now facing a shortage of baby formula. With 40% of formula supplies being out of stock nationwide. And there are three main factors responsible. These include a recall, COVID 19, as well as American trade policy.
Baby Formula Recall
Abbott Laboratories is the leading manufacturer of baby formula within the United States. It is responsible for producing up to 25% of the nation’s baby formula. However, a manufacturing facility in Sturgis, Michigan was shut down. Occuring after production linked to the death of two babies due to bacterial infections. Following the shutdown, a recall of infant formula was established. Combined with the issues nations face related to production and supply chain, aggregation was followed by a shortage.
COVID 19 and the Supply Chain
It’s no secret that COVID caused a discrepancy in the supply chain. Imports and exports were disrupted. This led to a ripple effect with jobs as well as supplies, among many other things. At the start of the pandemic, parents hoarded the formula, causing demand and sales to decrease. Companies had to reevaluate the market size for their product. Seeing the demand for the formula decrease caused them to cut back on production. At the same time, early 2022 brought an increase in birth rates, as well as a decline in breastfeeding. A decrease in production and the uptick in birthrates led to demand outpacing supply.
US Trade Policy
Now, why can’t the United States import baby formula from Europe? US Trade policy and FDA regulation are so technical that European formula is labeled illegal. However, studies have observed that many European formulas might be better than American formulas. This is due to Union bans on certain sugars. Additionally, a tax imposed by Donald Trump during his administration surged as high as 17 percent. Thus discouraging formula imports from the US’s largest trading partner, China.
The Future of Formula
Fear not, as the Biden Administration is focused on expanding domestic manufacturing of formulas to meet demand. Additionally, Abbott has stated that the facility in Michigan could restart within two weeks. Only needing another period of eight weeks needed before products are available. The FDA also plans to implement processes to make foreign companies have the ability to sell formula products in the US. However, a new issue arises. The US baby formula market is run by four primary companies – Nestle, Abbott, Perrigo, and Mead Johnson Nutrition. These companies account for about 90 percent of the market. The recent microscope on the issue of baby formula leads people to call for federal action.
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