“Is my baby getting enough food? It is a typical fear among new parents — and an acute one now, because of a national shortage of baby formula.” A New York Times report — The Baby Formula Crisis (https://www.nytimes.com/2022/05/13/briefing/baby-formula-shortage-us-economy.html, May 13, 2022) — begins in this way.
The New York Times report said:
‘A potential bacteria outbreak led to the February shutdown of a Michigan factory that makes Similac formula, and the plant still has not reopened. Its closure has aggravated shortages created by broader pandemic supply-chain problems. Last week, stores stocked about 43% less baby formula than usual.
‘“It gets really scary,” Carrie Fleming, who lives near Birmingham, Alabama, told The New York Times. Her 3-month-old daughter, Lennix, can tolerate only one brand of formula, and Fleming could not find it anywhere near her. She finally located four small cans in New York — for $245.
‘In Oceanside, California, north of San Diego, Darice Browning was recently despondent after failing to find formula for her 10-month-old daughter, Octavia, who cannot eat solid foods. “I was freaking out, crying on the floor and my husband, Lane, came home from work and he’s like, ‘What’s wrong?’” Browning said, “and I’m like, ‘Dude, I can’t feed our kids, I don’t know what to do.’”’
The report said:
‘For many families, baby formula is a necessity. Some babies cannot drink breast milk — or enough of it to stay healthy — while many lower-income mothers work hourly jobs that do not provide time to breastfeed.
‘As my colleague Amanda Morris, who has been reporting on the shortage, said, “Most of the parents I spoke with around the country who were feeling the impact of this the hardest were ones that either had limited resources or time, or ones whose babies had allergies or disabilities that severely limited their choices.”
‘Food and Drug Administration officials said they are trying to alleviate the crisis. Some members of Congress — including Rep. Rosa DeLauro, D-Conn., and Sen. Mitt Romney, R-Utah — say the federal government needs to do more.
The New York Times report said:
‘In addition to being an urgent problem for families, the shortage highlights four larger problems within the U.S. economy.
- The ‘everything shortage’
The pandemic has created shortages for many goods, including cars, semiconductors and furniture.
The main reasons: Factories and ports are coping with virus outbreaks and worker shortages at the same time that consumer demand for physical goods has surged, because of government stimulus programs and a shift away from spending on services (like restaurant meals). As a result, much of the global supply chain is overloaded.
The baby formula industry was already coping with these issues before an Abbott Nutrition factory in Sturgis, Michigan, shut down. The company shut the factory after four babies — all of whom had drunk formula made there — contracted a rare bacterial infection. Two of the babies died. It remains unclear whether the formula caused the infections.
Because sales of baby formula do not fluctuate much in normal times, factories generally lack the ability to accelerate production quickly, said Rudi Leuschner, a supply-chain expert at Rutgers University. As a result, other factories have not been able to make up for the Sturgis shutdown.
2. Big business
The baby formula business has something in common with many other U.S. industries: It is highly concentrated.
Three companies — Abbott, Gerber and Reckitt — make nearly all of the formula that Americans use. Abbott is the largest of the three, with roughly 40% of the market.
Over the past few decades, this kind of corporate concentration has become more common in the U.S. economy, and it tends to be very good for companies. They face less competition, allowing them to keep prices higher and wages lower. Thomas Philippon, an economist at New York University, refers to this trend as “the great reversal.” The subtitle of his 2019 book on the subject is “How America Gave Up on Free Markets.”
For workers and consumers, concentration is often problematic. The baby-formula shortage is the latest example. If the market had more producers, a problem at any one of them might not be such a big deal. It is even possible the problem would not happen at all.
“Abbott does not fear consumers will flee,” Sarah Miller, executive director of the American Economic Liberties Project, which advocates less concentration, told me. “And it does not fear government, which has a pathetic track record when it comes to holding powerful corporations and executives accountable.”
3. Big bureaucracy
Even as the industry seems to be under-regulated in some crucial ways, it may be overregulated in other, superficial ways.
The FDA’s bureaucratic inflexibility has hampered its COVID-19 policy, and baby formula turns out to be another case study.
Many formulas sold in Europe exceed the FDA’s nutritional standards, but they are banned from being sold here, often because of technicalities, like labeling, Derek Thompson of The Atlantic has noted. President Donald Trump exacerbated the situation with a trade policy that made it harder to import formula from Canada. These policies benefit American formula-makers, at the expense of families.
The inflexibility of U.S. regulatory and trade policy, Thompson wrote, “might be the most important part of the story.”
4. The gerontocracy
The U.S. has long put a higher priority on taking care of the elderly than taking care of young families.
Americans over 65 receive universal health insurance (Medicare), and most receive a regular government check (Social Security). Many children, by contrast, live in poverty. Relative to other affluent countries, the U.S. spends a notably small share of its budget on children. President Joe Biden’s stalled Build Back Better plan aimed to change this, Urban Institute researchers have pointed out.
Alyssa Rosenberg, a Washington Post columnist, argues that the formula shortage is part of this story. “Babies and their well-being have never been much of a priority in the United States,” Rosenberg wrote this week. “But an alarming shortage of infant formula — and the lack of a national mobilization to keep babies fed — provides a new measure of how deeply that indifference runs.”
In her column, Rosenberg suggests the creation of a national stockpile, as exists for some other crucial resources, to prevent future shortages.’
A few days ago, another media report said:
‘Major retailers in the U.S. have begun rationing baby formula amid soaring out-of-stock rates, according to media reports on Sunday.
‘Some pharmacies and supermarkets are limiting shoppers to three infant and toddler formula products per purchase in stores and online, USA Today says, quoting the retailers.
‘”Due to increased demand and various supplier challenges, infant and toddler formulas are seeing constraint across the country,” the publication quotes Walgreens Boots Alliance spokesman Steve Cohen as saying.
‘Between November and April, the out-of-stock rate for baby formula — a manufactured breast milk substitute made mostly from cow milk — jumped from single digits to nearly 40% nationwide and even exceeded 50% in some states, according to the latest figures from market data analysis company Datasembly.
‘Finding formula has become a challenge for parents, CNN says, describing how some have to drive to neighboring states or go on social media and plead with strangers to share or even barter any extra supply they may have. One mother told USA Today that “it is almost a full-time job trying to find Similac {a brand of infant formula}.”
‘“Inflation, supply chain shortages, and product recalls have brought an unprecedented amount of volatility for baby formula,” said Datasembly CEO Ben Reich, warning that there is “no indication of a slowdown.”’
The report said:
‘According to CNN, manufacturers are producing at full capacity but it’s still not enough to meet current demand. The shortage has been exacerbated by a recall in February of three brands of powdered baby formulas due to concerns about bacterial infections and a shutdown of a major factory.
‘The birth rate in the US has been climbing steadily in recent years, while inflation has soared over the past year at its fastest pace in more than 40 years.’
Baby Formula Shortage Hits Canada
Another media report said:
‘Baby formula supply shortages in the US have started to have an effect on Canadian families, which are now struggling to procure breastmilk substitutes.
‘A baby-food crisis recently hit the U.S. as already existing supply chain issues were exacerbated by a major product recall by Abbott Nutrition, which voluntarily pulled from shelves three of its brands of powdered baby formula after reports of bacterial infection and illness among infant consumers, including two who died.
‘In the U.S., nearly 40% of infant formula is now out of stock in over 11,000 stores, according to reports by online retail analyst Datasembly, which has led to increased demand for the product, as some retailers have even introduced rationing to combat hoarding.
‘While major Canadian retailers say they haven’t been experiencing widespread shortages yet, smaller store chains have reported issues with stocks. The national spokesperson for the Retail Council of Canada told local media that some stores have struggled to maintain a steady supply of formula since 2021.
‘Loblaws, a supermarket chain in Canada, has stated that the supply chain issues and Abbott recall have left holes in its shelves and affected its ability to stock certain kinds of formula, CBC reports. The company noted, however, that it had so far managed to find alternatives and procure formulas from other vendors.’
The report said:
‘Nevertheless, some Canadian families are still finding it increasingly challenging to secure alternatives to Abbott’s hypoallergenic formula and sometimes end up having to drive hundreds of kilometers, or even across the US-Canada border, to procure the product for their children.
‘Meanwhile, experts have warned that it is imperative for Canadians to not panic over the shortages, as has been happening in the US, as it may only serve to worsen the crisis. Michelle Pensa Branco, co-founder of Safely Fed Canada, has urged parents to remain calm, not feel attached to any particular brand of baby formula and consult with their pediatricians to find alternative brands. Parents are also advised to supplement their infant’s diet with more breastmilk and move towards solid foods as soon as possible.
‘”I want to discourage people from doing things like buying up a whole bunch of formula and storing it aside,” said Pensa Branco in an interview with CTV News.
‘She also highlighted the fact that some families are sticking to specialty formula despite their children not actually needing it, saying that “a good number of parents using these products don’t have a diagnosis of dairy allergy.” She added that some parents are using the specialty formulas simply because of advice from friends or out of an overabundance of caution.’
