From supply chain crisis to formula production monopolies – here is a breakdown of the formula shortage in the U.S.
As of May this year, 43% of U.S. retailers do not have baby formula on their shelves. The situation has become so bad that the state of New York had to declare an emergency to bring down the skyrocketing prices of baby formula.
Parents across the U.S. are buckling under the pressure to find baby formula. People have become increasingly desperate, even to the extent of scouring the internet for recipes on how to make their own baby formula. But why did the U.S. end up in this situation? Let’s take a look at the key reasons behind the baby formula shortage, how parents are trying to cope with it and the attempts being made to rectify the situation.
Reasons behind the baby formula shortage
Supply chain issues
During the pandemic, there was a surge in demand for cow’s milk, which is one of the key ingredients in baby formula. Moreover, there was also a shortage of packing materials and labor which inadvertently slowed down the production speed of baby formula. These conditions only worsened when a large chunk of baby formula was called off the shelves.
The shutdown of Abbott Laboratories
In February, Abbott Laboratories, one of the U.S.’s top baby formula manufacturers, voluntarily recalled several major brands of formula. This happened soon after four babies (of which two passed away) were hospitalized with bacterial infections, after consuming formula produced at their Sturgis, Michigan factory. The company asserted that there was no link between the formula and the illnesses, but it did shut down production at the factory in question.
Monopolization of formula production
Sure, it may seem like shutting down just one factory wouldn’t lead to a country-wide shortage, but it is important to note this one factory produces half of Abbott’s formula supply. Moreover, formula production in the U.S. is heavily regulated and is largely dependent on four main manufacturers—Abbott, Nestle, Perrigo and Reckitt Benckiser. These four manufacturers together account for 90% of the U.S.’s baby formula production.
Of these four, Abbott, Nestle and Reckitt are the manufacturing companies supplying baby formula to low-income families under the Special Supplemental Nutrition Program for Women, Infants and Children (WIC). WIC is a government subsidy that reimburses 15% of wholesale costs to these companies. Moreover, only a small number of manufacturing facilities are approved for baby formula production, which makes it hard for new players to enter the space.
How are parents coping?
As we previously discussed, parents have frantically been looking for alternatives to baby formula and have begun creating their own homemade formula. But these homemade brews can deprive babies of essential nutrients and lead to malnutrition and in the worst case, even death. Another alternative that parents have been using to feed their babies is cow’s milk. While the American Academy of Pediatrics (AAP) does suggest that children above the age of six months can be fed cow’s milk, it clarifies that this is not ideal and shouldn’t be routinely used.
Solutions to the shortage
To deal with the shortage, Abbott Laboratories has shipped in baby formula from its factories in Ireland to tide over demand in the country. Additionally, the U.S. government has passed a bill to provide the U.S. Food and Drug Association (FDA) with US$28 million in emergency funding to ease the current shortage. The government has also decided to lift restrictions on importing baby formula from other countries to reduce the shortage. They have begun flying in baby formula from other countries on commercial flights, with the first shipment from Germany landing on U.S. soil on May 22.
But these are only short-term solutions to a much bigger problem. This shortage has been a rude awakening for the U.S. on what happens when production in certain sectors is heavily monopolized. Amid the shortage, the rest of the formula manufacturers have been struggling to keep up with the demand. Baby formula delivery startups, Bobbie and ByHeart, have even had to take the decision to close their doors to new customers in order to ensure that the needs of their current customers are met.
Of course, the first course of action anyone would suggest in such a dire situation is to switch back to breastfeeding. But some mothers simply cannot produce enough milk to provide for their babies, and alternatively, some children cannot metabolize the sugar in breast milk. Under both of these circumstances, formulas become the only option.
Understanding the guilt and pressure associated with breastfeeding, entrepreneurs have also stepped up to the challenge of creating a replacement for breast milk. Laura Katz and Michelle Egger have both created their own synthetic breast milk startups called Helania and BioMilq respectively. While these startups are still in their infancy, once their products are on the market, they will be a sigh of relief to mothers looking for the closest replacement to breast milk possible.
Based on a statement from formula manufacturer Perrigo, customers can expect the shortages to continue for the rest of 2022. For now, all that new parents can do is use their supply of formula more cautiously and consult their pediatricians for the steps they can follow to deal with the shortage.
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