Baby formulas provide nutrition for infants to grow and thrive. A lack of baby formula can create serious health risks. Across America, store shelves selling infant formula are going bare, and parents are panicking. We will touch on three reasons behind the formula shortage.
Concentration in the formula market
Reduced competition does not serve the economy well. In America, just four companies (Abbott, Gerber, Perrigo, and Reckitt Benckiser) make most of the formula. Abbott is a big formula producer that controls around 40% of the market. In February, due to an investigation of infection in four babies, who had consumed formula from its plant resulting in two deaths, Abbott issued a recall. A recall is a process of retrieving and or correcting a defective product that the Food and Drug Administration (FDA) considers to violate its laws. Since Abbott supplies most of the baby formula, the recall of several brands has disrupted the ongoing supply chains of formula makers. Resulting in fewer choices on the store shelves.
Rigid FDA regulation for foreign factories
Many baby formulas consumed are made domestically in America. The FDA approval process for foreign factories is strict. To combat this, the FDA said it was streamlining its review process to make it easier for foreign manufacturers to ship more formulas to the U.S. Also, President Biden has authorized the Defense Department to use commercial air cargo to transport from overseas, baby formula that meets federal standards.
The Defense Production Act is not a substitute for planning and preparedness
Data from DataSembly, a data firm, shows that the baby formula shortage went up from 30 to 40 percent at the end of April and was around 43 percent by May 8th. Data shows that Baby formula was already being affected by pandemic-related supply chains. Why were plans not yet in place for the possible increase in formula shortage?
The Defense Production Act forces private companies to prioritize government orders. As there is a delay in importing ingredients, the law can be used to set priorities for formula ingredients and manufacturing capacity. Now, given that the main problem is the manufacturing issues that closed production at Abbott and not a shortage of formula ingredients. It is not very clear how this law will solve the formula shortage.
Three points were discussed above, but there are more reasons behind the baby formula shortage. If you can think of more, please share in the comments.