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US Is Facing Baby Formula Shortage Know Why?

Baby Formula Shortage in the United States has morphed into a full-fledged national emergency. More than half of the formula is sold out at retailers in many areas, including Texas and Tennessee. 40% of the formula is out of stock nationwide, a twentyfold rise since the first half of 2021.

Retailers like Walgreens, CVS, and Target have all attempted to limit purchases as parents have begun to hoard formula. The scarcity of things is nothing new. Rationing necessities for desperate parents, on the other hand?

That’s a bizarre twist in the American scarcity myth. The shortage of baby formula in the United States is caused by three factors: bacteria, a virus, and trade policies. The bacteria come first. The Food and Drug Administration investigated Abbott, a major maker of infant formula, after at least two newborns died of a rare infection and found signs of the bacteria Cronobacter sakazakii in a Michigan plant.

As a result, the FDA issued a recall for various types of infant formula, and parents were urged not to purchase or use any formula linked to the plant. Recalls are extremely common. Every year, thousands of prescriptions and products are recalled, but they don’t cause a pharmacy crisis or force CVS to implement Soviet-style rationing of basics. So there’s something else going on. The virus is the second factor to consider.

What Us is Facing Baby Formula Shortage?

Baby Formula Shortage

The epidemic has disrupted supply chains in a variety of ways, but I can’t think of a market that has been thrown off more than infant formula. “During the spring of 2020, formula sales skyrocketed as individuals stored formula the same way they stockpiled toilet paper,” said Lyman Stone, director of infant research at Demographic Intelligence.

Sales plummeted as “families sorted through their stockpiles.” This fluctuation makes production planning extremely difficult. It was difficult to acquire a sense of the true market size.” Meanwhile, according to Stone’s research, an increase in births in early 2022 coincided with a “quite substantial decrease in breastfeeding rates” among new moms, driving increasing demand for formula once more.

In brief: In 2020, demand for formula soared as parents stockpiled; after that, demand decreased, prompting suppliers to reduce output through 2021; and now, with more new mothers seeking more formula in 2022, orders are soaring faster than supply can recover. The third factor is the United States’ regulatory and trade policies.

While most people are more interested in bacteria and viruses, this could be the most essential aspect of the story. The FDA regulates formulas so strictly that most of what comes from Europe is forbidden to buy in the United States due to technicalities like labeling regulations.

Nonetheless, one study revealed that many European formulas fulfill FDA nutritional guidelines and may even be better than American formulas in some areas, because the European Union prohibits the use of certain carbohydrates, such as corn syrup, and requires formulas to have a greater lactose content.

Some parents who aren’t concerned with the FDA’s approval try to get around the rules by obtaining formulas from Europe through third-party sellers. However, customs agents in the United States have been known to impound packages at the border. Importation of formula that meets FDA guidelines is also restricted under US regulation.

The tax on formula imports can reach 17 percent in huge volumes. Furthermore, under President Donald Trump’s leadership, the United States signed a new North American trade deal that aggressively opposes formula imports from Canada, our major trading partner. America’s formula policy has a further impact on the sector.

WICshort for Special Supplemental Nutrition Program for Women, Infants, and Children is a division of the Department of Agriculture that provides a variety of services to pregnant and breastfeeding women as well as their young children.

It is also the largest buyer of infant formula in the United States, with only a few recognized formula firms receiving contracts. As a result, the baby formula sector in the United States is intentionally small. Abbott, Mead Johnson, and Gerber accounted for nearly all U.S. formula sales, according to a USDA analysis from 2011.

To satisfy the requirements of families, the Biden administration is focusing on increasing domestic formula manufacture. The main issue, however, is our trade strategy. “The United States is a captive market for domestic dairy farmers like Abbott, and the absence of alternative suppliers becomes a pretty large problem during times of crisis,” said Scott Lincicome, director of general economics and trade at the Cato Institute, a libertarian think tank.

Conservative populists and even liberals who are critical of globalization occasionally suggest that our economy would be more resilient if everything was created within our borders. However, the baby formula shortfall indicates that things do not always go as planned.

Instead, we’re seeing what happens when we cut off trade with other countries for a basic good: we become more exposed to disasters like the bacteria-infested Michigan factory. There is an alternative. “Total global capacity, system-wide adaptability, and dynamism should be maximized,” Lincicome stated. “Having as much as possible within a nimble system that can replace one plant’s supply with another’s is more important than the location of the supply.

“America’s legitimate impulse to protect children has morphed into an excessively restrictive trade policy, making the US formula business very vulnerable to existential (pandemic) and domestic shocks (like a major recall). Shocks are ubiquitous these days, which is why infant formula isn’t.



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