America’s Formula Shortages –The Bigger Picture

A recent article (The Dispatch, Scott Lincicome: America’s Infant Formula Crisis and the ‘Resiliency’ Mirage) explains that the reasons we are facing formula shortages go beyond the Abbott recall.

Excerpts:

The infant formula crisis isn’t simply another case of a one-off event causing pandemic-related supply chain pressures to boil over. Instead, U.S. policy has exacerbated the nation’s infant formula problem by depressing potential supply….all part of our government’s longstanding subsidization and protection of the politically powerful U.S. dairy industry…

[Additionally, there] are strict FDA labeling and nutritional standards that any formula producer wishing to sell here must meet….These regulatory barriers are probably well-intentioned, but that doesn’t make them any less misguided—especially for places like Europe, Canada, or New Zealand that have large dairy industries and strict food regulations

The combination of trade and regulatory barriers to imported infant formula all but ensures that our almost $2 billion U.S. market is effectively captured by a few domestic producers—despite strong demand for foreign brands. What German company, for example, is willing to spend the time and money meeting all the FDA requirements—registration, clinical trials, labeling and nutritional standards, inspections, etc.—only to then face high import taxes that make its product uncompetitive except during emergencies? The answer: almost none…

Meanwhile, Abbott is in full-on crisis mode and has turned to flying in formula produced at an FDA-registered Irish affiliate…

WIC program’s use of sole supplier contracts has created a problem specific to the current crisis because … the big FDA recall just happened to hit the very producer—Abbott—holding most of the WIC contracts. 

My take: This article explains why there is not a simple switch to flip to fix the current formula bottlenecks.

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