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Your global guide to America’s baby formula shortage

Your global guide to America’s baby formula shortage
Annie Gugliotta

America is the richest country in the world, so it is perplexing that parents nationwide are currently faced with shortages of a crucial food staple: baby formula.

It is nothing short of catastrophic. The share of baby formula across the country is down 40%, forcing distressed parents to drive across state lines to secure formula – only to be faced, in some cases, with more naked shelves.

How did we get here? The immediate trigger for the crisis was a recall of products made by Abbott Laboratories after four infants – two of whom died – contracted bacterial infections linked to a pathogen called Cronobacter sakazakii. Abbott has since shut down its sprawling Michigan plant while the Food and Drug Administration and Centers for Disease Control and Prevention investigate claims of unsanitary conditions. (This week, Abbott reached an agreement with the FDA to reopen the plant, but it could take two months to resume a regular supply cadence.)

So, what does it feel like to be a formula-reliant parent in America right now? In short, it’s a nightmare.

“As someone who opted not to breastfeed, formula is how I feed my daughter,” says Jennifer Lemon, 35, a New Jersey based mom. “I literally wake up in the middle of the night sometimes to check online to see if stocks have replenished to hopefully pick up one tin,” she says.

“If anyone has formula fed, they know how important it is to stick to the same brand because babies have such sensitive digestive systems … it is the difference between a calm, happy baby, and a baby in pain,” Lemon says.

Similarly, Paige Dawes, 33, who lives in New York City, says this issue “has been the bane of my life for the last three months,” adding that last week she went to seven different stores to try and find formula. “I have now figured out which day the local supermarket gets their stock in and make sure I go first thing in the morning.” Still, because of rationing, Dawes can only get two tubs at a time, which doesn’t last very long. “It’s a nightmare,” Dawes says.

The shutdown has caused shortages at a time when inflationary pressures and pandemic-related supply-chain disruptions were already leading to spotty formula supply. But this isn’t the full story. Drugs and foods are recalled all the time for various reasons, and they don’t usually result in post-apocalyptic scenes at Walmart.

Formula is big business. Part of the problem is rooted in good old corporate monopolization. Four corporate behemoths – Abbott, Gerber, Mead Johnson, and Perrigo Nutritionals – control 90% of the infant formula supply in the US, meaning there’s little resilience in the system to weather big shocks, such as a nationwide recall.

What’s more, the aftershocks aren't being felt equally. This crisis is even more acute for poor Americans who buy baby formula through the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). Recipients of the program – which includes 1.2 million infants – are only allowed to buy formula manufactured by select companies that have negotiated government contracts. Therefore, even if they find a rare baby formula tin sitting on a dusty Target shelf, they often can’t use their WIC card to purchase it.

The baby formula shortage isn’t just about corporate greed. The current calamity – which has given rise to some previously unthinkable rationing resembling Cuba’s food rationing system – can also be directly attributed to (misguided) US trade policy.

Milk melodrama. The US and Canada, whose trade relationship topped a whopping $615 billion in 2020, have long been at loggerheads over agricultural exchanges, with both trying to exploit the benefits of free trade while also trying to protect the distinct interests of their farming sectors.

Things came to a head during the Trump administration’s painstaking renegotiation of the NAFTA trade agreement with Canada and Mexico in 2018, when disagreements over dairy proved a major sticking point that threatened to derail the 24-year trade pact.

Perturbed by a Canadian policy known as “supply management ” that dates back to the 1960s – where the government has played a role in stabilizing agricultural pricing so that farmers only produce quantities reflecting expected demand – American farming lobbies had long pushed for their own protections.

As a result, the Trump administration – in a bid to win over the country’s influential farming sector – insisted on a provision in the revised trade pact making it all but impossible for Canada to export baby formula to the United States. Remarkably, it also imposed limits on the amount of baby formula Canada could produce for exports to other markets. But US-imposed trade barriers aren't just for Canada. In other instances, the US has put in place tariffs on baby formulas as high as 17.5%, an insurmountable restriction for manufacturers wanting to enter the US market.

What’s more, the Food and Drug Administration has also been accused of imposing overly stringent regulations (at best), and politically motivated decision-making (at worst) that prevents imports of European baby formula. The FDA says this is because of insufficient labeling and health concerns. But some analysts say this justification is risible because baby formula manufactured in the US often contains less-than-ideal ingredients – such as corn syrup – that are banned in the EU.

To be sure, Donald Trump is not the only one with protectionist proclivities. Joe Biden, who boasted to allies last year that “America is Back,” has also pursued protectionist trade policies in the hopes of wooing unions and the broader working class. Notably, the Biden administration infuriated Canada with its proposal to roll out financial incentives for Americans to buy US-made electric vehicles, a move Ottawa says will hurt the auto industry, one of its largest manufacturing sectors.

“The viewpoint from Canada is that Americans need to treat their friends better,” says Eurasia Group’s vice chairman Gerry Butts, who previously served as Canadian Prime Minister Justin Trudeau’s advisor. “There was a lot of misguided hope that a lot would change on the trade front with the change in administrations, but the Democrats can be just as protectionist as the Republicans,” Butts says.

But Canada clearly does it, too. As part of its “supply management” scheme, Ottawa maintains sky-high tariffs on dairy goods; US cheese exports, for instance, can be hit with a whopping 300% levy.

How should we understand this crisis in the context of an otherwise thriving, interconnected economy? “This is what happens when general agreement on trade rules starts to break down,” says Butts.

Whether it's India banning wheat exports to save domestic supplies amid a heat wave, or the US buffering its dairy sector, it is all part of the same theme: protectionism. Canada's supply management system is decades old, but it could certainly be a sign of what's to come globally: “We just don’t have general agreement on how we are going to trade with each other,” says Butts, “regardless of what trade agreements say.”


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