More Supply Chain Pain, More Hunger Pangs

The Government Says It Is Taking Steps, But Still No Food For Baby

For America’s formula-fed infants, no infant formula on store shelves means no food for baby. Period. End of Sentence. End of Discussion.

For the 16% of newborns who are formula-fed exclusively from birth, this is not an exaggeration.

For the 44% of infants who are no longer breast fed by 6 months of age this is not an exaggeration.

The White House is “taking action” we are told, yet the sum of those actions falls short of getting babies the food they need.

Nearly three months after a Feb. 17 recall from formula manufacturer Abbott, which pulled products made at their Michigan plant from shelves after reports that four infants may have fallen ill from bacterial infections, while two died, the national formula out-of-stock percentage stood at 43% last week. Despite warnings by some in recent months, the issue seemed to come to a head this week, as the White House announced steps it’s taking to alleviate the shortage after criticism that the administration was not doing enough.

Government Actions

What steps has the US government taken to address the situation?

These are the steps the White House has taken to confront the shortage of infant formula:

• Cutting Red Tape to Get More Infant Formula to Store Shelves Quicker.

• Calling on the FTC and State Attorneys General to Crack Down on Any Price Gouging or Unfair Market Practices Related to Sales of Infant Formula.

• Increasing the Supply of Formula Through Increased Imports.

These measures are in addition to actions being taken by the FDA in regards to rectifying the shortage. However, like the White House measures, the FDA’s list of actions primarily involves holding meetings and gathering data. A step the FDA has apparently been reluctant to take: allowing Abbott Nutrition to reopen its Sturgis, Michigan, facility, although Abbott Nutrition has announced that it was given the okay to restart production there just this week.

The net effect of these actions by the White House and the FDA? For formula-fed infants, there is still no food for baby. Abbott Nutrition’s own timeline estimates indicate that it will take up to two months for product from the restarted Sturgis plant to reach store shelves

No Formula, No Food

As I wrote yesterday, the blunt reality is this: for infants with nutritional needs, food allergies, or whose mothers are not able to breastfeed for whatever reason, no formula means no food.

From Supply Chain Pain To Hunger Pangs

This is not a problem of price-gouging or even some unforeseeable act of God. This is a problem of the four infant formula suppliers in the US—particularly Abbott Nutrition—failing to produce and/or deliver enough formula to meet the needs of America’s infants.

While Abbott Nutrition is making preparations to restart production at Sturgis, its own timeline indicates it will take two weeks for production to resume, and another six to eight weeks for product to reach store shelves.

“We understand the situation is urgent – getting Sturgis up and running will help alleviate this shortage,” Abbott officials said Wednesday. “Subject to FDA approval, we could restart the site within two weeks. We would begin production of EleCare, Alimentum and metabolic formulas first and then begin production of Similac and other formulas. From the time we restart the site, it will take six to eight weeks before product is available on shelves.”

That timeline assumes FDA approvals are not withheld.

While Abbott Nutrition is restarting its production lines, or if Abbott is for some reason prohibited from restarting production, alternative solutions must be found and put to use—and, as one of my readers pointed out yesterday, there are alternatives to the four major suppliers.

There are a couple of options. They may not be ideal, but this is in no way an ideal situation.

Homemade formula. Lots of babies survived on this and lived long lives. It's a thing.

Breastmilk banks/kind, lactating friends and neighbours, and milk banks

How viable these alternatives are is a challenge each nursing mother must decide for herself. Still, there is no escaping the daily needs of newborns and infants—two months, two weeks, even two days is too long for children to wait for food. If Abbott formulas are two months away from reappearing on store shelves under the best case scenario, nursing mothers must find a way to feed their children without Abbott formula for at least that long.

We should be mindful that the FDA strongly counsels against homemade formulas, even in the face of the current shortage, citing the health risks of formula with improper levels of various nutrients.

Infant formula can be the sole source of nutrition for infants and is strictly regulated by the FDA. The agency has requirements for certain nutrients in infant formulas, and if the formula does not contain these nutrients at or above the minimum level or within the specified range, the infant formula is adulterated. Homemade infant formula recipes have not been evaluated by the FDA and may lack nutrients vital to an infant’s growth.

However, it is impossible to outpace the nutritional inadequacy of there being no food for baby. In the face of bare store shelves that will not be filled with infant formula for at least another two months, the potential for inadequate nutrition from homemade formula is surely not the greatest nutritional threat facing this nation’s formula fed infants.

Where Is All The Formula?

Making the shortage of formula on store shelves particularly galling are reports of shipments of formula arriving at unexpected places—such as processing facilities for illegal aliens detained while trying to enter the United States from Mexico.

This past week, Congresswoman Kat Cammack (R-FL), released this video describing the shipment of “pallets” of formula to the Ursula processing facility in McAllen, Texas.

Congresswoman Cammack also posted photos to her Twitter account purporting to show ample stocks of formula at the Ursula facility, juxtaposed with empty shelves at a store in her district.

Kat Cammack @Kat_Cammack

The first photo is from this morning at the Ursula Processing Center at the U.S. border. Shelves and pallets packed with baby formula. The second is from a shelf right here at home. Formula is scarce. This is what America last looks like.

While there is no denying that there are infants among the those detained at facilities such as Ursula, and that those infants need to be fed also, there is also no denying the obvious iniquity of formula arriving in abundance at Ursula and not arriving at all at stores around the United States.

Yet there is another disturbing question posed by these social media posts: where has all this formula been hiding?

Abbott’s Sturgis plant was shut down in February. In the middle of March, the out-of-stock rates for formula were reported to be around 29%.

An analysis by Datasembly, a company that chronicles billions of grocery and retail pricing records for stores in all 50 states, tracked baby formula stock at more than 11,000 stores, and found that 29 percent of top-selling baby formula products were out of stock as of the week of March 13.

Despite this, “pallets” of formula were recently delivered to the Ursula facility in McAllen—where did the government get this stock of formula?

Why was a portion of this stock not made available to American consumers?

Are there any more such “reserves” of formula being held back from store shelves?

Government Gets In The Way

The McAllen shipments also serve to highlight yet again the degree to which government involvement in various supply chains which deliver goods to consumers serves to create and/or exacerbate dysfunctions within those supply chains. If the reports of formula shipments to the Ursula facility are accurate, the federal government has significant stocks of infant formula which it is not releasing to the American public.

Yet even if the federal government itself does not have stores of infant formula, it is an acknowledged fact that the USDA, through state grants funded by the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), is the largest single purchaser of infant formula in the United States. As even FactCheck.org was obliged to concede in its rationalizing of the infant formula shortage, Abbott Nutrition has exclusive contract with the majority of state WIC agencies.

Abbott contracts with a majority of state programs for the Special Supplemental Nutrition Program for Women, Infants, and Children, commonly called WIC, which is the largest purchaser of baby formula in the U.S., according to a 2011 report from the U.S. Department of Agriculture.

When Abbott issued its formula recall in February, the USDA had to issue special waivers to state-level WIC programs to allow WIC shoppers to purchase other brands of infant formula not subject to the FDA recall.

Over the weekend, the U.S. Department of Agriculture issued waivers to 48 State WIC Agencies that will facilitate the immediate and longer-term response to infant formula shortages stemming from the Abbott recall. State WIC Agencies are now empowered to permit vendor exchanges consistent with store policies, allow for larger infant formula container sizes, and waive medical documentation for certain substitutions. Medical documentation will still be required for infants on Food Package III, who require specialty formulas. These waivers ensure that retail grocery stores can apply the same return or exchange policy for recalled infant formula products to both WIC and non-WIC shoppers. State WIC Agencies are also adding additional substitution options so that WIC shoppers can, in the near term, purchase other infant formula products.

These waivers, while issued timely, underscore the degree to which government involvement restrains individual choice and individual action in responding to a changing market situation. Participants in WIC programs effectively need government permission to seek out alternatives to approved products which suddenly become unavailable.

The unavailability of Abbott Nutrition formula products is the result of another government agency, the FDA, ordering their primary production facility to close and then keeping it closed for the past three months. While there has been a growing shortage of infant formula in the US since July of 2021, the nationwide out-of-stock rate did not surpass 30% until April of this year, two months after the Sturgis closure.

Data analysis demonstrated that baby formula stock was relatively stable for the first half of 2021. Out-of-stock rate (OOS) fluctuation was between 2-8%. The OOS detail shows that in January 2022, baby formula shortages have hit 23%. Hyperlocal data indicates they will continue to worsen, showing OOS levels now at 31% as of April 2022.

While nationwide supply chain and logistics disruptions arising from pandemic-motivated shutdowns in 2020 served to catalyze the initial shortages of infant formula, there is no denying the role of government bureaucrats in making the shortage considerably worse, to the point where nearly half of the needed supply of infant formula is not on store shelves. The shipments of formula to McAllen illustrate the degree to which the government can and does distort retail supply chains, disrupting flows of goods and services from suppliers through distributors to stores for purchase by consumers.

Even if one ascribes the best of intentions to government bureaucracies, there is no escaping the reality that government gets in the way of efficient delivery of goods to consumers. Whatever supply shocks arise from one supplier having to unexpectedly close production facilities for a time are made that much worse by the actions of government.

There is no denying the reality that significant numbers of newborns and infants in the United States are right now not receiving the nutrition their bodies need for healthy growth and development, nor that government bureaucrats are right now contributing to that reality.

Ronald Reagan’s timeless observation has never been more true than it is today:

The most terrifying words in the English language are: I'm from the government and I'm here to help.

Perhaps instead of the government trying to help alleviate the infant formula shortage, it would be so kind as to just get out of the way so that ordinary people can resolve the issue for themselves.