May 16, 2022

The baby formula shortage.

The baby formula shortage.
Photo by Kelly Sikkema / Unsplash

An examination of why it is happening and what to do.

I’m Isaac Saul, and this is Tangle: an independent, ad-free, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum on the news of the day — then “my take.”

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Today's read: 12 minutes.

The baby formula shortage, plus a question about the root issue.

Photo by Kelly Sikkema / Unsplash

Update.

Last week, I answered a reader's question about whether some Republicans were really trying to ban IUDs and other birth control methods. One of the people I cited was Idaho State Rep. Brent Crane, who said he was going to hold hearings on banning IUDs and Plan B. One reader submitted a local interview with Crane where he clarified his comments. It is context I felt was worth noting:

"In a Saturday interview, Crane clarified that he supports contraception, including IUDs, and would not support hearings banning contraception generally. Instead, he said that he has heard of safety concerns with emergency contraceptives, like Plan B, and abortion pills, and would therefore be willing to hold hearings about them."


Quick hits.

  1. A white gunman in Buffalo, New York, shot and killed 10 people inside a grocery store. Officials say they have a manifesto written by the shooter and other evidence suggesting the attack, which took place in a predominantly Black neighborhood, was racially motivated. (The shooting)
  2. John Fetterman, Democrats' leading candidate in the Pennsylvania Senate race, announced over the weekend he is recovering from a stroke. (The announcement)
  3. During the funeral procession of Shireen Abu Akleh, the Palestinian American journalist killed while covering a military raid in the West Bank, Israeli police clashed with mourners and protestors, including some who beat those carrying her casket. (The clashes)
  4. White House press secretary Jen Psaki had her last day of work on Friday. She is moving onto MSNBC, and will be replaced by Karine Jean-Pierre, the current deputy press secretary. (The end)
  5. Elon Musk stunned followers when he announced that his Twitter takeover is now on hold pending verification of how many spam and fake accounts exist on the platform. (The hold)

Our 'Quick Hits' section is created in partnership with Ground News, a website and app that rates the bias of news coverage and news outlets.


Today's topic

The baby formula shortage. Over the last few weeks, what began as a pandemic-era quirk has spiraled into a national crisis. More than 40% of baby formula is now out of stock in the U.S., a twentyfold increase since the first half of 2021. Target, Walmart, CVS, and Walgreens are limiting how much infant and toddler formula customers can purchase per visit. Millions of families depend on baby formula. Less than half of all babies born in the United States were exclusively breastfed in their first three months, the CDC reports.

On Thursday, President Joe Biden met with "executives from infant formula manufacturers and retailers including Target, Walmart and Nestle's Gerber, pressing them to do everything possible to get families access amid a nationwide shortage," according to Reuters.

Several contributing factors have been pointed to as potential causes of the shortage. One that has gotten a lot of attention in the news is the detection of Cronobacter sakazakii at a Michigan plant run by Abbott Nutrition. The discovery came amidst reports of infections in infants and two infant deaths. It led to a recall, despite Abbott’s claim that it found no evidence of any contaminated supplies. Abbott is one of just three manufacturers that produce nearly all the baby formula in the U.S., so the recall immediately sent shockwaves through the industry.

Even before the recall, there was a shortage of formula and prices had spiked. Like many other products, baby formula supply has also been deeply affected by the pandemic. Early on, many parents bought as much baby formula as they could. This hoarding led to a steep increase in demand, followed by a sharp drop (because many parents had stocked months’ worth of baby formula supply). The erratic demand made it difficult for companies to plan their production, and when the demand rose again, it outstripped how much formula was available.

Baby formula is also a heavily regulated industry. Some of the United States Food and Drug Administration’s (FDA) most stringent standards regulate baby formula, even disallowing most formula from Europe due to labeling issues. There are also heavy taxes — some as high as 17% — on formula imports. Under the latest United States-Mexico-Canada Agreement (USMCA), baby formula imports from Canada are so heavily taxed it effectively prevents Canadian suppliers from importing into the U.S.

On top of that, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is the largest purchaser of baby formula in the U.S. It awards contracts to major producers, buys up supply in bulk, and then helps distribute that formula to poor families at a discount.

The White House says it is considering invoking the Defense Production Act to produce more formula. The FDA says it is going to announce new steps to allow imports of certain infant formula products from abroad. The White House has also called on the Federal Trade Commission to investigate predatory conduct like price gouging.

There is actually a strong consensus on this issue on the left and the right that government policies are worsening the baby formula shortage and that the government needs to take some actions to address it. There are differences in precisely how to go about that, but commentators on both sides think the trade policies and regulations related to baby formula could be reformed most quickly.

Instead of our normal left-right dichotomy today, we're just going to share some opinions from across the political spectrum about what should be done and who is to blame.


Some opinions.

Scott Lincicome said U.S. policy is depressing supply.

"In some ways, the infant formula situation is just another example of the pandemic doing its thing," he wrote. "The Wall Street Journal, for example, reported in January—before the big Abbott recall—that domestic producers were struggling with the same things that almost all U.S. manufacturers are struggling with: labor and materials shortages, transportation and logistics hiccups, and erratic demand. Unfortunately, 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.

"The United States maintains high tariff barriers to imports of formula from other nations—all part of our government’s longstanding subsidization and protection of the politically powerful U.S. dairy industry," Lincicome wrote. "If tariffs were the only problem here, then high prices in the United States right now might induce alternative supplies from overseas producers looking for new customers and profits. Unfortunately, however, the United States also imposes significant 'non-tariff barriers' on all imports of infant formula. Most notable are strict FDA labeling and nutritional standards that any formula producer wishing to sell here must meet. Aspiring manufacturers also must register with the agency at least 90 days in advance and undergo an initial FDA inspection and then annual inspections thereafter. And the FDA maintains a long 'Red List' of non-compliant products that are subject to immediate detention upon arriving on our shores."

William Marler said the FDA failed to protect families in the formula shortage crisis.

"From September 2021 to February 2022, the CDC received reports of Cronobacter bacteria cases in infants in Minnesota, Ohio and Texas that resulted in four illnesses with two deaths," Marler wrote. "These illnesses were ultimately linked by the CDC and FDA to the consumption of powdered infant formula produced by Abbott in its Sturgis, Michigan facility. A worldwide recall of formula produced in the plant has left store shelves bare and parents scrambling for safe alternatives to feed their babies... How did the FDA find itself facing thousands of scared and angry parents? It is a history of warning signs ignored. In September 2019, the last time the FDA inspected the facility, the FDA cited Abbott for failing to test an adequate amount of formula to assure that it met 'the required microbiological quality standards.'

"In September 2021, after two years with no on-site inspection, the FDA returned to Abbott and found several concerning practices that likely lead to formula contamination, specifically, Abbott failed to 'maintain a building used in the manufacture, processing, packing or holding of infant formula in a clean and sanitary condition.'... Baby formula is more than a canned commodity — it’s food for the most vulnerable," he said. "It requires the highest of standards and mandates the closest of inspections. Yes, babies’ lives depended and depend on it. The CDC needs to reconsider making Cronobacter a nationwide reportable disease, so no illnesses are missing, and outbreaks figured out sooner so the product can be taken off the market in days instead of months. The FDA leadership has not been held to account for inadequate inspections and failing to act on the whistleblower warnings."

Dominic Pico wrote about how government policy is creating artificial price controls.

"A 2010 study from the USDA’s Economic Research Service estimated that 57 to 68 percent of all baby formula sold in the U.S. was purchased through the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)," Pico said. "That means over half of the baby formula that’s consumed in the U.S. isn’t really bought and sold on a free market at all. The federal government started WIC on a temporary basis in 1972, then made it permanent in 1975, as a way to help impoverished mothers afford food for their babies. As Douglas Besharov and Douglas Call pointed out for the American Enterprise Institute in 2017, it has expanded far beyond its original purpose.

"WIC is a federally funded program, overseen by the USDA, that is administered by the states. To be eligible for WIC purchases, baby-formula makers bid on contracts with state governments," Pico wrote. "With government responsible for over half of the country’s baby-formula purchases, price signals don’t work as they should. As research firm Datasembly noted, the baby-formula market was beginning to go awry before the Abbott recall. The out-of-stock percentage moved from its normal range into double digits in July of last year. Yet 'overall prices didn’t increase when out-of-stock percentages started to increase,' it found. Such behavior would be very strange in a free market, but it makes perfect sense when you consider that predetermined contracts with state governments are responsible for such a large segment of total purchases."

In Deseret News, Bethany Mandel said, "if you thought parents were mad about not being able to send their children to school, just wait for the anger of parents going from store to store searching for formula and coming home empty-handed."

"Last month U.S. Sen. Jack Reed, a Democrat from Rhode Island, wrote a letter to the Biden administration, asking the heads of the U.S. Department of Agriculture and the Food and Drug Administration a series of questions, including: 1. What steps have your agencies taken to minimize the impact of the immediate shortage? 2. When do your agencies expect baby formula inventory to be back to sufficient levels? 3. What measures should be taken in the long term to minimize the supply chain disruptions for what is an essential product for many families?

"If senators (especially a Democratic senator) were writing letters to the administration in mid-April and nothing has been said or done to date, it’s clear that the Biden administration’s priorities are elsewhere," Mandel said. "Sen. Tom Cotton, R-Ark., showed how it would be done and led the way, pointing out that the shortage is even worse for mothers who don’t [have] the time to spend hours driving around looking for formula, or the money to have it shipped to them in bulk, as some parents are doing. It’s time for other Republicans to follow Cotton’s lead, and join with Democrats like Reed to treat this as an issue of utmost priority. It says a great deal about a nation’s priorities when disappearing nutrition for our most vulnerable — infants — doesn’t cause a five-alarm fire in the halls of power. Political inaction on this issue should create a firestorm unlike anything we’ve seen to date. If it doesn’t, our society is troubled beyond measure."

In The Atlantic, Derek Thompson called out our trade policy.

"FDA regulation of formula is so stringent that most of the stuff that comes out of Europe is illegal to buy here due to technicalities like labeling requirements," he said. "Nevertheless, one study found that many European formulas meet the FDA nutritional guidelines—and, in some ways, might even be better than American formula, because the European Union bans certain sugars, such as corn syrup, and requires formulas to have a higher share of lactose. Some parents who don’t care about the FDA’s imprimatur try to circumvent regulations by ordering formula from Europe through third-party vendors. But U.S. customs agents have been known to seize shipments at the border.

"U.S. policy also restricts the importation of formula that does meet FDA requirements," Thompson added. "At high volumes, the tax on formula imports can exceed 17 percent. And under President Donald Trump, the U.S. entered into a new North American trade agreement that actively discourages formula imports from our largest trading partner, Canada... Conservative populists and even liberals who are skeptical of globalization sometimes argue that if the U.S. made everything within our borders, our economy would be more resilient. But the baby-formula shortage suggests that things don’t always work out that way. Instead, we’re seeing what happens when we reduce trade with other countries for an essential good: We’re more vulnerable to emergencies like a bacteria-infested plant in Michigan."

In The New York Times, Jessica Grose said the shortage is not an excuse "to be cruel."

"There are parents who are desperate to feed their babies, so this should be a very straightforward issue — feed those babies! — and yet there are some people trying to score partisan points, either by juxtaposing the issue with American aid to Ukraine, as some who voted against aid have done (as if our current Ukraine policy hinges on a formula recall), or suggesting that babies of undocumented immigrants in federal custody should just go to the back of the line," Grose said.

"Instead of calling attention to this ongoing problem and looking for a more permanent solution to make sure parents do not have to stress over basic nutrition for their infants, I’ve seen a spate of ignorant comments on social media using this opportunity to shame women who can’t or don’t want to breastfeed," she wrote. "I’ve also seen people say that parents shouldn’t have babies they can’t afford, which is just cruel: Babies need to be fed. Full stop. And even if their mothers could breastfeed to begin with (which is not always the case), restarting the process when you have already weaned can take weeks or even months. Babies can’t wait for the nutrition they need."


My take.

I don't know much about baby formula or the way foodborne illnesses get inspected and regulated. But I do know a lot about trade policy and politics; and this story is a great encapsulation of so many other crises that we now face in the wake of the pandemic, exposing some problems of our own making. It's also a prime example of a modern issue that really is multi-faceted in every sense.

On the trade side, it's a nice reminder that "we can do it alone" is not always the best policy. I've written very positively about the "America First'' trade agenda championed by former President Donald Trump (and in various ways supported or shared by liberals like Sen. Bernie Sanders and President Joe Biden). Domestic production is good. Domestic jobs are good. Not being dependent on despotic foreign governments for essential goods like energy or medical supplies is smart.

But there is a cost to everything.

Right now, we're seeing the cost of a highly regulated industry with no breathing room. Baby formula is a sort of maximalist government approach. There is a strong case for the safety regulations in place to protect consumers and infants, of course. Food inspection and sussing out bacterial contamination early on is popular policy and for good reason. In an odd paradox, though, the regulation designed to disincentivize foreign competition has essentially produced a near-monopoly we sometimes see when a free market runs wild, with just three giant companies accounting for nearly all the domestic production and the entire non-U.S. world locked out of even competing here.

At the same time, that stringent safety regulation — which,  again, I think is rightly popular — has buried one of those three companies in investigations and recalls. There is some evidence that Abbott has acted with some basic disregard for the well-being of its consumers, making the entire story the worst combination of the free market’s occasional lax safety protocols and excessive government oversight and regulation.

Now, the Biden administration is playing catch-up, and seems to have a limited set of options. Ramping up domestic production is the obvious answer. But it seems wise to lower the barrier of entry for reliable foreign companies, too. Why not? You solve the crisis in the near-term (or at least make it better) and maybe you open the door for more production streams and competition long-term, which would create a more stable base of supply and reduce prices for all American families respectively, all while making it easier for the ones who already prefer baby formula from abroad.

Politically, it's hard to think of a worse situation for Biden. I don't think his administration really deserves the lion’s share of the blame for the start of this crisis, given the inherited nature of our trade policies, supply chain issues and the pandemic. But there were signals this issue was coming and the not-so-immediate response to the crisis is yet to move the needle, which voters will notice. More simply, most parents scavenging Ebay for baby formula probably aren't going to spend too much time looking into all the reasons their child may be going hungry. They're just going to know that trade policy and government regulation play a role, and they know who their president is.

With already anemic poll numbers, increasingly resilient inflation issues, and midterm primaries underway, such a crisis is the last thing this administration needs in its lap. Whatever solution they focus their resources on had better work, or an already uphill midterm season could spiral into a political calamity.

Have thoughts about "my take?" You can reply to this email and write in or leave a comment if you're a subscriber.


Your questions, answered.

Q: Today I heard the press secretary defend the FDA's baby formula ban by saying the formula had killed babies. I also heard that the CDC had checked the bacteria in the baby formula and studied the baby deaths attributed to it and discovered that they were not related. Which Government agency do we believe?

— Bob, El Cajon, California

Tangle: For starters, I think it is important to be precise here. What I saw was Press Secretary Jen Psaki say "the issue here is that a manufacturer was taken offline because they did not produce a safe baby formula" and "this issue is because there was unsafe product that the FDA recalled to save babies’ lives."

It's a little semantic, but she did not say their formula had killed babies. She said the recall was to save babies' lives, and that Abbott had failed to produce a safe formula. I think we can put one and one together, but Psaki is obviously doing some politicking there. And still, I believe her statement was a bit misleading.

I thought Jason Freeman's piece on this was pretty interesting and worth the read (it was almost included above). Essentially, the FDA began investigating Abbott because consumer complaints were all coming from powdered formula produced in its Michigan facility. Abbott has strongly denied the Cronobacter infections were from contamination at its plant, and best I can tell their defense is legitimate.

Again: I'm not a food contamination expert, so I'll defer to the people who are. But reporting has shown the CDC found different strains of Cronobacter in the baby formula than they did in Abbott's plant, suggesting contamination happened after the formula was opened (this is totally plausible, as Cronobacter is fairly common). Abbott has also said all finished products made at the Michigan plant tested negative. I haven't seen any government agency contend this is untrue.

So, is it possible the contamination happened there? Yes. Plenty of food and safety writers contend Abbott doesn't test nearly enough. But, has the government proved that their formula caused these deaths and infections yet? No.

Want to ask a question? You can reply to this email and write in (it goes straight to my inbox) or fill out this form.


A story that matters.

The United States has reached over one million Covid-19 deaths, according to the CDC. The grim milestone comes two and a half years into the pandemic, and means the U.S. continues to have more deaths per capita than Western Europe or Canada. While the nature of how the U.S. counts deaths has been contentious throughout the pandemic, many experts contend the count is actually lower than the real total, given how many people may have died without being tested for Covid-19 or as a result of the virus’s impact on the healthcare system. In March of 2020, the Trump administration said it hoped to keep the number of deaths to 100,000 to 200,000, based on early warnings about the severity of the virus. About 600,000 people have died from the virus since President Biden took office in January of 2021. The total of Covid-19 deaths globally is estimated to be 15 million. The Hill has the story.


Numbers.

  • 12.012 per 1,000. The current birth rate in the United States, according to the U.N.
  • 11 per 1,000. The U.S. birth rate in 2020, according to the U.N.
  • 20%. The percentage of babies given formula in their first two days of life in 2020, according to the CDC.
  • $1,200 to $1,500. The average amount of money families spend on baby formula per year, according to current estimates.
  • 29. The number of required nutrients in baby formula, according to the FDA.

Have a nice day.

A passenger with no flying experience aboard a Cessna 208 successfully landed the plane in Florida after the pilot became incapacitated. Darren Henderson, the 39 year old man, was behind what is being dubbed the "Miracle in the Air" after he took over the controls during a flight back from the Bahamas with one other passenger. The pilot told Henderson he wasn't feeling well before falling against the controls, sending the plane into a nosedive. Henderson managed to pull the plane out of the nosedive and contact the Treasure Coast International Airport for help. “I’ve got a serious situation here … the pilot is incoherent,” the married father-to-be is heard saying in a recording of the call. “And I have no idea how to fly the airplane.” The lead air traffic controller gave him instructions on how to land the plane safely on the ground. The Miami Herald has the remarkable story.


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