For nearly a year now we've been writing about the fragility of the supply chain, both the food & beverage chain and the one impacting all product manufacturers. Some of our stories and those of the mainstream media, too, concluded that coffee, beef and chicken may be a little less available and cost a little more, and as a processor you probably need to substitute for sunflower oil. But that's about it for severity or hardship.
Then in early February we ran our first news story about the looming shortage of baby formula. When you have a newborn with special dietary needs, finding the right formula isn’t like switching from Coke to Pepsi or going meatless for a few meals. A specialized formula is akin to medicine.
In the past month, the infant formula shortage blew up into a full crisis. Many new parents went into a panic not being able to find the formula prescribed for Junior, who was born a little premature and needs a special diet for the first few months. I didn’t see a single story about an infant whose health was compromised because of the shortage, but that doesn’t ease the panic; and that’s beside the point.
Our own Erin Hallstrom, director of digital content strategy, blogged about the plight of her sister, a new mother with a two-month-old that has digestive issues, thanks to being born prematurely. After spending most of a Saturday frantically driving for many miles (and having relatives do likewise and search the internet for sources) she couldn’t find the prescribed formula for her child. “I’m scared,” she told Erin. “I’m not sure what we’re going to do if we can’t get his specific kind soon.”
As much as I like being a free marketeer, there are things in this life the government should control. Infant formula is one of them, and it clearly is not under control. Here are some interesting facts I learned from the multitude of reports about the formula crisis:
- Nearly all baby formula sold in the U.S. is produced domestically. While the reasons are primarily regulatory and in many cases the arguments are food safety-related, that sure looks like protectionism to me.
- Four major manufacturers — Abbott Laboratories, Mead Johnson Nutrition, Nestlé USA and Perrigo — account for about 90% of U.S. production. That sure looks like unsafe market concentration to me.
- Abbott’s Sturgis, Mich., plant is the largest in this country and single-handedly accounts for 20% of the U.S. supply. And that’s the plant that was the suspected cause of the February illnesses (and two deaths) and the recall. When the FDA inspected the plant looking for the bacterial contamination, they found conditions so bad they closed down the entire plant.
Supply crisis ensues!
There are so many reasons why this infant formula debacle never should have happened. Perhaps there’s legitimacy to concerns that parts of the American food supply are getting too concentrated (remember meat & poultry plants closing down during the pandemic?).
All flag waving aside, maybe it isn’t so wise to shut out foreign supplies of some products. For some reason, regulatory barriers and protectionism virtually ban infant formulas from other parts of the world. At the very least, I think Abbott, Mead Johnson, Nestle and Perrigo all have overseas plants; why couldn’t their product be imported?
Apparently there was a whistleblower in the Sturgis plant as early as last year, but his complaints were put on such a slow track that he wasn’t fully debriefed until the crisis had already started.
And then there’s the plant itself and the management, all the way up to Abbott headquarters in Illinois. They vehemently claimed there was no definitive link established between the illnesses reported back in February and the bacteria samples collected in the Sturgis plant. Nevertheless, when FDA officials call your plant “shocking” and “unacceptable,” that ought to shame you as a food processor.
Let’s not forget the FDA. Testifying before Congress about the shortage, FDA Commissioner Robert Califf pointed fingers at Congress for not providing enough funds and at the food industry for not providing enough transparency into its supply chains. Come on, Robert, you’re the FDA. The agency could have and should have tried harder.
“We’re going to learn from this,” an Abbott vice president reportedly said in the same Congressional hearing. “We’re going to get better as a result of this.”'
A whole lot of parties need to get a whole lot better.