Friday, May 13, 2022

How Government Created the Baby Formula Shortage—and a Black Market for 'Unapproved' European Imports

The latest hot button issue in the U.S.: Baby formula shortages across the country!

Why is this single very specific product in short supply and causing such an uproar? It has been heavily exploited for political reasons. I am not an expert on this subject, but it raises some serious questions:
  1. Why are European government approved baby formulas not quasi automatically approved in the U.S. and therefore cannot easily be imported? Smells awfully like a government created racket! Who lobbied for it and which politicians lined their pockets?
  2. It is reported that there is an 18% customs tariff on imported baby formula. What?
  3. How necessary was the government shutdown and inspection of the Abbott plant in Michigan? Has the shutdown and inspection taken too long?
  4. How much is federal government overregulation of this product to blame? A lot!
  5. How much can regular cow milk be used as a substitute at least temporarily?
"Some parents are trying to order non-FDA-approved formula from Europe, but Customs agents sometimes seize the shipments. ...
In April 2021 when US Customs and Border Protection agents in Philadelphia seized 588 cases of baby formula (value: $30,000) that violated the FDA’s “import safety regulations.” ...
... As Cato scholar Scott Lincicome pointed out on Twitter, the US government imposes a stiff levy on baby formula (technically a “tariff rate quota”) that amounts to 18 percent ..."

"The bacteria Cronobacter sakazakii was discovered at an Abbott factory that produces Similac and other brands.
It recalled formula and stopped production at the Michigan plant in February and hasn’t yet resumed production. 2 other companies (Mead Johnson and Gerber) account for almost all US formula sales.
Plus: Factories had cut production after families stockpiled formula early in the pandemic in 2020, and a decline in breastfeeding early this year drove up demand"

"... part of the shortage stems from a suspected bacterial outbreak at an Abbott plant in Michigan, which prompted the recall of three major brands of powdered formula. Matters were made worse when the plant was subsequently shut down for FDA inspection. ..."

"... As Christina Szalinski reported in March 2021, “baby formula is one of the most tightly regulated food products in the US, with the Food and Drug Administration (FDA) dictating the nutrients and vitamins, and setting strict rules about how formula is produced, packaged, and labeled.” ..."

P.S. I also did not have the time to double check some of the sources quoted here.

How Government Created the Baby Formula Shortage—and a Black Market for 'Unapproved' European Imports - Foundation for Economic Education As Christina Szalinski reported in the New York Times, “baby formula is one of the most tightly regulated food products in the US."

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