The Infant Formula Crisis was caused primarily by severe Government Intervention in production and foreign trade

Very recommendable! Sums it up quite well.

E.g. imports of baby formula are only less than 1.5% of domestic supply thanks to government trade barriers. Government programs created basically an exclusive domestic oligopoly of producers of baby formula.

Pure insanity! Government programs require that almost half of all baby formula sales can only be purchased from certain brands and only at approved stores.

Why can baby formula not imported from e.g. Canada or Europe? Because the U.S. government essentially declared those products unsafe!

Stringent government regulations also effectively prevent more domestic competition in the market of baby formula!

"Everyone at the hearing agreed that shortages in the United States have been caused in no small part by the current concentration of U.S. infant formula production among Abbott and three other companies: when Abbott initiated a voluntary recall and shut down that Michigan factory, there were no easy or immediate replacements to fill a gaping hole in the U.S. market. ...

In particular, several U.S. policies have worked to all‐​but‐​ensure that the infant formula market here is stagnant, dominated by a few large, domestic corporations, and highly vulnerable to an economic shock. These policies include:

Trade barriers. U.S. tariffs, trade agreements, and FDA rules effectively block almost all foreign‐​made infant formula from the U.S. market—contributing to market concentration. ... shipments from Europe have been routinely seized and destroyed by U.S. Customs and Border Patrol because they did not comply with FDA labeling and other rules — even in the middle of the current crisis. 

Government contracts. The expansion and design of the Special Supplemental Nutrition Program for Women, Infants and Children (“WIC”) effectively ensures that the U.S. market remains concentrated. WIC provides vouchers for low‐​income Americans to buy pre‐​determined brands of formula at approved retailers. Since the program’s inception in 1974, WIC participation has grown dramatically: today the program accounts for more than half of all domestic formula sales. This buying power allows the government to demand that producers offer steep discounts; and in exchange, state WIC agencies offer big, sole‐​source contracts to winning bidders. ...

Regulation. Finally, stringent FDA regulations specific to infant formula are also likely amplifying domestic market concentration. Since 1980, the United States has regulated formula more strictly than other foods here and more strictly than formula in most other countries. ... Until a few weeks ago, there hadn’t been a new formula manufacturer in the United States since 2007, and it took the new player, ByHeart, more than $190 million and five years to start production. ..."

The Infant Formula Crisis Argues for Less Government Intervention, Not More | Cato at Liberty Blog