Just when you thought America had run out of crises, the infant formula shortage burst into the headlines. Outraged mothers discovered empty shelves. Exasperated parents drove hundreds of miles to neighboring states in search of formula. This is a scene out of Venezuela or Burundi.
How can the wealthiest, most advanced country on earth run out of baby formula? The answer to that question is prompting political finger pointing, capitalism bashing and administration spin doctoring. None of this is putting infant formula on store shelves for desperate parents.
To make matters worse the media has ginned up fear with its often uninformed reporting. The complex situation requires more than a 30-second sound bite or an online click-bait headline with few facts. A crisis of this urgency demands vetted information which helps Americans understand the issues.
As usual, the Biden Administration was slow to react to the shortage. In February, the administration certainly knew there was the likelihood that the supply would be crippled when the Food and Drug Administration shut down the formula plant of the nation's largest producer, Abbott Laboratories.
The FDA halted production after several babies who had consumed the formula manufactured at the Sturgis, Michigan, factory fell ill. Two died. The FDA made the right call. That's the FDA's job. But the agency and, surely, the administration understood the impact on the supplies of infant formula.
The Sturgis plant is where Abbott manufactures all its formula. The firm has a facility in Ohio, but it makes other products. It is now shifting some formula production to the Ohio facility. But closing the Sturgis plant created a 40% shortage in formula. The FDA knew its action would trigger a shortage.
In fact, the problems at Sturgis, we now know, surfaced last September during the FDA's routine inspection. Agency inspections were scrapped during COVID. After a whistleblower came forward, the FDA returned to the plant on January 31. Inspectors knew there were problems at the plant.
But it took the FDA until February 17 to order the plant closed. Abbott has contended there "is no conclusive evidence to link Abbott's formulas to these infant illnesses." Reuters reports the FDA and CDC "have not disclosed any information that connects the illnesses to the plant."
The FDA is green lighting the restarting of production at Sturgis, but it will be months before formula reaches store shelves. After reopening the plant, Abbott estimates it will take anywhere from six to eight weeks before the first shipments are delivered to stores.
A few fair questions: Why didn't the administration alert the public in February? Why didn't the FDA work with the formula industry to increase production immediately? Why wasn't the government contacting suppliers in Europe with requests to ramp up production and expedite shipping to the U.S.?
The administration dithered until the formula crisis reached a national emergency. Belatedly, the president on May 18 announced a plan to airlift formula from overseas producers, using military aircraft. They administration calls it "Operation Fly Formula." Let's hope it's more than a catchy name.
But wait until consumers find out formula from overseas producers is subject to U.S. tariffs of up to 17.5%. Prices of formula will rise. Also, the FDA labeling and ingredient requirements for formula will exclude some overseas products from being imported. Don't expect stores to have full shelves soon.
Democrats are planning to hold Congressional hearings as if this will solve the problem. Hectoring CEO's and slamming capitalism is right out of the Democrat playbook. The FDA should be the agency under scrutiny. Hearings are always great television for puffed up politicians, but achieve little.
It will be interesting to see if Democrats raise a thorny issue no one wants to talk about. The largest purchaser of formula in the U.S. is the federal government. Not consumers in grocery stores. Your tax dollars fund a Department of Agriculture program known by its acronym WIC.
WIC provides nutrition for low-income, nutritionally at risk, mothers of infants. Abbott and Mead Johnson supply 90% of the infant formula for WIC. The federal government opted to use sole-source contracting in states, which manage distribution of formula for WIC beneficiaries.
Charges of gouging by Abbott and Mead Johnson are lies. The firms actually lose money on formula they sell through WIC because the lowest bidder wins the state contract. The formula producers receive about 20 times as much revenue from each can of formula sold to a non-WIC consumer.
So let's make this clear. Taxpayers fund WIC. If those taxpayers are ordinary moms who shop at a pharmacy or grocery store, they are also subsiding WIC recipients because they pay more for each can of formula to keep the producers in business. This is a political hot potato for Congress.
The truth is the federal government has contributed to ensuring only a handful of companies will control most of the U.S. infant formula market. Fully 98% of the formula sold domestically is made in the U.S. Tariffs and FDA regulations restrict overseas competition. So who created this "monopoly"?
Abbott holds a 43% share of the formula market. The other dominant players are Mead Johnson, Nestle and Perrigo. There are few companies in the formula business because of the high barrier to entry. Building and staffing a formula plant represents a multi-million dollar investment.
The formula business is shrinking, particularly in the U.S. Birth rates are falling and the demand for formula is slowing. Worldwide sales reached $3.65 billion in 2019. That is another reason more firms are not rushing into formula production. It is a small line of business and marginally profitable.
In the midst of this crisis, Congresswoman Kat Cammarck blew the whistle on the stockpiling of baby formula at the border for illegal immigrants. The disclosure stoked more consumer anger. Biden's protector, The New York Times, labeled the concern "faux outrage." But was the information true?
While the Times awarded the congresswoman four Pinocchios, it admitted that a 2015 Customs and Border Protection document ordered : "Food must be appropriate for at-risk detainees age and capabilities (such as formula and baby food.") The phrase in parenthesis is in the newspaper's report.
It turns out infant formula is indeed stocked in warehouses for illegal immigrants at Border Patrol stations. So why the four Pinocchios? Isn't it obvious? The Times propaganda mission is to deflect criticism from the administration and tar those who dare point out the truth.
It begs the question: Why didn't the administration help relieve the shortage months ago by sending some of the formula stocked in warehouses to stores?
Biden' surrogates complain the president is not to blame for this situation. Poor Joe. Presidents often get credit for things they can't influence as well as blame for others. But, aren't the FDA and the Department of Agriculture part of the government Biden runs? Rhetorical question.
The administration's pity party is well...pitiful. American moms do not give a a baby poo about who's to blame. They expect the federal government to fix it. And immediately. Is that too much to ask of a government that spends trillions of dollars in taxpayer funds every year?
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