Politicians Created the Formula Shortage. Can They Fix It?

s parents across the country frantically search for baby formula amid a nationwide shortage, many have heard that the source of the problem is in Sturgis, Mich. That’s where Abbott, the multinational healthcare giant that sells formula under the Similac, Alimentum, and EleCare brands and controls 40% of the U.S. infant formula market, shut down its largest baby food plant in February after a type of bacteria linked to the hospitalization and death of several babies was found in the plant. (Abbott maintainsIt isn’t clear that the formulas caused harm to children.

But the reason one plant shutting down has had such an outsized impact on the nation’s baby food supply Several of these decisions can be traced back at Washington, particularly those made in the 1980s within Congressional corridors or beleaguered bureaucratic offices.

The baby food shortage, like many Washington issues, is multifaceted. However, it boils down to an insufficient supply. Baby formula is used by millions of people. Too few companies supply the product, which can lead to severe shortages if one major brand has stopped production.

The Centers for Disease Control and Prevention 2020 data shows that approximately three quarters (75%) of American babies are formula-fed by six months. Lower-income mothers are less likely to start formula-feeding babies than their higher-earning counterparts. This may be due in part to the inability to have a national policy for paid parental leave or to allow women working in the service industry to breastfeed.

Continue reading: The Stress of feeding their babies during a formula shortage: 5 parents

Many of these mothers enroll in WIC, the Special Supplemental Nutrition Program for Women, Infants and Children, run by the U.S. Department of Agriculture. Through state agencies, WIC gives families earning at or below 185% the federal poverty line vouchers and electronic cards to purchase baby formula on the government’s dime. In 1989, Congress, hoping to keep WIC’s costs down, passed legislation requiring states to use competitive bidding to select one manufacturer of infant formula to be covered by WIC.

According to estimates by the government, WIC accounts for roughly half- to two thirds of all formula bought in America. Due to so many families relying upon formula, Congress’s move led to each state having its bid winner dominating the US formula market. This led to a level of consolidation that was unprecedented in other areas of the U.S. Formula industry.

Since the single-contract rule was established more than 30 years ago, only three companies–Abbott, Gerber, and Mead Johnson—have received those WIC contracts. Their control over the market has disincentivized the creation of new brands, which is why the recent loss of Abbott’s products from store shelves has left many parents with few alternatives.

According to Datasembly software, 43% of top-selling infant formula products nationwide were out of stock as of May 8. The range of normal shortages fell between 2% and 8 percent.

“The extremely high levels of concentration in the infant formula market creates a serious risk to infant health if there is any disruption to a major manufacturer’s supply,” Senators Cory Booker of New Jersey, Amy Klobuchar of Minnesota, Tammy Duckworth of Illinois, and five other Democratic Senators wrote to Agriculture Secretary Tom Vilsack last week, calling for an “immediate antitrust review.”

“This is yet another example of how alarming levels of consolidation hurts American families and can no longer be ignored,” they added.

‘Infant formula is the most regulated food that exists’

Elyssa Schmier, a Michigan mother, is one of those who are flummoxed at the lackluster baby formula shelves in her local grocery store. She had hoped to exclusively breastfeed her son, who is eight months old, but her body wasn’t producing enough milk—even when she woke up every three hours to pump. Her doctor advised her to supplement with formula, which now makes up approximately 60% of her son’s bottles when she can find it in stores.

Schmier, a vice president with MomsRising, which advocates for issues facing mothers and families, expressed frustration with seeing people use the moment to guilt moms for using formula when exclusively breastfeeding a child isn’t feasible for many, especially after they have begun tapering. “The best way to feed a child,” she says, “is to feed a child.”

In Washington, many of the proposed solutions to Schmier’s dilemma are focused on the immediate crisis.

Biden administration has asked states to temporarily relax regulations about what formula parents can purchase using WIC. On Monday, a White House official said that they were working with four of the largest formula brands in order to find obstacles to domestic supply growth. The Administration also promised to speed up the approval and application process for importation.

That process normally moves at a snail’s pace due to strict safety regulations governing baby formula. “Infant formula is the most regulated food that exists, by far,” says Dr. Steven A. Abrams, a professor at the Dell Medical School at the University of Texas at Austin and the chairman of the American Academy of Pediatrics’ Committee on Nutrition. “The reason being that if you leave a component out, the baby can have severe brain damage and die.”

However, international brands may not export baby formula to America due to high tariffs of up 17.5%. Rep. Nancy Mace of South Carolina is working on a billThese tariffs would be temporarily lifted on formula products for babies.

Virginia Democrat Abigail Spanberger agreed that tariffs should be reduced. “The fastest way to get more formula onto the shelves, at least in the short term, is going to be tariff relief,” she told TIME Monday.

Lawmakers representing both parties, including Senator Marco Rubio of Florida and Sen. Kirsten Gillibrand of New York, have urged Biden to reconsider invoking Defense Production Act. The law was originally passed during the Korean War. It gives Presidents wide powers to direct domestic industries in emergencies. Former President Donald Trump and Biden invoked the DPA in an effort to accelerate production to fight the pandemic. “There is ample precedent for using the DPA to address a crisis in peacetime,” Rubio said in a statement last week.

Even though the current crisis has ended, formula will once again be available in grocery stores. But, there is still the consolidation problem and the risk of similar future problems. It would take a significant overhaul of WIC to address this problem, something that experts are skeptical about.

“There’s still not an awareness that one of the government’s key roles is to structure markets, so that you don’t have fragile supply chains,” says Matt Stoller, the director of research at the American Economic Liberties Project, an antitrust advocacy group, and the author of Goliath: Hundred Year Wars Between Monopoly Power And Democracy.

Spanberger also believes there should be greater transparency regarding possible shortages. A bill was drafted by Spanberger and another Republican to require that baby food producers inform the Food and Drug Administration of any anticipated shortages. This is similar to what other manufacturers do. “There are certain requirements on various different types of industries that if they are anticipating supply chain disruptions or shortages, that they are to make that known to FDA,” she says, while acknowledging that the proposal wouldn’t solve the current shortages. “This legislation, unfortunately, won’t help us in the here and now,” she says.

Abbott also announced Monday that it has reached an agreement with FDA for Sturgis to resume production as soon the safety concerns are resolved.

This won’t solve Schmier’s problems overnight, though. Abbott stated previously that baby formula would be available on store shelves within six to eight weeks once it was back up and running.

—with reporting by Alana Semuels in New York

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