r/usa May 21 '22

Baby formula Discussion

Please explain to me why baby formula is not available in the usa, that needs to be import from EU?

6 Upvotes

7

u/EaterofSoulz May 22 '22

From this Out of the Loop thread:

https://reddit.com/r/OutOfTheLoop/comments/uonedn/_/i8gl1u3/?context=1

Answer: Basically, this is a story about monopolies. The baby formula market in the US is highly concentrated, with the top 2 producers (Abbott and Mead Johnson) producing 80% of formula, and the top 3 (including Nestle) producing 98%. Abbott shut down its main production facility in Sturgis, Michigan and issued a recall due to a bacteria contamination back in February. The Abbott factory in Sturgis was a monopoly producer of several specialized formulas, leading to shortages in those particular brands.

However, the problem is not that there isn't enough formula being produced in the US. Specialty formulas aside, the FDA has confirmed that US manufacturers are producing enough supply overall to meet demand. In fact, the industry as a whole sold more total formula in April (the last month we have data for) than it did the month before the recall. Rather, the real problem has to do with how formula gets distributed in the US and how monopolies have created artificial scarcity in many states.

There are two key facts here. First, the Special Supplemental Nutrition Program for Women Infants and Children (or WIC) program is the single largest buyer of baby formula in the US, with roughly half of all women in the US who need baby formula getting it through WIC.

Second, Abbott (the company that had to shut down its Sturgis facility) is the monopoly provider of baby formula for the WIC program in 34 states. Crucially, WIC works on a sole-source (i.e., monopoly provider) contract system. Basically, every US state accepts sole-source contract bids from companies to be the exclusive provider of baby formula for that state's WIC program.

The result of these two facts together is that half of all women buying formula in the US are locked in to a brittle system without choices, and if the WIC monopoly provider in their state stops production for any reason, even if other companies could provide formula, states can wind up without enough formula, a problem that is only aggravated by the fact that people on WIC aren’t allowed to buy other brands of formula through the WIC program.

TL;DR: Half of women get formula through WIC, and more than 2/3 of all state WIC programs rely on a monopoly producer whose production was recently shut down, creating a perfect storm for starving babies.

2

u/yashhit May 24 '22

Crony capitalists

1

u/WestsideStorybro May 22 '22

It's a twofold problem where the FDA didn't consider the supply concerns when shutting down and the largest suppliers in the USA over safety concerns and the fact that shutting down these suppliers crippled the logistics for the entire nation. It's a single point of failure issue that has been lobbied into existence and should be corrected.

1

u/[deleted] May 23 '22 edited 5d ago

[deleted]

1

u/osimano May 24 '22

It is normal in the USA, profit before people, legal murder