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“4 companies have taken control of the infant formula market”: Lawmakers and women’s health advocates debate solutions to the infant formula shortage

What can be done to prevent shortages of baby food, tampons and other consumer goods?

The US Senate Subcommittee on Competition Policy, Antitrust and Consumer Rights held a hearing this week to address the US infant formula market and broader supply chain issues.

A nationwide infant formula shortage has forced some desperate parents to drive long hours, trawling stores and websites to find formula for their babies. In the seven days ended May 29, 73% of baby formula products nationwide were sold out, according to Datasembly, a retail tracking group. And in some states like California and Georgia, out-of-stock rates were over 90%.

Baby formula isn’t the only product prone to sudden shortages; Many sectors are too consolidated and too dependent on a few large players, an expert said at the hearing.

“There are dozens, if not hundreds, of industries that would have impacts that would be far more devastating than what we’ve seen here,” Barry Lynn, executive director of the liberal think tank Open Markets Institute in Washington, DC, told the Senate hearing about the lack of baby food in the supply chain.

For example, more than 95% of generic drug ingredients come from China, and their supply could easily be disrupted by US-China diplomatic issues, Lynn said.

Baby formula inventories were already running low before Abbott Laboratories, which controls 40% of the infant formula market, closed a manufacturing plant in Michigan in February. As a result, experts say the infant formula shortage was a storm waiting for us. For decades, the US infant formula market was controlled by just a few major players.

According to analysts, high tariffs and strict labeling regulations from the US Food and Drug Administration have made it difficult for other players to enter the market. In fact, the tedious process of becoming a baby food manufacturer in the US has led to this just a new manufacturer successfully registered with the FDA in the past 15 years, Scott Lincicome, director of general economics and commerce at the libertarian think tank Cato Institute, said at the hearing.

“Today’s producer concentration and any resulting problems are primarily the result of federal government policy, not some natural, private market failure,” Lincicome said at the hearing.

“I’m really frustrated,” Sen. Cory Booker, a New Jersey Democrat, said at the hearing. “Four companies have gained control of the formula market through acquisitions. It leads to a lack of innovation and leads to a lack of resilience and a consolidated market.”

Abbott ABT,
+0.45%,
Mead Johnson Nutrition (owned by Reckitt RBGPF,
-3.27%
), Perrigo PRGO,
+4.05%,
and Nestle USA NSRGY,
+0.01%
are the four major players in the US baby food market. The Biden administration enforced the Defense Production Act on May 18 to speed up formula manufacturing and import formula from abroad for additional supplies.

Abbot, Mead Johnson Nutrition and Nestlé USA did not immediately respond to a request for comment. A Perrigo spokesman said the company’s products accounted for about 8% of the total infant formula market. “The company is doing everything we can to make as much infant formula available to its retail partners during this challenging time,” the spokesperson told MarketWatch. “During the three months ended March 31, 2022, we shipped 37% more formula than in the same period last year.”

While US businesses and consumers have faced numerous shortages due to supply chain disruptions during the COVID-19 pandemic, infant formula differs from industries like semiconductors and automobiles: Only 2% of infant formula products are imported into the US

Tariffs on infant formula can be as high as 17.5%.

“Offer, variety, economic openness [and] Low trade barriers really help to have a better and more stable market,” Lincicome said.

At the same time, increasing infrastructure support for breastfeeding would help reduce demand for infant formula, Ginger Carney, director of clinical nutrition at St. Jude Children’s Research Hospital in Memphis, Tennessee, said at the Senate hearing.

According to Carney, breast milk is the optimal choice for infant feeding, but not all mothers are able to support their babies in this way. Many mothers want to breastfeed but struggle to do so, either because of a lack of support from school or other obstacles such as having a child. B. returning to work.

“Many mothers may start breastfeeding and then breastfeed for a few weeks while they’re on maternity leave,” Carney said. “And I’ve noticed a huge drop once moms have to go back to work.”

Most employers and workplaces don’t provide mothers with a private, clean place to express their milk, Carney said, and mothers may feel embarrassed or concerned about retaliation if they take breaks to pump while they’re at work. Low-income mothers can be discriminated against, Carney said.

It’s also a logistical challenge; Breast milk must be refrigerated and stored in special storage bags or clean, food-grade containers, according to the US Centers for Disease Control and Prevention. Moms who pump at work and want to transport the milk to their babies need to have all of this equipment with them, as well as a place to plug in the breast pump and keep the milk cool.

Carney gave the example of a new mom who works at a fast food restaurant. “What are you going to do when you have to pause and say, ‘Oh, watch the window. I have to express my milk?’ You just can’t do it. It’s just not accepted as the norm,” Carney said.

https://www.marketwatch.com/story/4-companies-have-gained-control-over-the-formula-market-lawmakers-and-womens-health-advocates-debate-solutions-to-baby-formula-shortage-11655486894?rss=1&siteid=rss “4 companies have taken control of the infant formula market”: Lawmakers and women’s health advocates debate solutions to the infant formula shortage

Brian Lowry

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