Baby Formula Shortage Impacted by Agriculture Supply Chain

BABY FORMULA SHORTAGE IMPACTED BY AGRICULTURE SUPPLY CHAIN

By Jaclyn Krymowski for Protect The Harvest

Throughout 2022, the national inventory of infant formula has decreased each month causing substantial shortages. The reason for this significant drop is due to a complex series of supply chain issues going back as early as 2020 - from the dairy farm to retail shelves.

Over half of of U.S. babies receive formula for at least part of their nutritional needs during their first year of life. Infants six months and older can start receiving some nutrients via solid foods, but prior to that they must be fully reliant on formula or breastmilk.

Baby formula is unique in that it is an essential product to supply complete nutrition for babies. There are no substitutes due to the careful nutritional composition and tedious safety regulations. According to an article in Epoch Times, “The FDA has discouraged parents from making formula at home due to very serious health concerns for babies.”

The article goes on to state, “The potential problems associated with errors in selecting and combining the ingredients for the formula are very serious and range from severe nutritional imbalances to unsafe products that can harm infants,” the agency noted. Health experts even warn that too much water for infants under six months could trigger seizures and brain swelling and dilute the calories.


By now it is common knowledge that COVID-19 was the lynchpin for a lot of supply chain issues. Even now many industries – especially agriculture – are still struggling to recover from the impacts. Infant formula was certainly not immune to these casualties. However, in September 2021, a massive recall at an Abbott Nutrition plant in Sturgis, Michigan further impacted the supply of baby formula. This recall included three of the biggest consumer brands: EleCare, Similac, and Alimentum.

The Baby Formula Supply Chain

While all elements and challenges within the food supply chain are significant to the American public, infant formula is especially unique. Infant formula is one of the most regulated food products in the U.S. food industry. Most infant formulas are dairy-based which is another highly regulated food product requiring specific handling and manufacturing protocols.

Restricted Dairy Production

Throughout COVID, dairy farms across the country struggled as their milk processors were restricted in production capacity due to limited labor. This led to milk being dumped on the farm as it could not be picked up before perishing. Inevitably this caused grocery stores to see a temporary “hiccup” and only have limited products in stock. Dairy products that did reach grocery stores were quickly purchased as panicked buyers tried to stock up amid the uncertainty.

Shipping

Many dairy processors have returned to their normal production capacity; however, there are other issues impacting the flow of supplies. A prime example of this is the global shipping container shortage that is inhibiting the importation and exportation of many key products like dairy, grains, and packaging supplies.
The ongoing shipping container crisis is especially significant right now because it greatly inhibits the number of new products or supplies that can enter the country. That means options for bringing in new formula products and ingredients from overseas are extremely limited.

Packaging

Infant formula manufacturers aren’t only struggling with production, they are also facing shortages with other essential items such as packaging. Packaging is a challenge, especially in the face of inflation. An article by ModernRetail in March 2022 covered the issue of raw materials being in high demand and short supply. In the article they mention, “Over the past two years, raw materials have proven to be some of the most important – but hard to procure – slices of the supply chain. With a shortage of these basic components, brands cannot deliver inventory to customers on time.”

Inflation and Pricing

Not only is it a struggle to get the formula to shelves, but it’s also a struggle to keep them stocked despite having higher prices.
Since the Abbott Nutrition recalls, retail formula prices are up approximately 30% in price across all major brands due to inflation and increased costs of production. This is coupled with a 40+% shortage of major formula brands across the country.
Intricacies of Producing Baby Formula
Many facilities report working at capacity but are still struggling to bridge the current gap. Unfortunately, with the intricacies of the supply chain, beginning at the farm level is a tricky thing to navigate. The limited facilities and capacities of processors in the various sectors make it especially difficult to recover from massive recalls as illustrated by the incident at Abbott nutrition.

Out of Stock Numbers Increasing – Retailers Setting Limits

According to the latest numbers put out by Datasembly, out-of-stock (OOS) rates are growing. The article lists nine states that have an out-of-stock rate over 50%. The states with the highest out-of-stock percentages are: Tennessee, Delaware, Texas, Montana, and Nevada. The CEO of Datasembly stated, “This issue has been compounded by supply chain challenges, product recalls and historic inflation. The category started to see stocking challenges beginning in July 2021, and the situation has continued to worsen into 2022.”

It is now being reported that several major retailers are setting limits on formula purchases to ward off stockpiling.

Slow but Steady Recovery

Beyond continuing production and ensuring the system moves as smoothly as possible, there are no answers to provide an ultra-fast and satisfactory solution. Instead, the process will need to naturally recover itself which will happen in due time.

We’ve seen this happen before, most recently with the U.S. beef, pork, and poultry industries that were temporarily slowed due to COVID-19. This resulted in a major backlog of animals waiting to be processed and a near standstill of the industry’s natural flow. Recovery did not happen exponentially, but with slow consistent progress eventually, production capacity increased and returned to its near-normal status.

Links:

Read More About the Abbott Nutrition Recall HERE

Learn More About Forumla Costs HERE and HERE

FDA Information About Baby Formula HERE

Datasembly Releases Latest Numbers on Baby Formula HERE

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