What’s Behind America’s Shocking Baby-Formula Shortage?
Bacteria, a virus, a trade policy—and a lesson
In brief: Demand for formula surged as parents hoarded in 2020; then demand fell, leading suppliers to cut back production through 2021; and now, with more new mothers demanding more formula in 2022, orders are surging faster than supply is recovering.
The pandemic has snarled all sorts of supply chains, but I can’t think of a market it’s yanked around more than infant formula. “During the spring of 2020, formula sales rocketed upwards as people stockpiled formula just like they stockpiled toilet paper,” Lyman Stone, the director of research at the consulting firm Demographic Intelligence, told me. Then, as “families worked through their stockpiles, sales fell a lot. This oscillation made planning for production extremely difficult. It was complicated to get an idea of the actual market size.” Meanwhile, Stone’s research has found that an uptick in births in early 2022 has corresponded with a “very dramatic decline in rates of breastfeeding” among new mothers, which pushed up demand for formula once again.
FDA regulation of formula is so stringent that most of the stuff that comes out of Europe is illegal to buy here due to technicalities like labeling requirements. Nevertheless, one study found that many European formulas meet the FDA nutritional guidelines—and, in some ways, might even be better than American formula, because the European Union bans certain sugars, such as corn syrup, and requires formulas to have a higher share of lactose.
Some parents who don’t care about the FDA’s imprimatur try to circumvent regulations by ordering formula from Europe through third-party vendors. But U.S. customs agents have been known to seize shipments at the border.
U.S. policy also restricts the importation of formula that does meet FDA requirements. At high volumes, the tax on formula imports can exceed 17 percent. And under President Donald Trump, the U.S. entered into a new North American trade agreement that actively discourages formula imports from our largest trading partner, Canada.
