By Jenny Zimmer
Corruption can feel abstract: insider trading, kick-backs, deal-cutting.
But today, corruption is having a real, noticeable impact on some of the most vulnerable Americans – families and babies who rely on formula in the middle of a supply shortage.
So what caused the baby formula shortage?
In February 2022, one of the largest formula manufacturing plants in the country shut down following a U.S. Food and Drug Administration (FDA) investigation. The investigation looked into why four infants were hospitalized for a dangerous bacterial infection.
The Michigan plant, run by Abbott Nutrition, was a major producer of formula used across the country. This closure, combined with existing supply chain issues, has contributed to the increasingly low stock of formula in stores. The people who have been hit the hardest are those who need specialized formulas for children with allergies and specific dietary needs. It’s also been devastating for many low-income families who can’t afford to stock up.
How is the formula supply issue a corruption problem?
Here’s the headline: Our government is serving the needs of corporations rather than the needs of its people.
1. The formula sector is a monopoly, meaning there’s little to no competition in the market.
The United States has antitrust laws that are supposed to break up monopolies. However the Federal Trade Commission (FTC) has not used those laws to break up the highly consolidated infant formula industry. That leaves us with a mere four companies that control 90% of the formula market. Very specialized formulas are often more consolidated than that. That means that when one massive plant shuts down production, or one company struggles to secure the ingredients they need, it becomes a national crisis.
2. Exclusive contract negotiations for the federal WIC program led to further consolidation of power for just a few providers.
More than half of the baby formula purchased in the U.S. is purchased through the Women, Infants, and Children (WIC) program, a national program established to support low-income families. Each state negotiates its WIC contracts with one company in a bidding process. The goal of this single-source contracting process is to cut expenses for the WIC program. But it also means that over the past 30 years, just three companies have received contracts with WIC. This contributes heavily to the highly consolidated formula industry.
One of those companies is Abbott Nutrition – the company whose factory is currently shuttered. Abbott is the sole formula provider for roughly half the infants receiving formula purchased through WIC.
Because Abbott’s supply is severely impacted, many states are having trouble finding formula that is approved for sale through the WIC program, and some of the most vulnerable formula users are unable to find or afford the food they need for their babies.
This prioritization of low costs over the safety and availability of life-saving nutrition demonstrates the failure of a government that puts corporate interests before the interests of the people they serve.
3. Protectionist policies effectively disallow importing baby formula
One more way the U.S. protects the big domestic formula producers, and hurts consumers, is by heavily restricting imports of formula. In theory, these regulations are to ensure the safety of infants. But by disallowing formula created and used in other countries – including Canada – it also creates less competition and makes our formula supply vulnerable to shortages. (Note: On Wednesday, May 18, President Biden eased some of these restrictions in an effort to bring more formula into the country.)
4. Lack of a federal standard for paid leave
Paid leave is an incredibly popular policy. A poll last year found that 84% of likely voters, including 74% of Republicans, support a paid leave policy for new parents. A majority of those polled across all parties and political perspectives also said they would pay more taxes to ensure a federal paid leave standard. However, despite this overwhelming support, America still doesn’t have a national paid leave policy. Because it’s popular, politicians tout it on the campaign trail, only to see it fizzle in Congress year after year. In the year 2022, only 23% of American workers have access to paid leave.
Lack of paid leave has aggravated the formula shortage by increasing the number of parents dependent on formula to feed their infants and making it more difficult for parents to get time off work to find formula in this crisis.
RepresentUs has long decried the gap between the popularity of policies and which policies become law. When politicians aren’t accountable to their voters, we can’t count on them to pass the policies we desperately need to improve our lives.
In 2022, we all know supply chains are complicated and slow (remember the toilet paper shortage of 2020?). But perhaps the commodity in shortest supply here is responsive federal policy, and a government that is accountable to all Americans. Even the very tiny ones.
So what can we do?
At RepresentUs, we’re fighting for democracy everyday. Join us to:
- End partisan gerrymandering so that voters pick their representatives, NOT the other way around.
- Promote Ranked Choice Voting and break the two-party duopoly.
- Get money out of politics.
- Ensure our elections are free and fair by protecting nonpartisan election officials.
- And more!
Text DEMOCRACY to 35565 and sign up for our email list to be a part of the movement.
Contributors: Dexter Williams, RepresentUs Research Analyst; Susan Hildebrand, RepresentUs National Mobilization Director