Over the course of the pandemic, we have experienced shortages in grocery stores – the most prominent images being empty shelves and harbored container ships. Supply shortages have definitely impacted consumers, people in communities. Unfortunately, a major supply shortage is currently affecting babies and toddlers. There is a massive national shortage of baby formula.
A major plant in Michigan that makes baby formula was shut down in February, and has not reopened. As a result, stores have reported stocking 43% less baby formula than usual. Parents all over the US have been desperately trying to get formula, fearing not being able to feed their children. Carrie Fleming is one of these parents, a mother of a 3 month old. As the New York Times conveys, “Her 3-month-old daughter, Lennix, can tolerate only one brand of formula, and Fleming could not find it anywhere near her. She finally located four small cans in New York — for $245.” For many families, baby formula is an absolute necessity. Like Fleming, babies may require formula because of an allergy. Babies may also be not able to drink breast milk, or lower income mothers may not have time to breastfeed. So, a shortage of baby formula is absolutely devastating.
Connecting to the economics lesson, the supply of baby formula (strained by the pandemic) has fallen behind with the demand from growing families. The baby formula supply chain is especially impacted by this strain, likely because of the relative monopoly that three companies hold over the baby formula market. If there were many businesses producing baby formula, I believe that the closure of one plant wouldn’t affect the whole market so devastatingly.
There is a bit of hope though. I’ve seen women on social media volunteering to give their breast milk to other families in need, and breast milk banks have been collecting donated breast milk. Reading the NPR article, economists are suggesting solutions like importing formula from foriegn countries (despite its high taxes and regulation) and more government regulation. I personally support the idea of more government regulation, specifically in regulations encouraging and supporting more baby formula producers to enter the heavily dominated market.
Questions:
What is your reaction to this supply chain issue?
What solutions do you agree with? Or, what solutions do you propose, based on principles of economics?
Sources:
https://www.nytimes.com/2022/05/13/briefing/baby-formula-shortage-us-economy.html
2 comments:
I never realized the extent to which supply chain issues such as a shortage of baby milk formula could have on the lives of young children, as those who have allergies and medical disabilities are put at high risk with no source of nutrition/food being available. The New York Times article “Baby Formula Crisis” reported that one of the biggest causes of this issue is the large corporate concentration in producing baby milk formula, therefore shortages like these have more of an impact as there are no other producers around. As for the solution being proposed, they are viable in the short term for getting donated breast milk but if the supply chain shortage were to continue other possible long-term options such as importing formula from foreign countries might also face many obstacles due the to U.S.’s FDA regulations and strict trade policies.
In efforts to address the baby formula shortage, Biden invoked the Defense Production Act on Wednesday, which mandates private businesses to provide more supplies to the baby formula manufacturers. According to NBC, this act grants the federal government great regulatory control over private businesses during times of national emergencies. The act requires baby formula ingredient producers to first ship formula manufacturers. This means that other food industries must wait, which will decrease production. Furthermore, the Department of Defense had to ship formula in from other nations.
While the act may be helpful in the short-run, it's certainly not a permanent fixture.
https://www.nbcnews.com/think/opinion/infant-baby-formula-shortage-biden-production-rcna30133
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