Government Creates the Baby Formula Shortage

It is still difficult for parents to locate baby formula.

Both the media and the left (sorry! blame “corporate power run amok.” House Speaker Nancy Pelosi says, “There might be a need for indictment!”

Because it closed down Similac’s Similac factory, they blame Abbott Laboratories. Unsanitary conditions are what led to two deaths in infants by the Food and Drug Administration, however Abbott denied that it was responsible for those deaths.

In all cases, a factory shutting down doesn’t cause major shortages.

My Video of the WeekThis is what really causes the formula shortage.

Bans on imports. Mexico and Europe have plenty of food formula. American companies will normally buy this and then ship it here.

They can’t because of a number of destructive government policies.

“The dairy industry in the United States has a really long history of lobbying the government and achieving protection,” explains Cato Institute trade policy specialist Scott Lincicome.

That “protection” includes fat tariffs on formula from overseas and outright bans by the FDA.

These rules were bypassed by gray markets. “American parents enlisted third-party sellers to obtain European infant formula,” says Lincicome.

The formula was in the boxes, but Customs wouldn’t allow American parents to have it. They’ve “been seizing European baby formula shipments at the border, much like a drug seizure,” says Lincicome.

What is the purpose of banning imports? The government says it is for safety. But, the bureaucratic stupidity of formula bans often leads to them being banned.

“If you have the wrong scooper, banned!” says Lincicome. “If you don’t list a certain ingredient that the FDA demands, you’re banned!” If ingredients are listed in the “wrong” order or aren’t listed in English, the food is banned “even if a third-party retailer provides you with the English translation.”

I say to Lincicome, “I would think that government now would suspend those rules.”

“It certainly should,” he replies. “But the dairy industry lobbied very hard for these rules that provided them essentially a captive market. They’re not going to give that up easily.”

Our government now approves imports from just one British company because of this shortage. They also launched “Operation Fly Formula,” which flies formula here in military planes.

These responses, however, are quite pathetic. The only bottles they pick up are those made by FDA-approved facilities. They then waste time on re-inspecting the shipment upon its arrival.

“They want make sure the formula is safe,” I say to Lincicome.

“A legitimate concern if it were infant formula from China,” he replies. “But the largest producer of formula is in Europe.

Perhaps the European product may not be as secure.

“It is!” says Lincicome. “It’s exported all over the world.” But we can’t have it because “the FDA is extremely jealous of its regulatory authority.”

The government’s restrictions on competition are another reason why there is a shortage.

WIC is America’s food stamp program. It grants licenses to one company in every state. WIC stands for “Women, Infants and Children” as it is similar to all welfare programs. Now, it purchases 50% of American baby formula.

Abbott Nutrition dominated this market, offering the government the best price. They did a great job. Parents had few options after Abbott’s recall.

“It’s going to take weeks for Abbott to get manufacturing up and running again because they’re going to need FDA clearance,” says Lincicome. “The time for fixing this was months before the crisis hit, because now we have a highly concentrated domestic market (and) a tariff and regulatory wall around the country.”

Many government functions involve trying to correct the mistakes made by government.

Politicans rarely accept that. They blame the business.

On the floor of Congress, big government lovers like Connecticut’s Rep. Rosa DeLauro complain about “corporate greed” and demand the FDA be given more money.”The usual suspects blame capitalism and greedy corporations,” says Lincicome. “Clearly it’s government policy that’s causing the biggest problems.”