Oligopoly In Baby Formula Production Leads To Shortages, Republicans Want To Starve Babies In Immigrant Detention

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The latest scandal du jure is a baby formula shortage. And what is the cause of this shortage? Fortune explains, America is running out of baby formula because 3 companies control the market and babies aren’t that profitable:

A baby formula shortage gripping the U.S. since March has parents in a panic over where and when they’ll be able to find the products they need to feed their kids.

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The out-of-stock rate, representing the amount of formula that’s not in stock compared to what’s typically available, was 43% for the week ending May 8, according to Datasembly, a provider of real-time product data for retailers and consumer packaged goods (CPG) brands.

[H]ow did a baby formula crisis spring up in one of the world’s richest countries? Experts say a recall by one of the industry’s largest manufacturers, persistent supply-chain issues, and a market dominated by only a few players have combined to form what one consumer goods expert calls a “perfect storm” affecting the supply of essential formula to millions of babies across the U.S. And the shortage could last for months. 

Here’s how we got here.

Poisoned baby formula

Abbott Nutrition is the food sector arm of medical device and health care giant Abbott Laboratories, making products that range from carb-loaded drinks that help patients rebound from surgery, to energy drinks, to powder and liquid baby formula. Though it maintains a global manufacturing network, its plant in Sturgis, Mich., is among the few in the U.S. that produce formula.

On Feb. 17, Abbott voluntarily recalled its Sturgis-manufactured products and shut down the plant following reports that four infants fell ill from bacterial infection and two died after consuming formula produced in the plant. A whistleblower report, submitted to the FDA in October 2021, alleged further health and safety compliance issues at the facility and contributed to a formal inspection by the agency earlier this year.

Abbott is now waiting for approval to reopen. “We understand the situation is urgent—getting Sturgis up and running will help alleviate this shortage,” the company said in a statement to Fortune. After conducting its own investigation, which included genomic sequencing of bacteria, the company reported that nothing on its premises matched the specific strain of bacteria that caused the illnesses and deaths.

“The Cronobacter sakazakii that was found in environmental testing during the investigation was in non-product contact areas of the facility and has not been linked to any known infant illness,” the company said in a statement.

The FDA, however, found more problems with the facility that extended beyond the possibility of previous contamination. Following its own inspection, which occurred from Jan. 31 to March 18, the FDA says that it observed Cronobacter sakazakii “in medium and high care areas of powdered infant formula production”—a problem regardless of whether or not it was the same strain that caused the specific infant deaths.

The agency additionally said in its report that the company “did not ensure that all surfaces that contacted infant formula were maintained to protect infant formula from being contaminated by any source.” According to the FDA, the company is still working to “correct findings” from its inspection. The plant has not yet been able to reopen as a result.

Abbott won’t be able to get product from its Sturgis facility on shelves for another six to eight weeks, according to the company. And that’s only if it reopens as soon as possible.

“From a parent’s perspective, there’s no easy, magical answer right now,” says Brian Ronholm, director of food policy for Consumer Reports, a nonprofit organization dedicated to ensuring product integrity.

Even after the plant reopens and begins to provide formula to families again, a larger question remains: How can closing a single manufacturing facility have such a drastic effect on millions of babies’ access to nutrition?

A monopoly in the market

The baby formula market exists as a shared monopoly, with only a few manufacturers controlling nearly all supply.

Abbott had an approximately 43% market share a decade ago, according to aUSDA report from 2011 — the most recent number available. Little has changed since then. The company still maintains exclusive provider contracts in many states with WIC, the USDA’s supplemental nutrition program for low-income families, which makes up nearly half of formula sales nationwide. A few other manufacturers, including Mead-Johnson and Nestlé, also have WIC contracts and control the rest of the market.

In addition to its highly concentrated structure, the baby formula market is difficult for another reason. Its demand is set by the nation’s birth rate, and the market has been shrinking for years. The number of births has declined every year since 2008, except for 2014, according to the U.S. Census Bureau.

With only a few key players whose capacities are tied to a shrinking market, repercussions are inevitable when anything gets in the way of a certain product getting to store shelves. Other manufacturers are bound to struggle with an influx of new demand from consumers who can’t get what they’d typically buy.

“The dilemma [manufacturers] have is that it’s not a very lucrative market,” says Patrick Penfield, a professor of supply chain management at Syracuse University. “The only way you can grow your market share is if you’re aggressively going after competition.”

Because Abbott is one of the biggest players in the game already, significantly expanding its share is not really an option.

“If you can’t grow your market share, then you look at how you can reduce costs,” says Penfield. “And sometimes when you reduce the costs, you may not have the right protocols or procedures in place to make sure that you’re doing things properly.”

“I’m not saying that’s what Abbott Laboratories did,” he cautions. “But that would be an assumption of mine.”

Is the FDA responsible for the shortage?

Abbott is not the only entity possibly at fault. “There’s plenty of blame to go around here,” says Scott Faber, a professor at Georgetown University’s law center and vice president of government affairs at Environmental Working Group, a nonprofit aimed at empowering consumers.

Faber sees the FDA itself as in part responsible for the shortage. The agency, he says, did not react fast enough to the whistleblower report and should have conducted a plant inspection sooner.

[W]hen submitting the report for the record last month, Rep. Rosa DeLauro (D-Conn.) wrote: “I am equally concerned that the FDA reacted far too slowly to this report. The report was submitted to the FDA on Oct. 20, 2021. The FDA did not interview the whistleblower until late December 2021. According to news reports, FDA did not inspect the plant in person until Jan. 31, 2022, and the recall was not issued until Feb. 17, 2022.”

The agency did not finish its inspection and issue observations to Abbott until March 18. The company says that it has been working since then to update its education and training protocols as well as its cleaning and maintenance procedures. “The FDA would not have shut down that factory if they didn’t find anything. So there’s definitely some type of noncompliance that’s going on,” Penfield says.

Now the FDA is working to catch up to a crisis that seems to have been unfolding in slow motion for months.

The future of formula

This week, the White House held a press conference to address the shortage and how it plans to get formula restocked as quickly as possible without compromising safety.

“Those steps include first cutting red tape to get more infant formula to the shelves by urging states to provide flexibility in the WIC program, which can be a key driver of some supply disruptions,” said a senior administration official. The official added that the administration is calling on the FTC and state attorneys general to monitor price gouging by third-party sellers.

The official outlined a third avenue for alleviating the shortage: foreign imports. “The U.S. normally produces 98% percent of the infant formula it consumes, and trading partners in Mexico, Chile, Ireland, and the Netherlands are key sources of imports,” said the administration in a release that accompanied the press conference.

However, there’s no timeline yet for when those formula imports will arrive in the U.S and be distributed. Friday, FDA commissioner Robert Califf tweeted that the agency will announce its plan next week.

When pressed about how long the shortage will last, the official said there is no estimate for when Abbott’s facility will resume functioning.

“I see continued shortages,” says Penfield about the coming weeks. “I think there’s a lot of pressure on Abbott to get that plant up and running. And until they do so, you’re gonna see these continued shortages.”

So to review, 90% of baby formula in the United States is produced by only three companies. They effectively have oligopoly power and no market competition. Because baby formula is not financially “lucrative,” Abbott at least took risks with safety protocols and procedures to reduce its cost of production, leading to contamination. Because Abbott has an exclusive contract with the federal government for the USDA’s WIC program, federal oversight by the FDA was lax. One could say that the FDA is a captive agency of this oligopoly industry. This is capitalism run amok. This is an Upton Sinclair muckraker journalism story here.

But Republicans have sought to politicize this baby formula shortage, folding it into their 2022 midterm campaign strategy of anti-immigrant hysteria “white fright.”

MSNBC’s Chris Hayes reports:

There is no bottom to how low these bottom-feedings sewer dwellers will go. These white Christian Nationalists are truly evil. They are vicious animals. How dare they pretend to call themselves Christians. How dare they pretend to call themselves “pro-life.” They are neither. They are willing to starve to death immigrant babies in the custody of the U.S. government because of scarce resources resulting from an oligopoly industry. They are no different than the Nazis.

Huffington Post reports, Republicans Criticize Biden For Not Starving Undocumented Immigrant Babies:

Republicans criticized the Biden administration on Thursday for providing food to infants detained in its custody — effectively suggesting the babies should be starved because of their immigration status.

“The Biden administration has been sending pallets of baby formula for illegal mothers and their babies while American mothers and babies cannot find baby formula,” Rep. Marjorie “Q” Greene (R-Ga.) said at a news conference. “This is completely unacceptable, and this needs to end now.”

“Baby formula should go to Americans before illegals,” Rep. Troy Nehls (R-Texas) wrote on Twitter. “This should not have to be said.”

Texas Gov. Greg Abbott (R) accused the administration of giving “critical supplies to illegal immigrants before the very people he took an oath to serve.”

See: “Pro-Life” Gov. Greg Abbott Demands That Biden Starve Babies. “Starve the babies while taking away abortion rights is what Republicans mean by pro-life.”

Greene referenced photos of baby formula at a border facility, likely referring to a [far-right] Washington Examiner article about immigrants detained at the border receiving baby formula amid a nationwide shortage. Nehls also tweeted a link to the article. The Examiner refers to the immigrants as a “lucky group” and cites posts by Rep. Kat Cammack (R-Fla.) about “thousands and thousands of containers of baby formula” being sent to the border. Cammack said she received a photo of the deliveries from a border agent.

Cammack called on people to demand the Biden administration “take the baby formula that they have basically siphoned out of the supply chain and put it back in the damn stores for American kids.”

* * *

[B]abies in U.S. government custody need sustenance, too, and their parents don’t have the option of leaving detention to buy supplies. If the government didn’t provide food to the babies in its custody, they would starve.

The right has demonized undocumented immigrants for years, and the U.S. has a disturbing record of neglecting or mistreating children in its care. In one of the most infamous examples, former President Donald Trump intentionally split children from their parents in an attempt to dissuade immigrants from coming to the United States. For years, Republican lawmakers have blocked efforts to grant legal status to undocumented immigrants who came to the U.S. as kids. Republican politicians have suggested immigrant detention centers, including ones that lock up children, are too nice.

The right’s claims about baby formula for undocumented kids fit into the narrative that Democrats are encouraging unauthorized immigration by not being harsher to undocumented people. [Fascist] Stephen Miller, a former senior adviser to Trump who championed many of that administration’s harshest immigration policies, said the Biden administration was “diverting scarce formula to subsidize mass illegal immigration.”

Cammack insisted that her screed against baby formula for undocumented infants was actually part of a pro-children agenda, and she accused the Biden administration of helping cartels smuggle immigrant kids by being insufficiently tough on the border.

“It’s not these kids’ fault,” she said. “My heart breaks for these kids.”

Just not enough to let them eat.

Every one of these white supremacist Republicans is no better than the Nazis who starved millions of Jews.

The third in command in the Republican leadership in the House managed to tie the baby formula shortage to the QAnon pedophile cannabalistic baby eater insane conspiracy theory. Rep. Elise Stefanik Attacks Mysterious ‘Pedo Grifters’ For Shortage Of Infant Formula:

Rep. Elise Stefanik (R-N.Y.), who [falsely] describes herself as “pro-life,” blamed the White House and mysterious “pedo grifters” on Friday for America’s infant formula shortage — and called for denying formula to migrant’s babies.

The “White House, House Dems, & usual pedo grifters are so out of touch with the American people that rather than present ANY PLAN or urgency to address the nationwide baby formula crisis, they double down on sending pallets of formula to the southern border,” Stefanik wrote in a tweet.

The “usual pedo grifters,” who were unidentified, appeared to be a reference to a particularly outlandish QAnon conspiracy theory that an international ring of child sex traffickers is being operated by Democratic leaders. A Stefanik spokesperson insisted to The Independent that the imagined “pedo grifters” also included Republicans.

Critics warned that such an irresponsible tweet could trigger violence against imagined enemies. A gunman opened fire in 2016 in a Washington, D.C., pizzeria that was baselessly identified as a headquarters for a supposed child trafficking operation. No one was injured. The “Pizzagate” gunman was sentenced to four years in prison.

After similar tweet Friday by Stefanik calling for formula to be denied to immigrant’s infants, Rep. Ruben Gallego (D-Ariz.) named her the leader of a mock “Pro Starvation Caucus.”

Stefanik blames the Biden administration for the current shortage of infant formula in America. The administration does not manufacture formula; it’s created and sold by three major companies, which have little competition.

The shortage was triggered in part by pandemic-related supply chain issues combined with a massive safety recall by the largest formula producer, Abbott Nutrition, which was forced to close its Michigan plant earlier this year due to contamination concerns.

The U.S. has purchased formula for immigration facilities because it’s required by law to provide necessities, such as toilet paper, food and infant formula, to people being processed or detained in federal facilities.

Note: It is required by the 1997 Flores Settlement as it relates to children incarcerated in family detention centers with an accompanying parent or legal guardian.

Stefanik is one of several so-called “pro-life” Republican lawmakers who want abortion banned yet see no contradiction in denying infant formula to babies at federal detention facilities.

Critics on Twitter piled on Stefanik.





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3 thoughts on “Oligopoly In Baby Formula Production Leads To Shortages, Republicans Want To Starve Babies In Immigrant Detention”

  1. House Speaker Nancy Pelosi said on Friday that the House would take action next week to address the baby formula shortage. In a letter to lawmakers, Ms. Pelosi said she would expedite a bill to grant emergency authority to the federal food assistance program for women and children (WIC) to relax restrictions on the types of formula that can be purchased. “House Plans Vote to Ease Formula Crisis as Biden Pledges Quick Action”, https://www.nytimes.com/2022/05/13/us/politics/baby-formula-shortage-biden.html

  2. The Washington Post’s Fact Checker, “The faux outrage that Biden is stockpiling baby formula for undocumented immigrants”, https://www.washingtonpost.com/politics/2022/05/12/faux-outrage-that-biden-is-stockpiling-baby-formula-undocumented-immigrants/

    [T]the Biden administration is following the law — a law that President Donald Trump also followed (though he wasn’t happy about it).

    At issue is something called the Flores consent decree, which began as a class-action lawsuit regarding the treatment of migrant children. The Justice Department negotiated a settlement in 1997 during President Bill Clinton’s administration.

    The Flores settlement requires the federal government to release rather than detain undocumented immigrant children, first to their parents if possible, to other adult relatives if not, and to licensed programs willing to accept custody if no relatives are available. A 2015 judicial ruling then said the Flores settlement covered all children in immigration officials’ custody, regardless of whether they were apprehended crossing the border alone or with family.

    Here’s the relevant section of the settlement, which refers to the now-defunct Immigration and Naturalization Service (INS).

    Note the reference to food: “Whenever the INS takes a minor into custody, it shall expeditiously process the minor and shall provide the minor with a notice of rights, including the right to a bond redetermination hearing if applicable. Following arrest, the INS shall hold minors in facilities that are safe and sanitary and that are consistent with the INS’s concern for the particular vulnerability of minors. Facilities will provide access to toilets and sinks, drinking water and food as appropriate, medical assistance if the minor is in need of emergency services, adequate temperature control and ventilation, adequate supervision to protect minors from others, and contact with family members who were arrested with the minor.”

    [A] 2008 law that codified elements of Flores, the Trafficking Victims Protection Reauthorization Act.

    Among those standards: “Food must be appropriate for at-risk detainees’ age and capabilities (such as formula and baby food).”

  3. NY Times Fact Checker, “Republicans Wrongly Tie Biden Immigration Policies to Baby Formula Shortage”, https://www.nytimes.com/2022/05/13/us/politics/baby-formula-shortage-biden-immigration.html

    Republican lawmakers have misleadingly suggested that the Biden administration is sending baby formula to undocumented immigrants at the expense of American families amid a national shortage.

    The shortage has become fodder for political attacks from Republicans, who have fused the issue with criticisms of the administration’s immigration policies. Democrats have countered that those opposed to providing migrant infants with formula belong to a “pro starvation caucus,” as [Rep. Ruben Gallego put it.]

    But it is inaccurate to suggest that President Biden is choosing to prioritize the needs of immigrant children over those of American children. Providing food — like formula — and water to migrant children detained at the border is required by [the Flores settlement], and the Trump administration also adhered to that requirement. And it is unlikely that the amount of formula in stock at detention facilities would meaningfully ease the shortage.

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