The formula shortage is far from over. Families across the US are struggling to get proper nutrition for their babies after a major supplier stopped production.
“A major problem is the consolidation of the food industry,” said David Hammons, senior instructor of supply chain management at Missouri State University. “In the US, just a few producers account for the majority of our food supply.”
“It is time to consider how we can improve our regulatory systems and our seizure management to ensure this does not continue to happen.”
The cost of extensive regulation
Although formula milk production is the most observed case in recent supply chain disruptions, it is not alone. We are witnessing shortages of many food products, with some favorite brands missing from grocery store shelves.
Main reason for this shortage? Extensive and often costly regulation by the Food and Drug Administration (FDA).
“We, of course, want our food production to be well regulated,” Hammons said. “But the current regulations are often created by lawmakers with limited understanding of food production practices.”
“These regulations can make it harder for smaller companies to survive.”
This leads to a consolidated industry, Hammons explains. When only a few companies can afford to stay afloat, there are fewer options when a major incident occurs that limits the supply of a particular product.
Another problem with the game is the lot sizes. When manufacturers create a product, they assign it a code corresponding to its production run or batch. Batch codes are the numbers you look for on your product when a recall is announced.
These codes can include all products from the same day or even week of production. The large size of these lots can lead to massive recalls when many of these products may be safe to sell.
Fighting the shortage
To help families get the formula they need, the Biden administration in May invoked the Defense Production Act. The law will bring about 58 million 8-ounce bottle equivalents to the U.S. market by the end of the year.
But this is not a long-term solution. The law requires significant slack within the FDA and has left many parents worried that they may have to switch their baby from one formula to the new foreign brands.
Until the shortage was addressed, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) required its members to use only pre-approved brands of formula.
But the recent flexibility introduced by WIC may have come too late. Families resist switching from one formula to another, fearing that the change could cause digestive and other health problems.
“Unnecessary restrictions like this can put unnecessary pressure on the supply chain when something goes wrong,” Hammons said. “As long as formula is safe, parents should be allowed to use it.”
Hammons offers another solution: a database to connect manufacturers and distributors with parents and guardians of babies who need specialty formulas.
Premature babies and babies with allergies often need specialized formula milks, and there’s no way for families to know when this formula might hit the shelf.
Resources for families
Prevent future disruptions
So how can we prevent future food supply crises? Hammons has two suggestions:
- Improve our food supply chain management systems.
Companies began experimenting with reducing batch sizes and enforcing clearer coding for each production run.
“If we can develop smaller, more specific lot codes and the technology to track them, we’ll be able to enforce better seizure techniques,” Hammons said. “We won’t see such extensive recalls because we won’t be forced to remove products that are safe to sell from our stores.”
- Work with our regulators to find solutions that can ease consolidation in the food industry.
This shortage has opened the eyes of many legislators and regulators such as the FDA to the shortcomings of our food industry and the regulations designed to protect it.
“Bigger companies have the power to lobby for regulations that won’t stifle their jobs, but small companies need to be offered a seat at the table, too,” Hammons said.
“Small companies cannot survive in such a strict regulatory environment, so they go out of business or are forced to sell their business to large companies.”
These changes could ease consolidation and prevent further threats to the health of US families
Explore logistics and supply chain management at MSU