Why is the US “thirst” for formula milk?
Le Tuyen (TV reporter of THVn, resident in the US)–Wednesday, May 25, 2022 12:38 GMT+7
Last weekend, the first flight carrying formula milk was brought to the US in the hope of helping to reduce some “thirst” in this market. That is the immediate solution, but in the long term where is the real problem to be solved?
Formula milk, which is derived from animal milk such as cow’s milk, has never been as rare in the US as it is now. Thought this was an issue of a narrow field, but it affects many people and has the potential to change the view of America’s longstanding trade policy.
CNBC reports that another flight carrying baby formula will arrive in the US. This is the effort of US Food and Drug Administration (FDA) to ease the pressure on domestic supply of infant formula. Earlier, on Sunday, the flight dubbed (roughly translated) “Operation Powdered Milk” brought back more than 35 tons of milk from Europe.
The US National Radio (NPR) news website quoted Abbott as apologizing for the current shortage of milk. The fact is that in February, Abbott had to close the largest milk formula factory in the US in Michigan after a suspected bacterial infection. This factory contributes up to 20% of formula milk in the country. Since the recall, these dairy shelves in supermarkets have been empty and quantity restrictions have been put in place.
Abbott had to set up a fund of 5 million USD to support families with children suspected of drinking contaminated milk. Its factory is expected to return to operation in June. But many reports say that, to create the milk crisis, it is not Abbott’s fault.
The shelves, which usually display baby formula, at a supermarket in New Orleans are empty, May 16, 2022. (Photo: AP)
According to the Wall Street Journal, the formula crisis was created by policy. The article argues that it is the trade protectionism with the 17.5% tax barrier and the strict licensing process that the FDA imposes on foreign companies that has made the US formula market less selective.
Although US milk is not necessarily safer than European and Australian milk, the FDA has the power to inspect foreign factories, imposing tariffs on imports that make it less competitive.
The New York Times added that there are too few manufacturers in the US market. According to the article, US companies account for 98% of the domestic market share, while the tax imposed on imported products is 17.5%.
At the same time, the FDA maintains a limited “red list” with some brands coming from Europe. A few reasons are given such as the label does not write in English or does not have enough nutritional requirements. While this very week, the FDA has to relax some of those regulations for urgent import of these items into the US.
But even with more openness to foreign manufacturers, the US market has another barrier: a falling birth rate. Since its peak in 2007, America’s birth rate has been on a steady decline. Since then, this percentage has decreased by nearly 20%. A market with fewer and fewer consumers will find it difficult to attract manufacturers or investors.
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