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Thursday, May 19, 2022

Baby Formula

 There's no other way to say this than the folks blaming the Biden administration for the baby formula shortage are clueless (those who know me should assume that word wasn't my first choice).  

We got here because Abbott Nutrition had to shut down their Sturgis, MI facility, which was producing tainted formula.  A point for Team Trump for removing a not insignificant number of FDA safeguards and dramatically reducing inspections.  Another point for Team Trump for putting protectionist measures in place that make it virtually impossible to import baby formula.  This is what the current administration is working on overcoming now.

But the FDA should have done more!!!  Like fucking what?  They shut down production of tainted product to prevent further infant deaths.  But they should have known this would cause an issue!!!  Newsflash, it's not the government's job to monitor capacity of a product, versus demand.  

Why was there a capacity issue in the first place and why didn't other manufacturers have extra capacity to take up the slack?  The baby formula market is controlled by three players, Abbott, Nestle, and Mead-Johnson, making it a controlled monopoly.  These companies' respective market shares have remained pretty static, with each of them enjoying some portion of various government programs (read fixed price).  And there's little any can do to capture significant market share from the others.  Baby formula has strict standards and takes a lot of work for new products to be approved by the FDA.  For damned good reason; it's for babies.  Unlike something like an automobile, where demand is variable, being impacted by economic conditions, adoption in developing countries, etc., demand for baby formula is known because it's directly tied to the birth rate.  Not as though there's an emerging market for it hiding somewhere.  And the birth rate in the US has been declining for decades.  At the end of the day, you have a product with incredibly static and declining demand, that you don't make much margin on.  Anyone at these companies who endorsed adding capacity would be fired for being incompetent.

So there it is, the perfect storm that got us where we are.

For the cherry on top, yesterday, the House voted on a measure that would make it easier on mothers who rely on subsidies (which is most of them) to get formula for their babies.  It shouldn't surprise you that the Republicans, who've been screaming loudest about how badly the administration fucked this up, voted against it.  Fucking pieces of shit continue to prove how they only care about controlling women and not actual children.  



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