If you’ve been paying any attention to the news, you have probably heard that parents across the U.S. are grappling with a baby formula shortage. This situation is causing huge amounts of stress to new parents, some of whom are uncertain if they’ll have enough formula for their baby’s next meal.
So how did this happen? One way to make sense of it is to put it in the context of the greater food supply chain.
The food supply chain includes every step in the process from production to consumer, including sourcing, handling, distribution, and sales, as well as documentation of these activities. These interconnected steps create a domino effect. If any one of the cogs in the wheel fails, it jeopardizes the entire process.
Here are the factors that led to the baby formula crisis:
1. Formula contamination in a major manufacturer
Baby formula manufacturers are part of the processing stage of the food supply chain, whereby commodities are turned into food products or ingredients.
The infant formula industry is dominated by only a few major manufacturers that compete on pricing, including Abbott. Early in 2022, the death of two infants from very rare infections was traced back to pathogens found at the Abbott Michigan plant. As a result, the U.S. Food and Drug Administration inspected the plant, and the manufacturer voluntarily recalled several of its brands. Because the supply chain was already strained from the COVID-19 pandemic, the Abbott plant closure triggered a nationwide shortage.
2. Unprecedented demand
The food supply chain begins at farms where raw materials are grown and cultivated, including cow’s milk.
In 2020 when the COVID-19 pandemic hit the U.S., there was a surge in demand for certain products, including cow’s milk, which is one of the main ingredients of baby formula. At the same time, consumers began hoarding some consumer goods. Remember that huge panic about toilet paper that left shelves empty? Well, consumers were stockpiling infant formula as well, making it difficult for manufacturers to keep up with demand.
Lastly, more babies create a greater need for infant formula, and in 2021, the number of births increased in the United States by 1% -- the first such increase in seven years.
3. Transportation and labor shortages
While demand for cow’s milk and baby formula increased during the pandemic, available labor decreased. When the state and local governments closed restaurants and other food service facilities, demand for food from grocery stores and other food retailers skyrocketed. This sudden shift caused significant labor shortages in some parts of the food supply chain.
Lastly, since businesses reopened, it has been difficult for them to attract and retain skilled workers, possibly due to the pandemic stimulus checks and expanded unemployment. The result? It’s been more difficult than ever to transport and package consumer food items, including baby formula.
Here are some statistics to consider in terms of the labor shortage:
- 2.1 million jobs critical to the supply chain and manufacturing industry will remain unfilled by 2030.
- The American Trucking Association data shows that the industry could be short by over 140,000 drivers by 2026, increasing the driver shortage to over 160,000 drivers by 2030.
Supply chain solutions
The Advanced Mobile Group (AMG) has the expertise, resources, and tools that food service companies need to address supply chain challenges. Our reliable and user-friendly distribution software helps eliminate errors in inventory management. It delivers superior product traceability, helping to prevent or respond quickly to outbreaks of dangerous food pathogens, and provides for real-time tracking and management of the food distribution process. Looking for help with reducing costs, decreasing loss and late deliveries, ensuring product freshness, and most importantly, improving customer satisfaction and retention? Contact us to find out what we can do for you!
