Navigating the Challenges of Building a More Resilient Infant Formula Industry
AAEA members release new research in AEPP
The current Ag-FDA appropriations bill will set funding levels for the Women, Infants, and Children (WIC) program. Due to a rise in program participation during the pandemic, the White House requested an additional $1 billion for the program to cover programmatic cost and allow all elligible applicants to participate. Unlike SNAP, WIC is not an entitlement program so participation levels depend on adequate funding. Historically WIC has used competitive sole source contracts to effectively manage infant formula program costs, which allow the program to increase participation rates. These contracts require participant to purchase a state specific brand of infant formula, and it has been suggested they may have contributed to or exacerbated the effects of 2022 infant formula shortage resulting from the closure of an Abbott plant.
In the new article “Navigating the Challenges of Building a More Resilient Infant Formula Industry” published in the Applied Economic Perspectives & Policy, the authors Jackie Yenerall, Andrew Muhammad, and Karen Delong from the University of Tennessee, as well as Trey Malone from the University of Arkansas, discuss potential long term impacts on the supply of safe and affordable infant formula associated with making the temporary changes during the 2022 infant formula shortage to WIC, tariffs, or FDA regulations permanent.
The authors say “Prior to the 2022 shortage, U.S. infant formula imports averaged 0.26 kg per capita, significantly lower than many other comparable high income countries such as the United Kingdom (12.0 kg per capita) and Canada (11.3 kg per capita). Infant formula imports significantly increased in 2022 to more than 42,500 metric tons (MT) and $323 million, a quantity and value increase of 153 and 302 percent, respectively, compared to 2021.”
They continue “In the fall of 2022, 75 percent of households that typically use infant formula reported being impacted by the shortage and one third reported having difficulty obtaining formula in the past week according to the Census Household Pulse Survey (HPS).”
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ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes three journals, the Journal of the Agricultural and Applied Economics Association (an open access journal), the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit www.aaea.org.
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