Baby Formula Shortage Has an Aggravating Factor: Few Producers

To help alleviate the shortage, the Agriculture Department has granted states waivers that would give WIC recipients more flexibility to choose alternative formula brands and sizes, although not every state has adopted all of the waivers.

While the bidding process could be limiting competition, the federal government saves about $1.7 billion each year with states negotiating for rebates. Tiare Sanna, the director of Oregon’s WIC program, said that mothers in the state are now facing difficulty finding formula because the state contracts with Abbott, but the bidding system normally allows the state to serve a greater number of participants because it is able to buy more formula at the discounted rate.

“If we had to use our WIC food dollars to purchase formula at shelf price, we would have to significantly decrease the amount of participants that we serve,” Ms. Sanna said. “So this is a means of allowing us to serve the greatest amount of infants as possible but I do acknowledge that it can create some issues.”

The Biden administration has announced a series of steps to address the shortages, including invoking the Defense Production Act to ramp up manufacturing and deploying Defense Department planes to speed shipments to the United States. Still, officials acknowledged on Thursday that the shortage was expected to persist into next month, in large part because the Abbott plant has yet to restart production.

Many Republicans, including Senator Mitch McConnell, the minority leader, have blamed President Biden for the shortages, saying the administration should have moved more quickly to limit the fallout from the plant closing.

Those who have tried to break into the infant formula market say the current situation shows the need for more competition and changes to rules that appear intent on thwarting new entrants.

“What I discovered is that this is a very convoluted, complex and slightly corrupted industry,” said Laura Modi, an entrepreneur who, after the birth of her first child in 2016, decided to create a European-style, organic infant formula company that she believed would provide a better option than what was available in the States.