19 May 2022

NZ exporters unlikely to capitalise on US infant formula shortage

7:19 am on 19 May 2022

The severe shortage of baby formula in the United States could provide an opportunity for New Zealand exporters to test the waters there, but the window of opportunity will likely be short-lived.

Spoon with infant formula

Photo: 123rf

Parents across the US have been scrambling to find the product after supply chain disruptions and a product recall saw supermarket shelves stripped bare of baby formula.

Abbott, one of the largest producers of formula in the country, was forced to close a key manufacturing plant in February, after bacteria was found in the facility, sparking contamination concerns.

The supplier has this week reached a deal with regulators on how production can restart at the Michigan plant, and in the meantime, the Food and Drug Administration is increasing formula imports into the country.

That included easing rules for exporters to import baby formula, though companies will still have to submit applications to the FDA and show that it meets high safety and nutritional standards.

Infant Nutrition Council of Australia and New Zealand chief executive Jan Carey said some exporters may look to test the waters and send formula over, but she thinks the window of opportunity is small.

"I don't think it's going to be streamlined enough to create an opportunity for New Zealand manufacturers, and it would be a very short term opportunity in any case," she told RNZ.

"It's incredibly difficult to get products into the market in the United States. The regulation is very hard, there's a number of hoops that you've got to jump through, it's very difficult.

"And it shows - because it's so difficult, there aren't very many infant formula companies in the United States, and so when a supply issue happens, they're really in a lot of trouble."

The US typically produces 98 percent of the baby formula that consumers buy there, according to CNBC News, but the crisis has seen global firms boost imports of the product into the country.

Gerber-maker Nestle is flying additional shipments of baby formula from the Netherlands and Switzerland to the US, while UK-based Reckitt Benckiser, which also has factories in the US, has increased production by 30 percent this year.

Even if Australasian exporters were able to tap into the US market, Jan Carey said it would likely by short-lived, with the shortages expected to ease within two months.

"I've been in touch with my counterparts in the US and this is a short-term crisis, that should be over in the next six-to-eight weeks," she said.

"Now that doesn't sound like much to worry about for some people, but you can imagine how stressful it must be for families who are struggling to find supplies of infant formula, and that's going to continue for another six weeks at least.

"I think what what it shows is, apart from supply issues, is the really important role that infant formula plays in the nutrition of our babies, the babies are not getting breast milk.

"If the baby can't receive breast milk, infant formula is the only suitable and safe alternative, so it's terribly important that supply is guaranteed."

Carey said that supply is guaranteed for New Zealand customers and whānau don't have to worry about a similar situation unfolding here.

"We have a very good manufacturing facilities in New Zealand, we make really fantastic infant formula products," she said.

But she said the formula crisis in the US exposed a huge gap in regulations there.

"I think it does show weakness in their policy," she said.

"We can speculate that might make the Food and Drug Administration consider why they make it so difficult for, other entrants to come into the market. Why can't they make it a bit easier to get it in?

"We have such fantastic products in New Zealand, our products are highly regulated under the Food Standards code for Australia and New Zealand and they meet all of the nutritional requirements of an infant."

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