Just four companies make nearly all of the country’s baby formula
pandemic shoppers have learned again and again about the fragility of supply chains. In America the latest product missing from supermarket shelves is infant formula. Whereas previous shortages, affecting everything from cars to couches, presented an inconvenience to consumers, a lack of nourishment for babies creates serious health risks. So the Biden administration has swung into action.
Some politicians and analysts have also pointed to two more fundamental problems in the American economy supposedly exposed by the shortages: corporate concentration and price gouging. The former is a valid concern; the latter is a misleading distraction. Concentration in the formula market has been exacerbated by close regulation. About 98% of formula consumed in America is made domestically because of the’s stringent approval process for foreign factories. And more than half is purchased through a nutrition programme for low-income families, which in turn sources from a single supplier in each state.
But for some in the Democratic Party, these allegations about pricing now fit into a broader narrative about how corporate greed lies at the root of America’s high inflation. Elizabeth Warren, a progressive senator from Massachusetts, and several colleagues introduced a bill on May 12th that would “prohibit the practice of price gouging during all abnormal market disruptions”.
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