This would be a much smaller problem were the US not wholly reliant on domestic production. Long-standing 17.5 per cent tariffs on imported baby milk, mind-boggling Food and Drug Administration (FDA) safety and labelling requirements, and the American government’s role as majority baby- milk purchaser through a nutrition programme have deterred European brands from entering the market. Some might even say they delivered US “self-sufficiency”. Before this crisis, US production accounted for 98 per cent of formula consumed there.
In this story of America’s struggles, there’s an important lesson for British policymakers. During the pandemic, many extolled policy-created self-sufficiency. If only past governments had used industrial policies to boost manufacturing capacity for vaccines and ventilators, or encouraged production of domestic food and energy, they said, we could have avoided the supply-chain problems. UK governments were slaves to free-trade tales of economic efficiency, the argument goes, but the downside was a lack of resilience.
Well, the US formula crisis reminds us that disruption can be domestic in origin, too. Sometimes you get outbreaks of mad cow disease, or meat-packing worker cohorts laid low with Covid-19, or, yes, baby-formula plant closures. Then you realise that openness to trade doesn’t just lower prices and expand choices. Providing alternatives reduces exposure to domestic shocks and diversifies supply-and-demand sources across countries to mitigate localised foreign disruptions, too.
American parents, certainly, have been desperate to import European milk online, but customs agents and the FDA have been unforgiving, destroying products good enough for French and German babies at borders and shutting down import sellers. Mercifully, the approval process for legal entry of European products is now being streamlined. Whether foreign businesses will endure the costs of establishing supply lines for temporary sales in a market so tilted towards domestic producers is another matter.
One can certainly dream up scenarios where self-sufficiency is desirable, such as during full blockades or when the whole world is suffering collapsing global trade. Outside of these unlikely instances, though, our governments cannot easily predict which crises will hit or when, and it would be wasteful to prepare domestic production for all eventualities.
If these formula shortages teach us anything, it’s the folly of putting all your eggs in one basket. Shifting towards “self-sufficiency” can leave a country more exposed and less resilient, even for products as important as baby milk.