It's hard to imagine, but this does happen in the United States

Author:Look at the think tank Time:2022.06.14

On June 1, local time, U.S. President Biden, Minister of Health and Public Services, Director of the Public Health Bureau, and the heads of several large milk powder manufacturers held a round table to discuss how to deal with the shortage of infant formula milk powder in the United States.

"It is difficult to imagine that the United States will not be able to get the most basic food, but this is exactly what we encounter in 2022." The Washington Post wrote on May 19.

The issue of American baby formula milk powder has attracted attention from all parties. The Bayeng government even used military planes to transport American babies from abroad. But this is not new this year. The cause of the incident started in 2021.

In fact, in July last year, the shortage rate of American baby milk powder has begun to rise month by month. From September 2021 to January of this year, four infants were suspected of being contaminated with polluting milk powder, and two of them died. The US Food and Drug Administration (FDA) announced an investigation into Abbott, an involved milk powder manufacturer. In February, Abbott announced the recall of the issue of milk powder and closed the factory involved, which caused the milk powder supply to intensify.

DataSEMBLY data from the US retail industry data show that as of May 28, the shortage rate of infant milk powder in the United States has reached 74%. Including Washington and Florida, the output rate of 10 states in 10 states exceeded 90%. On June 4, Abbott announced the restart of the factory involved, but the factory only produced special infant milk powder and shipped consumers around June 20.

It is distressed that, June 12, local time of the Washington Post, the latest documents released by the US Food and Drug Administration (FDA). Since the beginning of 2021, as many as 9 children are in After eating the baby formula produced by the ABei plant in the Michigan State, it died, 7 more than 7 people confirmed by the agency.

Can the American "milk powder shortage" be relieved? What are the concentrated concentrations of the American milk powder industry production chain?

Text | Deputy Director of the Institute of Merchants of the Ministry of Commerce

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Members of Congress also joined the snap -up army

"Milk powder shortage" has not only become a hot spot for reporters at the United States-ASEAN Special Summit. Many types of baby milk powder in many places in the United States have a dilemma that is difficult to find in a barrel of baby milk powder, and even some Congress members have joined the army grabbing milk powder.

On May 10, 2022, New York, USA, was severely expelled due to infant formula milk powder, and the shelves were swept away. Figure ｜ IC Photo

These members not only went to physical stores and online stores to search for milk powder, but also actively used legislative power to work to solve the rations of their babies. In the two weeks since May 11th, the two houses of the United States have launched 25 legislative processes in the title of "baby milk powder", including exempting import tariffs and other measures. Among them, the 9 legislative motion comes from the House of Representatives and 5 from the Senate.

According to the power distribution of the US government, all legislation related to funds should be initiated by the House of Representatives. In response to baby milk powder shortage, the two parties in the United States changed the previous dragging style, which was amazing efficiency. As an important issue of the "internal affairs" in the United States, no matter which party is unwilling to bear the notoriousness of the supply of milk powder, it also fully shows the seriousness of this problem.

Taking the "2022 Obtaining Baby Milk Powder (H.R.7791)" that Biden was signed during his visit to Asia as an example, the House of Representatives launched a legislative motion on May 17 and received the co -deployment of 129 members. On the 18th, the House of Representatives passed quickly with 414: 9 votes. Biden, who had just arrived in South Korea, signed on the 21st. Five working days quickly through the rare high efficiency in the history of the US Congress, not to mention the impact of Biden's international travel and jet lag.

Efficient legislation reflects the serious concerns and urgent needs of American society for infant formula milk powder. In view of the lack of the ability of a special group in babies, Bao Da Bao's willingness to solve rations for babies is more strong.

According to this new law adopted in the United States, the Ministry of Agriculture (USDA) was authorized to take action to deal with the shortage of infant milk powder caused by emergency, disaster and supply chain interruption to "women, infants and children's special nutritional supplementary plan (WIC)" caused Impact. The law particularly emphasizes that when baby milk powder recalls, USDA needs to take measures to control costs. It must sign a memorandum with the US Department of Health and Public Service (HHS) within 30 days to coordinate the information of any supply chain interruption (including food recall). And sharing. Under emergencies, USDA can make a programmatic modification, including the maximum monthly subsidy restrictions on baby milk powder.

To some extent, the U.S. government has chosen the re -selection of the two targets of the total amount of milk powder and high standard hygiene and safety. In order to meet the supply of milk powder, it can reduce the hygiene and safety of the high standards of milk powder when necessary.

Biden uses military forces to open up the blocking point

Earlier, Biden also issued a presidential order on May 18th to ensure that the Minister of Health and the Public Service Department ensures the supply of baby formula milk powder according to the "1950 Defense Production Law (DPA)". According to this authorization, the U.S. government uses military forces to adopt direct intervention on economic and social activities on the grounds of ensuring the security of the expansion. The Biden government believes that the supply of milk powder worldwide can still meet the needs of the US market, but the poor transportation network under the epidemic of new coronary pneumonia makes milk powder buyers unable to obtain the adjustment of the market. Selection. On May 22, the US Air Force's transport aircraft had begun to transport 32 tons of baby milk powder from Germany to the United States.

However, from the perspective of legislation, the legal authorization used by Biden has not supported its intervention in the supply and demand of the milk powder market, because the historical food supply chain was broken, which caused almost no national security incidents in the United States, especially the nationwide issue. Essence DPA is not clearly suitable for domestic food chains in the United States.

Former President Barack Obama was used under the power of DPA in administrative orders No. 13603 to solve the problem of grain resources. Historically, the US president used DPA to solve the rare situation of the general food supply chain interruption. For example, when the United States was suffered from natural disasters, it was used to distribute food to survivors in the affected area.

Trump has also used DPA to ensure the continuous supply of meat and poultry under the impact of the new crown. However, the authorization of Trump has aroused extensive political disputes in the United States, and the opponents believe that it exceeds the original purpose and scope of DPA.

This time Biden used DPA to deal with milk powder shortage, which caused the US Congress to reflect on this law. Whether it is necessary to cover the category of "key infrastructure" in food and related supply chains, and whether the shortage of supply chain is also defined as " Important events of national defense. It can be seen that one of the important reasons for American milk powder is the issue of "supply chain".

In the long run, the total supply is not lacking

So, is it really in short supply of infant formula milk powder in the United States?

In the existing laws and regulations, the US Food and Drug Administration defines "baby" without more than 12 months, while the Federal Food and Drugs and Cosmetics Acts define the baby formula as "a kind of" a special diet for special diets Food simulates human milk and is suitable for all or part of its alternatives. " Therefore, in the US management system, although infant formula is food, it is under addition. This strict supervision has greatly reduced the import dependence of infant formula milk powder in the US market.

On May 19, 2022, Houston, Texas, USA, a mother fed her 5 -month -old daughter in her home milk powder. Figure ｜ IC Photo

According to the United States Unified Tariff (HTSUS), infant formula milk powder belongs to 1901.10 children, covering 25 categories from 1901.10.05 to 1901.10.95. According to a report from the US Congress research department, from 2012 to 2021, the United States produced an average of 524 million kilograms of infant formula milk powder per year, worth about $ 2.3 billion. In comparison, the demand for infant formula milk powder in the United States is about $ 2 billion each year, and the annual supply surplus is about 300 million US dollars, accounting for 13.0%of the output. The United States also lacks through international trade adjustments.

In the past 10 years, the United States exported an average of 33.5 million kg of infant formula milk powder each year, with an export value of about 277 million US dollars, and imported baby formula milk powder with 3.2 million kg of imports, with an import value of about $ 13.4 million. In other words, the average annual infant formula that has been imported in the United States in the past 10 years is only 4.8%of the export volume, less than one in 20; it only accounts for 0.67%of the average annual consumption of the United States. At the same time, the import and export category and value of American baby formula milk powder are large. The average milk powder exported was $ 8.27 per kilogram, and the imports were only $ 4.19.

From the perspective of the value chain, the US exports are mostly finished baby formula milk powder with high added value. Related raw materials and some nutrients in imports are relatively high. The total supply of baby formula milk powder in the US market is not missing.

At present, it is not a disaster caused by tariffs

However, the United States' dependence on imported baby formula milk powder has increased over time. Does high tariff have caused the current supply shortage?

In the past 10 years, the import volume of American baby formula milk powder has continued to increase, from 1.3 million kg (US $ 3.8 million) in 2012 to 4.3 million kg (US $ 28.8 million) in 2021, and the import volume and imports increased by 230.8%, respectively. And 657.9%. In 2021, the imported baby formula milk powder met about 1.5%of the domestic demand.

The enhancement of the dependence on imported baby formula milk powder has also made the United States more demand for the stable of importing supply chains. When the global supply chain is impacted and unstable, the supply and demand gap is easily enlarged and becomes a signal source of market panic.

From the perspective of imported sources, the distribution of American baby formula milk powder import sources is more concentrated. In 2021, the United States imported 2.3 million kilograms of infant formula milk powder from Ireland, worth $ 17.2 million; imported 1.2 million kg from Chile (worth $ 3.3 million); imported 500,000 kg of imports from the Netherlands (worth $ 7.1 million), 3 countries in 3 countries Total 93.0%of the total amount of milk powder imported in the United States and 95.8%of the value. It can be seen that the unit of infant formula imported from the Netherlands is the highest value, while Ireland is second, while Chile is the lowest. The three countries in North America have close economic and trade connections, and they also have important development benefits in the dairy industry. The international trade of dairy products has frequently caused conflicts of parties.

During the Trump period, the "North American Free Trade Agreement (NAFTA)" was upgraded to the "USMCA". The coordination of dairy interests was once the difficulty and focus of the agreement. In 2021, the United States did not import baby formula from Canada, while Mexico was the main source of the imported milk powder in American children (12 months to 12 years). It is difficult to provide alternative support for American baby formula milk powder in the short term.

Under the USMCA agreement, the United States does not impose additional tariffs on formula milk powder imported from Canada, but it includes a new requirement. The agreement requires Canada to monitor its global formula export and provide relevant information to the United States. If the year of the year of August 2021, the export of global formula in Canada exceeds 40.48 million kg, Canada is obliged to export the export fee of $ 4.25 per kilogram (about $ 3.31) per kilogram. However, the average price of the US exports is $ 8.26 per kilogram.

In fact, compared with tariffs, non -tariff barriers have a greater impact on foreign manufacturers' decision to not enter the US market.

The so -called non -tariff barriers mainly refer to the requirements of the quality of imported goods in addition to tariffs. Meeting such requirements for US regulators may greatly increase their obligations and costs for export milk powder manufacturers, and significantly weaken its competitiveness in the US market. The American baby formula milk powder market is highly saturated, and the output of domestic manufacturers far exceeds the scale of domestic demand. In order to protect their control over the US market, these manufacturers are very active in promoting the establishment of high market access in the United States.

In the FDA's nutritional requirements for infant formula milk powder, as well as multiple restrictive market environments such as the U.S. Department of Agriculture's WIC, foreign milk powder manufacturers have limited interest in the US market. Three major sources of middle schools, Chile's milk powder can enter the US market with tax exemption. Although Irish milk powder needs to be paid, the import growth rate is faster than Chilean milk powder when the value of the product unit is higher.

Therefore, the baby formula of infant formula in the United States is really not a cause of tariffs.

A sudden impact

In fact, this time the fuse of the American baby formula milk outbreak was ignited last year.

In September 2021, the milk powder produced by an infant in Minnesota in the Stergis Formula Milk Powder Factory in Michigan was diagnosed and infected with possible fatal Croachabaccin, and then infected.

In February 2022, the FDA released the survey results of the two infants' death cases of Abbott milk powder, and found that the Abbott milk powder production plant had health problems. As one of the response measures affected by the FDA policy, Abbott closed the factory and implemented a global recall on the possibly polluted milk powder, forming an impact of the supply of baby milk powder global.

This sudden impact seriously interfered with the decision -making model of market entities such as consumers. Earlier, because the shelf life of baby formula milk powder was long, the US market supply was always sufficient. There was no shortage of goods on the shelves. Consumers had no willingness to store it. As a fast consumer product, you can supplement it in time. The outbreak of milk powder is the increase in inventory caused by market concerns.

Moreover, the highly liberalized market economy in the United States has led to serious monopoly behaviors in many industries. The entire food production chain in the United States is highly concentrated, and the milk powder industry is even more so.

Data show that three American companies, including Abbott, have controlled 95%of the market share of formulas in the United States. Among them, the market share of Abbott infant milk powder is as high as 40%, and its factory in Michigan is responsible for about half of the company's local production capacity. Abbott announced milk powder recall, and consumers have snapped up other brands of formula milk powder, making brands such as Mead John also out of stock, which further led to "milk powder shortage."

In order to avoid buying milk powder when needed, American parents significantly increased the inventory of infant formula milk powder. While pursuing individual interests to maximize their own interests, they caused overall supply in the market. This psychological expectation formed has exacerbated the supply of milk powder in turn, causing more panic. In the case of the market that may have room for price increases, the accumulation and sale of milk powder will increase, which will further reduce the supply and push the price.

Although under the intervention of the U.S. government, the tension between the supply and demand of baby formula milk powder may soon weaken, and market expectations will become rational. For babies formula milk powder, which is easy to store and demand for relatively stable demand, milk powder may soon be relieved.

However, in such a high -concentration market environment, to prevent foreign competitors from participating in the market through non -tariff barriers and other methods, and maintaining the market pattern of oligopoly monopoly, it is bound to increase the vulnerability of the supply and demand relationship due to lack of diversified competition. The spillover impact of the market and the global market cannot be ignored. When the black swan incident that causes the supply chain, the lack of milk powder supply will be difficult to find a suitable alternative and guarantee. Perhaps, even if the Biden government resolved this round of crisis through administrative intervention, it would not be too far away from the next "milk powder crisis". The use of military forces in the United States this time has the prerequisite for inventory in other markets other than the United States. If the demand for milk powder in various countries is superimposed, I am afraid that even if you send military planes, it may not necessarily alleviate the situation of supply and instructions.

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