by Sylvain Charlebois
While the COVID-19 pandemic has taken a backseat in the news cycle, concerns surrounding issues like China’s interference and wildfires have taken the forefront. However, for almost 16 months now, Canadian parents with newborns have been grappling with a persistent shortage of infant formula – a predicament that remains far from resolved.
This protracted situation is undeniably embarrassing for Canada, particularly given its increasing reliance on the United States as the primary source of infant formula.
The predicament began in early 2022 with a significant recall at the Abbott Nutrition plant in Sturgis, Michigan. Abbott, the manufacturer of Similac, swiftly took action to recall its infant products and temporarily shut down the Michigan facility due to instances of severe bacterial infections.
Consequently, the plant, which supplies nearly 60 percent of the infant formula received in Canada, has been unable to resume full operations. Compounding the issue, Nestlé, the producer of Gerber baby food products, also faced a recent recall, exacerbating the infant formula supply problem for American and Canadian families.
Regrettably, the challenges facing the industry extend beyond the issues mentioned above. Several months ago, it came to light that the U.S. Justice Department is conducting an ongoing criminal investigation into Abbott regarding the ongoing scarcity of infant formula in the U.S. Additionally, the Federal Trade Commission has launched an investigation into infant formula manufacturers, including Abbott Laboratories and Gerber, to determine whether these companies colluded during the bidding process for lucrative state contracts.
Undoubtedly, the sector finds itself in a state of disarray.
Understandably, parents are deeply concerned about the persistent disruptions in the supply of baby formula. The formula they rely on for their infants may not be readily accessible when needed, and finding suitable alternatives is challenging. Consequently, this distressing situation has prompted some individuals to panic buying, rapidly depleting reasonably priced products from store shelves and exacerbating the challenges parents face.
In response, Health Canada has facilitated the temporary importation of formula from Europe to enhance product availability in Canada. Retail stores and pharmacies nationwide are now starting to stock new standard infant formulas, with additional supplies expected to arrive this month. While this development is undoubtedly a step in the right direction, the pace of improvement may not be swift enough for many parents who continue to grapple with the scarcity issue even after 16 months.
Many Canadians are left wondering why Canada does not produce its own infant formula. The economics of manufacturing infant formula are not particularly attractive due to declining birth rates in Western countries, including Canada, resulting in a stagnant market. Consequently, it becomes challenging to incentivize companies to invest in this sector under such circumstances.
However, most Canadians are unaware that Canada is home to an infant formula manufacturer – Feihe International, a Chinese conglomerate. Operating in Kingston under Canada Royal Milk, a division of Feihe International, a plant was established in 2019 with the support of Canadian taxpayers. While Queen’s Park provided a grant of $24 million, the exact amount provided by Ottawa has never been disclosed.
Initially, the project held promise, with expectations of generating approximately 250 direct employment opportunities, over 1,500 indirect jobs, and around 400 construction positions over a two-year period. A few years ago, it was reported that the plant would focus on infant formula production from cow and goat milk, with all its production intended for shipment to China.
However, the facility remains largely inactive at present, with only a select few individuals possessing knowledge about the underlying reasons behind its current state of idleness. Consequently, this represents an untapped manufacturing capacity that could potentially be utilized, albeit temporarily.
The general understanding is that dairy farmers often encounter surplus milk that requires proper disposal. In February of this year, Jerry Huigen, a resident of Dunville, Ontario, gained attention when he recorded himself discarding a significant quantity of milk – specifically, 30,000 litres – in accordance with the instructions provided by the Dairy Farmers of Ontario. It is worth noting that the Dairy Farmers of Ontario maintains some form of supply agreement with Canada Royal Milk.
Since the video’s release, Huigen has purposefully maintained a low public profile. However, it is crucial to acknowledge that the practice of milk disposal on farms is not a recent occurrence and offers an opportunity to repurpose all the discarded milk to meet the needs of Canadian families seeking accessible and affordable infant formula.
In our most recent federal budget, a significant allocation of $333 million was granted to our dairy farmers for the Dairy Innovation and Investment Fund. This funding aims to support research and the development of new products, particularly those derived from non-fat solids. That would include infant formula as well.
A strange coincidence …Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.