The largest baby formula plant in Canada, Canada Royal Milk owned by China’s Feihe International, ships all of its products to China
Parents of toddlers are concerned about baby formula shortages due to a combination of factors.
A major recall in the United States affecting the top manufacturer of baby formula, coupled with supply chain challenges, has made things difficult for parents.
In the U.S., some parents are driving hours just to get the right product for their baby. In more than six states, over 50 per cent of retail stores are out of stock.
Breast milk banks are getting organized, and many organizations are helping desperate American parents. If someone is looking for a product for their child, they will find it, but it may not be the product their baby is accustomed to and that, of course, can be a problem for nervous parents.
But the big problem is the recall that occurred on Feb. 17.
Abbott Laboratories, the largest baby formula manufacturer in the U.S., voluntarily recalled its products manufactured in Sturgis, Mich., and closed the facility following reports that four infants had fallen ill from bacterial infections. Two toddlers allegedly died after having consumed formula produced in the plant.
A whistleblower report was submitted last year to the U.S. Food and Drug Administration (FDA) about what was going on at the plant. Abbott denies everything, based on evidence the company collected itself. Still, the plant in Michigan could be shut for another two months, if not more.
Regulators would typically expedite the opening of such an important plant. We saw this during COVID-19 with major meat plants, but the relationship with the FDA and Abbott is clearly fractured and messy.
When only three companies manufacture about 98 per cent of what’s consumed in the country, things will escalate when a recall occurs. The baby formula market is not that profitable since birth rates have been dropping in the U.S. When a market is shrinking, getting new players is challenging.
It’s not the first time baby formula has made international headlines. In 2008, China had a baby formula scandal when a top manufacturer opted to add melamine – a chemical used in plastic – to their baby formula. Thousands of toddlers were hospitalized, although few actually died. For months, Chinese leadership hid the scandal from the public because it didn’t want any bad publicity while it was hosting the Summer Olympics that year. This became one of the most significant food safety scandals in history.
And now the U.S. is dealing with its own baby formula headaches.
In Canada, the situation might be a little different. First, demand for baby formula is typically higher in most American states than in Canada. According to the Centers for Disease Control and Prevention (CDC), in the U.S., about 56 per cent of infants are breastfed up to the age of six months. In Canada, that rate is above 80 per cent, according to the International Journal for Equity in Health. So reliance on baby formula in the United States is more acute.
Health Canada has temporarily allowed infant formula brands from the U.S., the United Kingdom, Ireland, and Germany to be imported into Canada. This measure will help put many parents at ease. Still, most of the baby formula consumed in Canada is imported, so any hiccups outside of Canada can impact our supplies.
But most Canadians don’t know that Canada is home to a large baby formula plant. In Kingston, Ont., Canada Royal Milk, owned by China’s Feihe International, built a plant in 2017. It’s the largest baby formula plant in Canada by far. However, all its products are shipped to China. The plant uses Canadian cow and goat milk.
This is troubling for anyone who understands how the Canadian dairy sector works.
Not only is the production of that cow milk partially subsidized by Canadian taxpayers, but dairy farmers also have expensive government-sanctioned quotas intended to serve Canadians only. Supply management is about feeding ourselves and nobody else.
Supply management is considered one of the most protectionist policies in Canadian agriculture. But we produce baby formula for China almost exclusively. Something isn’t right.
Selling to China isn’t really the problem. After all, China’s melamine scare in 2008 made Canadian dairy products all the more attractive. It’s hard to blame an industry for capitalizing on an opportunity. But this dairy is Canadian.
To get Canadians to buy into our supply management regime and to produce what we need in Canada, Canadian dairy farmers have long argued we can’t ship milk abroad and grow the Asian market. Since dairy farmers have no incentive to grow any markets, we’ve allowed a Chinese-owned company to invest in Canada, only to ship our food back to China.
Subsidizing and protecting our milk production to serve other markets isn’t what supply management was designed to do when it was implemented more than 50 years ago. The milk sold to Canada Royal Milk should not only be off quota, but the facility should also be Canadian owned and operated so some of the focus would be on the Canadian market.
So Canadians are still reliant on imports, despite the existence of Canada Royal Milk.
Most ironic, due to trade barriers on both sides, the plant is only 30 km away from the American border but can’t ship products to the U.S.
For Canadian consumers, having access to Canadian-made baby formula would be reassuring, but dairy farmers just don’t think about the market that way. Money is money, and who’s being fed is totally secondary.
This is Canada’s true baby formula problem.
By Sylvain Charlebois
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.