(Washington, D.C.) U.S. Representative Zach Nunn (IA-03) introduced bipartisan legislation to prevent another infant formula shortage. The Investing in New Families and Newborns Through (INFANT) Tax Credit Act, which is co-led by U.S. Representative Chrissy Houlahan (PA-06), will diversify the formula supply chain by supporting small-sized manufacturers based in the United States.
“Just two years ago, millions of parents were scrambling to feed their babies – some even traveling miles or paying out-of-this-world prices just to get the formula their child needed,” said Rep. Nunn. “We may be past that crisis now, but we should work to stop this from ever happening again. By supporting small-sized American manufacturers, we can prevent another shortage and keep children fed and happy.”
In May 2022, the infant formula shortage hit critical levels as nationwide out-of-stock rates reached 70% with just two brands accounting for 60% of the shortfall. This shortage was the result of not only the pandemic but also a February 2022 recall from a facility estimated to produce 43% of the total consumption of formula in the U.S. The shutdown immediately skyrocketed out-of-stock levels of infant formula to 25%, up from 11% in December 2021, and continued to increase into the summer.
Infant formula is the most highly regulated food. In the U.S., oversight and regulation of infant formula is akin to pharmaceuticals rather than food products. As a result of the high and costly barriers to entry, until 2022 there had not been a single new manufacturer registered with the FDA in 15 years.
The bipartisan INFANT Tax Credit Act would create a transferrable tax credit for small, domestic infant formula manufacturers across the nation. For any taxable year, manufacturers may receive a credit equal to 25% of their qualified investment, including manufacturers impacted during the height of the infant formula shortage crisis in 2022. Additionally, this bill provides a production tax credit to allow companies to receive $1.50 per pound of infant formula produced.
The INFANT Tax Credit Act would also require the Secretary of Agriculture to develop a plan to ensure existing business development programs at the Department of Agriculture encourage competition in the infant formula supply chain.
