Price of baby formula spiked more than 20 per cent in one year amid shortages

The same baby formula shortage that affected families across Canada and the U.S. in 2022 and 2023 also prompted a spike in formula prices, retail expert Doug Stephens told CTV's Your Morning Tuesday.

Statistics Canada data revealed that between September 2022 and September 2023, the price of formula increased more than 20 per cent, from $31 a container to $38—a $7 increase.

Stephens said supply shortages play a part in the price increase.

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In February 2022, the Abbot Nutrition formula manufacturing plant in Michigan was shut down by the FDA after formula products were recalled due to bacterial contamination, Stephens said.

Stephens said that the plant was responsible for producing one of the most popular North American baby formula brands, Similac, and its absence from the market put a strain on supply and pricing.

In the aftermath of the plant’s four-month closure, Health Canada passed an interim policy to import a steady supply of formula from other countries, in addition to the brands already available to Canadians. These imports include brands that are new to the Canadian market, Health Canada said in an online statement.

As of September 2023, the Canadian supply of regular formula is stabilizing, Health Canada said.

The health ministry said that policy has been extended until the end of 2024.

Stephens said the shortage highlights the fragility of a supply chain that is dependent on one manufacturer for a given product.

"As Canadians we need to do a better job of ensuring that cornerstone products like this, food and health products, that we do have the capacity to manufacture these products domestically," Stephens said.

In its statement, Health Canada said it will continue to work with manufacturers interested in the domestic production of infant formula in Canada.

Royal Canada Milk, a plant in Kingston, Ont., owned by a Chinese conglomerate Feihe International, produces milk powder products, according to its website.

"Currently, there is no production of infant formula for any market, domestic or international, being produced at the Kingston facility," Royal Canada Milk said in an online statement posted on Dec. 8. 

"So there is an opportunity for the Canadian government to sit down with the owners of that plant and the Chinese government and try and work something out so that we can at least have this plant that's located in Canada supplying product to Canadians as well," Stephens said.

Stephens also referenced a "declining market segment," where Canadians are not having children in the numbers they once did.

He said the shortages raise the question of whether formula costs should be regulated, and that more conversations need to be had around health security and nutrition for infants in Canada.

To watch the full interview click on the video above