Import complexities disrupt baby formula supply
Importers and distributors of baby formula said the supply of the product has declined compared to the demand in the market, while its price has increased due to the hike in import costs
A crisis has arisen in the supply of infant formula with the dollar shortage complicating the process of opening letters of credit (LCs) for imports, while the gas crisis forced exporting countries to limit their production.
Importers and distributors of baby formula said the supply of the product has declined compared to the demand in the market, while its price has increased due to the hike in import costs.
On condition of anonymity, a represenattive of a leading importer told TBS, "We have all the documents for opening LCs ready, but we cannot open LCs due to the dollar crisis.
"Consequently, the previously existing smooth supply chain has been disrupted. We have been struggling to meet buyers' needs."
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The importers said before giving permission to open LCs, the Bangladesh Bank is excessively scrutinising if the product concerned needs to be imported. As a result, opening LCs currently takes a lot of time.
Besides, the time needed for importing the product from European countries has increased from three months to eight months, which has also increased import cost, said the importers.
They further said due to the Russia-Ukraine war, European countries have been suffering from gas shortage, and their companies cannot use gas outside a certain time period.
If a company wants to use gas beyond the scheduled time, it has to buy it at a high price, causing a decrease in their production. Consequently, they have been taking longer than before to deliver certain quantities of products.
Besides, the US has increased importing baby formula from European countries as two of its major producers shut down operations in 2022, said the local importers.
China is also importing more baby formula than it needs in fear of a crisis. As a result, demand in the international market has increased amid a decrease in supply.
Due to all these reasons, the prices of baby formulas of different brands in the market have also increased. Department store chains like Shwapno, Meena Bazar and shops in Karwan Bazar currently sell a 400 gram pack of infant formula at Tk750, which was around Tk500 in 2020.
Alamgir Hossain at the grocery store Al-Amin Traders in Karwan Bazar, told TBS, "On the one hand, the price is high, and on the other, supply is low. Sometimes, the distributors deliver the formula milks of the brands in high demand a month after we order them."
According to the Institute of Public Health Nutrition, which gives permission to traders for marketing baby formula, so far 17 institutions have applied for permission from it for importing the product.
According to the Infant and Young Children Nutrition Association of Bangladesh, currently, the demand for the product in the country is 14,000 tonnes annually. The market size increased by 12% in 2022 compared to the previous year.
The distributors said 12 brands of formula milk are now available in the country.
Iftekhar Rashid, president of the Infant and Young Children Nutrition Association of Bangladesh, told TBS, "There is a problem in opening LCs due to the dollar shortage. Besides, the production of baby formula is decreasing in Europe due to the gas crisis caused by the Russia-Ukraine war. Meanwhile, new buyers have been created. All these have led to a crisis in the supply of baby formula."
Meanwhile, officials at the Institute of Public Health Nutrition see the current situation as an opportunity rather than a crisis, because many mothers will now be forced to breastfeed their babies, which will play a positive role in infant nutrition, forcing them to move away from reliance on baby formula.
Dr Murad Shamsher Tabris Khan, deputy programme manager of National Nutrition Services at the Institute of Public Health Nutrition, told TBS, "There is no substitute for breast milk for babies aged zero to six months. If baby formula is fed instead of breast milk, the child becomes malnourished and suffers from various complex diseases.
"However, breastfed babies beyond six months of age need alternative milk, but it should be provided under controlled conditions."
