US president Joe Biden announced the deal in a tweet at the weekend, saying the company would deliver 27.5m bottles, the equivalent of the 1.25m cans reported by Bubs.
“We’re doing everything in our power to get more formula on shelves as soon as possible,” he said.
The NZ Herald reported the news that Bubs had found a way to enter the notoriously difficult American market “was well received” by dual-listed infant formula exporter a2 Milk investors who bid the stock up 10.2%.
The Herald explained that both Fonterra and a2 Milk have also applied to the US Food and Drug Administration for approval to supply infant formula to the nation.
“If a2 Milk were able to establish itself in the US market it would be a boon for the company which has its export route to China collapse during the pandemic.”
Of course a2 Milk already operates in the US (with revenue of $63m reported last year) but presumably needs FDA approval for imported infant formula.
In any case Bubs Australia appears to have got a head start. The US Food and Drug Administration said some of what Bubs is supplying is now in stock for transport and more would be produced by Bubs Australia in the coming weeks.
It’s the latest measure the US is taking to address the shortage that has left many parents struggling to feed their babies after Abbott Laboratories, the largest producer in the US, issued a nationwide recall.
In a statement on its website, Bubs Australia reassured Australian customers that its infant formula supply would not be affected.
“Due to our strong control of our supply chain security and our wholly owned production facility, we have already manufactured what is required and have been able to take steps to immediately increase the level of our future production, as needed,” the company said.
It noted the FDA’s decision to allow Bubs Australia’s six products to be imported and sold in the US followed a thorough review which found them to be “safe, clean and nutritionally sound for American babies”.
The company said the US Department of Health and Human Services had advised “they are evaluating options” for getting Bubs Infant Formula products to the US “as quickly as possible.”
The importing of Bubs’ products follows the relaxation of some regulations this month to mitigate one of the biggest baby formula shortages in recent history.
The Biden administration has also decided to import emergency supplies from Europe, the first of which arrived this week.
“In light of the current situation and revised FDA guidance, we have submitted an application to the FDA for approval to supply finished infant formula to parents in the U.S.,” Fonterra, the world’s biggest dairy producer, said in an emailed statement.
The FDA commissioner, Robert M Califf, said authorities were doing everything in their power to ensure there was adequate infant formula available across the country.
“Our recent steps will help further bolster supply of infant formula, including through the import of safe and nutritious products from overseas based on our increased flexibilities,” Califf said.
“Importantly, we anticipate additional infant formula products may be safely and quickly imported into the US in the near-term based on ongoing discussions with manufacturers and suppliers worldwide.”
The US Department of Health and Human Services has also allowed the global farm commodities trader Cargill Inc to provide raw materials needed to maximise the production of infant formula by invoking the Defence Production Act.
So good luck to both a2 Milk and Fonterra.
