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A "milk baby" is a toddler (usually a big chubby one) who is allowed to drink an inordinate amount of whole cow milk (32-40 or more ounces per day) to the exclusion of other foods. Cow milk tends to irritate the human intestine. Cow milk binds iron in the intestive and carries it out in the stool, and in excessive amounts leads to iron deficiency. The milk literally sucks the iron out of the body. From a year of age onward, the dairy requirement is about 16 ounces per day of milk or milk equivalent. Remember that for example, a single slice of individually wrapped cheese is about 5 ounces of milk.
Now, when the diagnosis is made, the blood count (hemoglobin and hematocrit) can be pretty low. I mean really low. The child's heart rate can be increased because thin blood has to be pumped around a lot faster to carry enough oxygen to the cells of the body. I had a case not too long ago with a hemoglobin of 5 (normal would be 10 or 11 for him). His treatment was iron, not transfusion. We very, very, very rarely transfuse such children - they get better so rapidly on iron alone.