People aren't rational actors, and by saying "they don't really need toilet paper", you're not solving the issue that is people seeing empty shelves for toilet paper, bread and soap and thinking that the system is failing.
You don't want the public to become nervous, ever. Nervous people make terrible decisions. And for a government to look uncaring/impotent is the way to make the population nervous.
Also, I don't know whether they'd actually need to increase production. According to super market chains, they have more than enough but it's in their storage centers and they have issues/aren't prioritizing getting it into the stores.
I saw a intriguing change in conversations I had over the last couple of days. First it was, like, no need, we got this. Just yesterday I found a call for an offer from the Armed Forces procurement department in my Inbox, while you now find direct contact details for these kind of things online. Not sure what happened, but there sure is a change in how authorities are approaching this.
It's gotten so bad where I live that Aldi has apparently decided to just give up and use the space for potting soil.
The pasta shelves are re-stocked though, as is bread. Berlin isn't quite there yet.
But certainly an insight into the culture and humanity of some people. Alas we have a society that seems to always see good responsible people suffer at the hands of the irresponsible.
The opposite is happening, you have (local, temporary) shortages and some politician who hasn't bought their own groceries in the last decade says "I assure you, there are no shortages", while everybody sees the empty shelves on a daily basis.
Equally, once many heard news of something was being brought up, the net effect was to drive others into panic and drive them to do the same.
Panic begats panic. So you start to enter into the aspect of https://en.wikipedia.org/wiki/Crowd_psychology
But now that people filled their shelves, I guess that store supplies are back to normal.
But people worried about non-fire safe cladding seemed equally happy to fill their homes with flammable paper - the hypocrisy of madness plays out in many ways.
You might say "but that's toilet paper, who cares", but empty shelves in super markets in Germany are a great way to make people remember the past and go into panic mode.
What people do right now is buy masks individually from Chinese vendors on Amazon, and they are getting shipped. If you want them quickly, you can pay for airmail. China can deliver, but for some reason, Germany doesn't take them.