Wednesday, August 26, 2020

Grocers And Food Producers Profit From And Love SNAP

Yes They Do!
To those people that think America's Supplemental Nutrition Assistance Program (SNAP) is supported by those simply wanting to feed the poor, think again. Some of the biggest supporters of what for years was commonly known as "food stamps" are the companies selling food to those on the program. A person that has grown cynical about government spending might even go so far as to say SNAP is more about enriching food producers and grocers than feeding the hungry.

In April of 2020, U.S. Secretary of Agriculture, Sonny Perdue announced emergency benefit increases have reached $2.0 billion per month for SNAP households. These emergency benefits represent a 40% increase in overall monthly SNAP benefits. Perdue went on to say, “President Trump is taking care of America’s working-class families who have been hit hard with economic distress due to the coronavirus. Ensuring all households receive the maximum allowable SNAP benefit is an important part of President Trump’s whole of America's response to the coronavirus.”

The website sponsored by the Center on Budget and Policy Priorities is just one of many such groups that tout the benefits of the program. For many people SNAP is seen as the federal government’s most responsive economic safety net. It gives 40 million Americans a monthly food allowance that can only be spent at food stores and farmers' markets. The program dumped out around $60 billion in benefits in 2019. Half of these benefits were spent at superstores like Walmart and nearly 30 percent were used at supermarkets like Safeway but today we are seeing a shift towards online shopping. Currently, more than 258,000 firms are authorized to accept SNAP benefits.

When it comes to the government being upfront as to where SNAP money goes, don't hold your breath. A case can be made that taxpayers and the general public have a right to know how much money retailers get by redeeming food stamps. This extends to companies such as Walmart, Amazon, and even the convenience store down the street. An article in the HuffPost two years ago bashed the lack of transparency and what many taxpayers consider a lame excuse for not disclosing how and where the money is spent. The fact is we need and have a right to know exactly how much was spent and at exactly which stores. The government argues that disclosing dollar figures for individual firms would hurt their business and such details should be exempt from the Freedom of Information Act.

This Woman Is Probably Not On SNAP
An audit of how and where SNAP money is being spent would go a long way in clarifying the effectiveness of this program. Throughout the program’s history, politicians and news reporters have obsessed over just what people were purchasing with their benefits. Decades ago, President Ronald Reagan talked about “strapping young bucks” buying T-bone steaks.  

For years the beneficiaries of this program used "actual stamps" but now their funds are put on debit cards that are far less visible in checkout lines. A big reason taxpayers are kept in the dark is that retail trade associations, such as the Food Marketing Institute have swooped in arguing the stigma flowing from negative attitudes toward food stamp recipients can create problems for those on the program. Some even went so far as to argue it might cause landlords to increase rent if they discovered tenants were getting SNAP benefits.

A troubling development for many local grocery stores is that online retailer Amazon has been approved to accept SNAP also known as EBT in most states. It could be said, Amazon has used its purchase of Whole Foods, to backdoor its way into this lucrative market. This really muddies the water when it comes to how and where poor people shop for food. While Amazon will rush to claim they will provide products at great prices it will put massive pressure on brick and mortar community grocers located in poor communities and force them out of business.

The SNAP program has opened to Amazon millions of new customers that previously were unable to get credit-cards because of bad credit. An internet search shows that Amazon has tightly latched onto the program as another way to grow ever larger by feeding at the government teat. Stores located in low-income areas often have a lot of problems with shoplifters making it difficult to compete, this will only make things worse as lazy patrons throw these grocers under the bus in response to the gentle promise of shopping made easier, free Amazon Prime, and more from the predatory behemoth retailer.

It is important Americans understand what is happening behind the curtain of the SNAP program facade. SNAP is as much about moving people into purchasing more expensive items than simply feeding the poor. Grocers and food producers love the program because it is another way to tap into the government's spending machine. Of course, when you search for, "Online Grocery Shopping Sites" it should not be a surprise that Amazon is already near the top of the list. As a result of Amazon pushing into these areas, it can be argued we will see a big increase in the number of places where people claim "food deserts" exist.

A big issue is what those on the program buy and how it affects their spending. For example, poor John or Jill that has ten dollars in cash slated for food would use their SNAP card instead of cash. This then allows them to use the money for something they consider more important such as a lottery ticket, beer, or cigarettes. It also translates into people on SNAP being able to afford food items that many hard-working Americans others feel they cannot afford. The fact recipients are able to shift spending or do what could be called "substitute shopping" muddies the issue of just how helpful the program is.

A Lot Of SNAP Money Goes To Buying This
A USDA website looks into what foods are typically purchased by SNAP households. The USDA website notes this to some extent the difficulty in pinpointing exactly what items are being bought with SNAP benefits. An interesting chart on the above site shows that generally less healthy foods are purchased by those on the SNAP program. This includes what is known as "prepared foods" which are often much more expensive per ounce than their unprepared counterparts.

Food Inflation has recently been in the news a great deal. With many Americans out of work due to Covid-19, it is taking its toll on the working poor who were already struggling well before the virus brought much of the economy to a halt. SNAP was designed to supplement the food budget of needy families so they can purchase healthy food and move towards self-sufficiency. Instead, it has become a generous gift to grocers and the companies that prepackage snacks and foods. Anyone that has traveled to other countries will immediately notice not all foods are packaged in small hard plastic and pumped full of preservatives. 

These packaging practices have been a big factor in driving food prices higher. In 2018 analysis reported the three largest food and beverage companies in the U.S. are PepsiCo., Tyson Foods, and Nestle, all of these are big beneficiaries of SNAP. This is a subject I have written about in the past, below are several links to those articles. When looking at this program, I contend, a great deal of money could be saved if purchases were limited to a few "approved items" and basic foods. This would eliminate much of the wasteful spending going to items such as snacks and sugary beverages.

From all indications, one group that has not been a huge beneficiary of rising food prices are framers. A new report released on August 4th by the American Farm Bureau Federation shows farm bankruptcies have continued to increase. AFBF found bankruptcies rose 8% over the last 12 months with 580 filings. The Midwest, Northwest, and Southeast recorded the most farm bankruptcies. While filings slowed in the first half of 2020, it was partly because of direct financial assistance provided to farmers via the Coronavirus Food Assistance Program and Paycheck Protection Program (PPP) loans.

We should expect a lot more Americans are going to sign onto the SNAP program for help in the coming weeks. Now that they have been cut off from receiving a $600 per week stimulus check that flowed from the CARES act, buying groceries has become more difficult. Since the program ended the ability of tens of millions of Americans to buy food or pay bills has been impacted. Many of these consumers will be forced to shop more carefully and buy less expensive foods. This is exactly what the grocers and food producers that love SNAP do not want to happen.

Footnote; This post dovetails with many of my past writings, for more I might suggest reading the article below. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged,

1 comment:

  1. There are also some fast food places where one can use SNAP benefits to purchase food that qualifies as "home prep", such as "take and bake" pizzas at Papa Johns and salads at Burger King. We lived in a small town in the Southwest for years and knew several people whose friends and relatives traded their food stamps for other items, including drugs. Maybe that's not possible now with the EBT "debit" cards, but they'll find a way to abuse those too I'm sure. Years ago I saw a couple use food stamps to buy a cart full of soft drinks, junk food, and meat like steaks, ribs, and pork chops. A few years ago we saw a young, very well dressed lady with an expensive iphone and designer purse(the wife knows this stuff) use an EBT card to buy food and supplies for her baby. She got irritated when the cashier told her that her card wouldn't accept a couple of the items, so she had to discard them, but she bought premium brand name diapers and other brand name products. We later saw her putting her groceries into her nearly brand new, very nice pickup truck. This is just another example of welfare benefits that get routinely abused, and the govt. doesn't really care as long as it can borrow and print the money to pay for this largess. Medicaid is another costly scam in many cases. There's also Social Security Disability which is rife with fraud and abuse. As long as politicians can just borrow the money to pay for all this stuff it will never end. If taxpayers actually had to pay for all this wasteful govt. spending, there would be a revolt, and every single one of the selfish, greedy politicians in D.C. would get booted out of office. Instead, we're stuck with a largely ignorant citizenry who don't understand that because of the spending, borrowing, and money creation, they are all paying a hidden tax, called price inflation, in addition to all the other taxes they pay.