Trump agricultural chief Perdue backs food stamp changes
- The Trump administration wants cuts made to the Supplemental Nutrition Assistance Program, better known as food stamps. Speaking at the WSJ Global Food Forum on Tuesday, Agriculture Secretary Sonny Perdue criticized the distribution of food stamps to people who are able to work, according to The Wall Street Journal. Congress will make some decisions about the program next year under the reauthorization of the Farm Bill.
- The number of Americans receiving SNAP benefits has dropped in recent years, from about 48 million recipients in 2013 to just over 42 million in September 2016. On average, recipients receive a monthly benefit of $125 to use toward the purchase of food. Nearly $67 billion in benefits were distributed in 2016.
- Perdue has a history of trimming social programs while governor of Georgia. His administration tightened access to some poverty-reduction programs and monitored recipients for compliance, the paper reports.
Not surprisingly, the food assistance program grew during the Great Recession, but the Obama administration began scaling back outlays in 2013 in light of the improving economy. The Trump administration now proposes cutting another $191 billion in SNAP or food stamp benefits during the next decade.
The spending cut could cost grocers some $57.5 billion in that time, according to research from CNBC and AlixPartners. This means stores could lose an estimated 37 cents out of every dollar currently spent by SNAP recipients. That’s tough to swallow for many grocers fighting for sales in a low-margin, highly competitive industry.
The Wall Street Journal reports the program has become a “critical revenue stream” for some big food retailers, including Walmart and Kroger. The latest USDA data reveals that 81% of food stamps, totaling $54 billion, were redeemed at about 35,000 authorized supercenters or supermarkets last year. About 40% of Kroger’s “most loyal customers” have been on SNAP at some time in the past five years, the paper reports.
Experts say reduced benefits usually don’t translate into a steep reduction in food spending, which is a necessity for consumers. Shoppers instead tend to reallocate their funds, buying more private label goods, for example, rather than pricier national brands. They’re also likely to seek out products that are discounted or ones that can be purchased with available coupons. Consumers affected by food stamp cuts obviously stand to benefit from grocery price wars sweeping the nation too.
Retailers likely will need to adjust merchandising and promotional strategies accordingly should the administration’s proposed cuts go into effect. Anything they can do to maintain low prices on everyday items, including milk, eggs and bread, should help. Grocers like Walmart stand a good chance of holding on to SNAP customers provided they offer good value and attractive store promotions. Price-sensitive shoppers could increasingly defect to grocers with a strong private label presence, like Aldi and Lidl.
Finally, branded manufacturers could consider such moves as value-line introductions or targeted coupon programs aimed at those expected to be affected by the proposed cuts.
- The Wall Street Journal Agriculture Secretary Perdue Favors Food Stamp Restrictions
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