Trump budget proposes major overhaul to food stamp program
- The proposed 2019 budget would fundamentally alter the structure of the current Supplemental Nutrition Assistance Program (SNAP), swapping roughly half of the cash recipients receive for a USDA Foods package that includes items such as shelf-stable milk, pasta, canned fruit and meat.
- Under the proposal, households receiving $90 or more a month in SNAP benefits would be given the box of food, which would be 100% American grown. States would be highly involved, influencing how the packages are delivered or picked up. An estimated 42 million people, or roughly 13% of Americans, receive food stamps, according to the USDA.
- The budget also proposed changes to income and benefits calculations, modifying working age definitions and eliminating certain exemptions.
The proposed changes to the current Supplemental Nutrition Assistance Program, better known as food stamps, are some of the most drastic in its more than 50-year history. The reformed program, which includes the so-called "America's Harvest Box" that households getting more than $90 a month in SNAP benefits would receive, would save an estimated $214 billion over a decade, according to the administration's budget.
Congress will have the ultimate say on whether this overhaul becomes a reality. Considering the support the current SNAP model has from grocers and lawmakers unwilling to upset their constituents, not to mention the ongoing gridlock and challenges facing Congress, it's unlikely that these changes will ever be enacted.
However, if this shakeup were to occur, it would have a drastic impact on Big Food.
Food retailers that are authorized to accept SNAP benefits, such as Walmart, Target and Aldi, could lose billions a year if food stamp recipients’ spending power is cut in half. Customer Growth Partners, which estimated that food stamps are responsible for 7.5% of sales, said Walmart alone collects more than one-fifth of all sales in the program, CNBC reported. Shares of Dollar Tree and Dollar General both dropped on Monday after the budget was released.
The Food Marketing Institute, a trade organization for grocery stores, was quick to respond to the budget proposal with its own concerns. It called the Harvest Box proposal inefficient, adding that it would create new costs that would negate any savings.
“Perhaps this proposal would save money in one account, but based on our decades of experience in the program, it would increase costs in other areas that would negate any savings," Jennifer Hatcher, chief public policy officer with the Food Marketing Institute, said in a statement. "As the private partners with the government ensuring efficient redemption of SNAP benefits, retailers are looking to the administration to reduce red tape and regulations, not increase them with proposals such as this one.”
Food and beverage manufacturers also stand to lose billions in revenue if the program is adopted. A 2016 study by the U.S. Agriculture Department found SNAP recipients spent more money on soft drinks than any other item. Frozen prepared foods and prepared desserts were the 4th and 5th most commonly purchased items, together making up roughly 14% of SNAP purchases. If spending on these items were cut, it would have a significant impact on many of food and beverage products these companies sell.
The proposed overhaul of SNAP isn’t the first time home delivery of food goods has been proposed. Last year, the USDA announced a two-year trial that would enable SNAP recipients in seven states to have food delivered to their home through retailers such as FreshDirect, Amazon, Safeway, and ShopRite and to pay for them using federal benefits, according to The Atlantic. The publication said the program was part of the 2014 farm bill requiring the USDA to try an online ordering program.
While it's unlikely SNAP will be drastically changed anytime soon, these proposals and pilot programs could be an indicator of where government supported food assistance is headed in the future.
- The White House BUDGET OF THE U.S. GOVERNMENT