Dive Brief:
- Grocery retailers are concerned about the Trump administration’s proposed $130 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP), according to The Wall Street Journal. The reduction would amount to a 20% smaller annual budget, and would come at a time when supermarkets can’t afford to lose sales, the paper wrote.
- Around $33 billion — more than half of all SNAP dollars spent — goes to large stores such as Walmart and Target. Walmart earns around $13 billion from SNAP sales each year, which is 18% of the sales made through the program.
- Grocers also are protesting a push by the administration to deliver so-called Harvest Boxes filled with shelf-stable food to more than 16 million SNAP recipients. The move seeks to cut $129 billion in spending during a decade, and would source items from wholesale channels rather than retailers.
Dive Insight:
In addition to reduced spending, Republicans want to institute stricter work rules for SNAP recipients. This includes requiring any recipient who isn’t employed to attend at least 20 hours of job training per week. While the goal is to get more people off the program, Democrats warn the new rules will create an expensive bureaucracy and result in one million fewer people using food stamps.
Under the current system, SNAP recipients are required to work, though there is an exemption option for states with high unemployment. There also are exemptions for individuals who are under 18, disabled, pregnant or elderly that are expected to stay intact under the revised plan.
During the past several years, SNAP enrollment has declined thanks to an improving economy. Since 2013, more than five million individuals have left the program, leaving it with just over 42 million recipients.
New rules may not be coming any time soon, or at all. As The Wall Street Journal reported in a separate article, the proposed SNAP revisions have led to a standoff in the House Agriculture Committee between Democrats and Republicans that could delay passage of the Farm Bill — the $900 billion piece of legislation up for renewal this year that authorizes SNAP funding. Some Republicans also are wary of making changes to entitlement programs before midterm elections.
SNAP cuts would come at a time when grocers can ill afford to lose customers and food dollars. Many independent grocers struggling to remain relevant against large chains will be hard hit. Walmart will feel the pinch as it goes head-to-head with Amazon and discount retailers. The company sees a hefty portion of SNAP dollars, and has done its part to keep the program current by participating in an e-commerce pilot, and by testing a program that allows food stamp spending through its click-and-collect program.
While it's too soon to definitively say what will happen with SNAP in the upcoming farm bill, the most likely outcome is some type of compromise that falls short of what the White House has proposed. Still, retailers facing industry turmoil will need to keep a close watch on whatever happens to the program because any changes, even ones that are small, could have major repercussions on their already challenged bottom lines.
