As Congress proposes cuts to hungry families, my new report raises questions about how much food makers, retailers and big banks profit from food stamps.
With the debate over the 2012 Farm Bill currently underway in the Senate, most of the media's attention has been focused on how direct payments -- subsidies doled out regardless of actual farming -- are being replaced with crop insurance, in a classic shell game that Big Ag's powerful lobby is likely to pull off.
Meanwhile, the Senate may hurt the less powerful by cutting $4.5 billion from the largest piece of the farm bill pie: the Supplemental Nutrition Assistance Program (SNAP, formerly called food stamps). Reducing this lifeline for 46 million struggling Americans (more than 1 in 7 -- nearly half of them children) has become a sideshow in the farm bill circus, even though SNAP spending grew to $78 billion in 2011, and is projected to go higher if the economy does not improve.
While New York Senator Kirsten Gillibrand's amendment to restore cuts to SNAP by reducing insurance payments is a noble effort, what's missing from this conversation is the role of corporations. Much attention has focused on how agricultural subsidies fuel our cheap, unhealthy food supply. In reality, the largest and most overlooked taxpayer subsidy to Big Food in the farm bill is SNAP, which now represents more than ten percent of all grocery spending.
In a report I released today -- Food Stamps, Follow the Money: Are Corporations Profiting From Hungry Americans? -- I examine the role of three powerful industry sectors that benefit from SNAP: 1) major food manufacturers such as Coca-Cola, Kraft and Mars; 2) leading food retailers such as Walmart and Kroger; and 3) large banks, such as JPMorgan Chase, which contract with states to help administer SNAP benefits. Findings from the report include:
Most details about where SNAP dollars go remains hidden. For example, although such data is readily available, the U.S. Department of Agriculture (which administers food assistance) refuses to make public how much money individual retailers make from SNAP. In addition, Congress does not require data collection on specific SNAP product purchases (such as Coke versus Tropicana), despite such information being critical to effective evaluation of the program.
USDA also does not collect national data on how much money banks make on SNAP. States bear much of the burden of these administrative costs. Are lucrative contracts with private banks the most cost-effective way to administer a critical food assistance program at a time of severe budget cuts? Could we feed more hungry Americans with some of the profits these corporations are making?
Anthony Smukall is a SNAP participant living in Buffalo, New York, where he says his fellow residents are "facing cuts year after year, with no sustainable jobs to be able to get off of programs such as SNAP." He thinks that "transparency should be mandatory. The people have a right to know where our money is going, plain and simple." He added:
JPMorgan is shaking state pockets, which then rolls down to every tax-paying citizen. I am disgusted with the numbers in this report, it is unimaginable. If the people knew how such programs were run, and how money is taken in by some of the world's conglomerates, there would be outrage on a grand scale.
Jennifer L. of Massachusetts is a single mother who recently re-entered the workforce and hopes Congress does not cut SNAP because as she explains:
SNAP makes a huge difference in my ability to support my children and pay the bills. Food prices have been skyrocketing while salaries remain unchanged. Many people I know have two jobs to try to make ends meet.She added: "I am in favor of making retailers' and banks' information regarding SNAP public. What are they hiding?"
Instead of hurting families during these hard times with cuts to SNAP, Congress should require program improvements that would restore its original purpose: providing a safety net for those in need while also helping farmers. Congress should also make SNAP more transparent by mandating accurate tracking of SNAP expenditures. Why should only the likes of Walmart and Coca-Cola know how billions of our tax dollars are spent each year? Is SNAP truly "putting healthy food within reach" as its tagline proclaims?
You can download the full report here.
Also see Reuters coverage.
Originally posted at Appetite for Profit.
Follow Michele Simon on Twitter: www.twitter.com/Appetite4Profit
Most details about where SNAP dollars go remains hidden.
For example, although such data is readily available, the U.S. Department of Agriculture (which administers food assistance) refuses to make public how much money individual retailers make from SNAP.
In addition, Congress does not require data collection on specific SNAP product purchases (such as Coke versus Tropicana), despite such information being critical to effective evaluation of the program.
http://www.fns.usda.gov/pd/29snapcurrpp.htm
You are bashing Government while these Business groups are the ones Lobbying to keep the sweetheart deals in place and to even expand them.
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Would it not be better for recepients of food stamps (usually women / mothers) to exercise their own good judgement (following lead of dietitians and social workers) in spending their reduced food stamp dollars on what food groups / ingredients are important?
Eliminate the power of lobbyists and govt by empowering the consumer!
"Starving the Beast" (excess govt spending of money it does not have) is the only way to bring efficiency. In Detroit, food stamp recepients are encouraged to grow their own fresh food as they did in the good old days when there was no SNAP program.
They are more efficient than old school paper and check benefits.
They can't be duplicated or falsified. From what I understand they get reloaded and devalued at the benefits center.
The administrative costs seem to be extremely high for the little bit of "administration" required.
WHY should JPMorgan be making a profit on food stamps? Is it any wonder big business is sitting on trillions of dollars, refusing to invest in jobs for Americans?
Why should visa/master charge be making a profit on child support recovery or unemployment benefits?
WHY? Why are the taxpayers filling the coffers of corporations off the backs of struggling Americans?
For heaven's sake there should be no profit in these programs.... IF it's mandatory to make a profit on those in such dire circumstances, for heaven's sake the government should be making the profit and applying to the debt/deficit or at least saving the money.
WHY are taxpayers footing the bill for more profits to these corporations who clearly don't deserve or need anymore?
The only thing the government should be concerned with is cost.
If it costs $80 billion for a program when administered in one way, and $70 billion another way (even if someone ends up making a profit) they should use the $70bn way.
I don't care who makes a profit if it costs the taxpayer less overall. But due to corrupt politicians we do need a ton of oversight in how these contracts are awarded.