Food Stamps: Fat Times For Food Companies, Recipients in $72B Program

Sept. 7, 2012 -- Who's getting fat off food stamps?

A record number of Americans—46.7 million, or nearly 1 in 7--now uses the food stamp program, according to the Department of Agriculture. The annual cost of SNAP (the Supplemental Nutrition Assistance Program, as the food stamp program is officially known) hit $72 billion last year, up from $30 billion four years earlier.

SNAP's swelling size and cost have earned it fresh scrutiny from critics, who say SNAP is making two different constituencies fat—big corporations and the poor—the first, figuratively; the second, literally.

Many health advocates, concerned by Americans' increasing obesity, argue that food stamp purchases should be disallowed for items high in salt or fat or sugar—candy, say, or fatty meats, potato chips and soda. Mayor Michael Bloomberg of New York City, who has a particular antipathy to sweet drinks, has urged the Department of Agriculture to exclude sodas from food stamp eligibility.

Makers of these maligned products, meantime, have lobbied Congress and state governments to prevent their products' exclusion from SNAP eligibility, arguing that consumers ought to be free in the grocery store to buy pretty much whatever they want. The National Confectioners Association, for example, argues on its website that excluding candy from SNAP would prevent parents from enjoying the freedom to give children "an occasional treat" on "Halloween, Hannukah, [or] Easter."

Consumer watchdog group Eat Drink Politics in June issued a report, "Food Stamps: Follow The Money," which tries to quantify both how much money food and beverage makers (among others) make from SNAP, and how much money they are spending to oppose legislation antithetical to their interests. It describes SNAP reform bills pending in nine states that would prohibit, say, purchases of sweetened beverages (California SB 471), potato chips (Florida SB 1658) or chewing gum (Illinois HB 1480). It hints the reason none of these has passed is heavy lobbying by the affected industries.

Hard numbers are are what the program buys hard to come by, says the report, in part because the USDA either doesn't have or does not release certain crucial data: The Department lacks the legal authority, for example, to require retailers to report products SNAP participants are purchasing. It knows the dollar value of transactions, but not whether the customer bought Cheesy Puffs or broccoli.

As for the increasing obesity of the poor--data on that problem is readily available, and food stamps' complicity in it is the subject of much debate.

Julian Alston, U.C. Davis professor of Agricultural and Resource Economics, has studied the question in depth, producing studies that include "U.S. Food and Nutrition Programs: Costs, Effectiveness, and Impact on Obesity" (for the American Enterprise Institute) and "Likely Effects on Obesity From Proposed Changes to the U.S. Food Stamp Program" (for the journal 'Food Policy').

In the second of these papers, Alston and his co-authors say food stamp participants are more likely than non-participants to be overweight or obese. (They don't say food stamps are making them fat.) The authors then go on to analyze whether the exclusion of certain food items from program eligibility might make participants healthier.

The argument that excluding "unhealthy" items would make participants healthier, Alston tells ABC News, "is not a lay-down hand at all." Why not? First, he says, there's nothing to prevent participants from saving up their cash for ice cream. "You can restrict how people spend their stamps but not change their total consumption." Second, no matter how the program's standards might be tweaked, manufacturers, he says, will tweak their products to try to get around the prohibition.

"They will re-engineer the food," he says. The revised products will be different; that doesn't necessarily mean they'll be any more nutritious.

Although changing program rules to promote healthier eating could indeed be expected to reduce participants' obesity, Alston and his co-authors say that the effect on food prices overall might be to make "healthy" food relatively more expensive for non-participant consumers (and "unhealthy" food relatively less), thus negating any net benefit to the population overall.

As for companies lobbying to prevent changes to the existing program, he says that while he personally finds the lobbying process "pretty ugly," it's part of "normal commercial practice" and an appropriate exercise of companies' rights. "It's natural for them to want an outcome favorable to them," he says. Unless there's actual bribery, "It's not necessarily corrupt."