Shoppers at Walmart Supersent at Burbank in Burbank on Thursday, 21 November, 2024.
Alan J. Shaben | Los Angeles Times | Getty images
For millions of low-income Americans- Already sharp From the risk of tariffs and high prices – changes in a program that helps with the cost of grocery can make life more expensive.
House Republican is demanding a cut of $ 230 billion of the US Agriculture Department in the next decade to pay for tax deduction. The Senate version of the bill states at least $ 1 billion in USDA cuts. Most of those savings, or all, will come from cutting funds for supplementary nutrition aid programs, earlier known as food tickets.
The proposed cut, if approved, after adjusting the average annual cut for inflation will be three times stable compared to the biggest previous deficiency ever, In the form of UnidosusWho advocates Latino in America
Nevertheless, the plan faces obstacles: Congress still needs to cover two separate bills passed by the House of Representatives and Senate, and it can eventually exclude the possible cuts in the Food Assistance Fund to avoid losing the important votes required to pass the form bill.
But changes may endanger sales for major retailers or divert expenses for low -priced brands at such times when consumers have already shown signs of financial stress.
In a statement, the USDA defended the cut and said the Trump administration is “trying to give the program correctly.”
The statement said, “Supplementary Nutrition Assistance Program is only so complement.” “It was never an intention to have a windfall for food companies and retailers, but a temporary security trap for needy families and communities.”
The number of people participating in the SNAP historically raised ups and downs around the economy status and eligibility, but Kohort is an important selling driver.
Shopkeepers using benefits come from large homes and spend 20% more on their monthly grocery than non-SNAP shopkeepers, a market research firm, which surveys American consumers.
According to an Evercore ISI analysis of USDA data, SNAP has about 112.8 billion dollars or 4% of the total US food expenditure. For the choice of Wal-mart, Kogar, General mills And PepsiCoSales of Snap shopkeepers meaningfully add to their top lines every quarter.
At the state level, changes may also come. At least 11 states have proposed a limit to what families can buy with funding from the SNAP program, such as the ban on using government funding to buy soda, candy or other junk food. On Tuesday, both Arkansas and Indiana Formally requested To restrict the use of SNAP funds for such products.
Given support from the Trump administration, the program is likely to proceed to state level efforts to ban sugars and low nutritious food and beverages. Proposals Robert F., Health and Human Services Secretary. Kennedy has promoted his campaign to fight junior and chronic diseases, which is “Healthy America Healthy Again,” or “Maha” dubbed.
“I’m working with [Secretary of Agriculture Brooke Rollins] And the governor now to remove Soda Pop from the Food Stamp program to pursue the Maha law in 24 states, away from the SNAP program, ”said Kennedy. Cabinet meeting At the White House on 10 April.
While Kennedy does not have the right to approve those changes, Rollins has already said She will sign the waves that states need to ban purchases using SNAP benefits.
Already spread
According to USDA data, about 42.1 million people per month used SNAP benefits to buy their grocery goods in FY 2023. It translates to about 1 of every 8 people living in the US, based on the data of the US census.
For low -income families who rely on snap benefits to buy grocery goods, the proposed funding cut comes at a time when grocery budgets already increase by pricing inflation.
Dollar generalThe one who meets low -income shopkeepers has seen tension between its customer base, CEO Tod Wasos said on the earnings of the middle of March.
He said, “Our customers continue to report that their financial situation has worsened than the previous year as they have been negatively affected by the ongoing inflation.” “Many of our customers report that there is enough money only for basic essential things, which are noted that they have to sacrifice the requirements.”
Wal-mart – The country’s largest grocery items – said that the pattern of consumer spending is being bumped in recent months. Its chief financial officer John David Renny said during the company’s Investor Day in Dallas last week, “Uncertainty and fall in consumer spirit has led a slightly higher sales instability for the week, and clearly, day -day.”
Recently, tariffs have expressed concern over goods imported from all over the world, including clothes, furniture and shoes, that prices will grow again and will force Americans to take and choose where and where to buy.
Consumer spirit this month Come worse All demographics, including age, income and political affiliation, according to Joan Hsu, were closely seen University of Michigan Survey,
Even recent luxury retailers, including sales results, Restoration hardware And Tiffany & Company and Louis Wuiton Parents LVMHA recession is reflected.
Profit at risk
Rising prices and potential snap cuts as grocery expenses, food and drink manufacturers. Harshe And Monster drink Could feel sting.
According to the estimates of Bernstein Research, about 9% of the food-house expenses come from SNAP recipients.
According to Bernstein’s analyst Alexia Howard, the Widcale Cuts for Snap will thank the General Mills the most difficult, thank you for its grain lineup. JM Smocker The next is the most exposed, fuel by its frozen uncrustables and sweet snack portfolio, which is as a result of the acquisition of the hostess. then there is Craft HanzWith its lunch meat, and Tyson foodsWith its meat and frozen options.
Drinking companies will also be affected by any belt. According to the USDA study, about 5% SNAP benefits are spent on soda alone. More broadly, approximately 9% of Snap expenses lead to “sweet beverages”, including sports drinks, energy drinks, juices and powder mixes.
According to City Research Analyst Philippo Fallorney, the drink leaves the monster of the company at risk, giving its high performance to the energy drink category and lower—-age consumers. Beverage Coca Cola And PepsiCo Possibly their sales will also take a hit, but their various portfolio and home demand from far and wide raised the risk of an increase of about 1.5%for global sales from the end of March.
Walmart did not comment on possible changes to snap his investor day last week. Big-box retailer, known for low price, is not a frill approach, Drawed rich shopkeepers In recent years.
Yet the retailer is still the top grocery items for Snap Shoppers, which is about 26% market share by the end of July, and CEO Doug McMillan told reporters at the investor program that the Big-box retailer has focused on “opening price points”, such as the need of families, such as the family needs.
According to market researcher’s data, the top three grosers for Snap Shoppers have been scored by Kroger, who catches Albertson with about 9% of the group’s annual grocery expenses and about 7%.
The total amount that makes from Walmart and other taxpayers-funded food programs is not clear. The USDA does not release data on the amount of money groups and retailers obtained from SNAP. Supreme court After the Food Industry Association in 2019, it was decided to keep that data from the public, then called the Food Marketing Institute, which is an industry group that represents grossers and food manufacturers, Fought a fight to keep it private,
Like dollar store Dollar general And dollar Tree According to Bernstein’s retail analyst Jhihan MA, SNAP is the most exposed to any change in benefits.
“If you are a dollar shop, your full value proposal is dedicated to serving the lower -income consumers,” Maa said.
CEO Wasos said at the retail conference of Goldman Sachs last year that the dollar comes from homes with an annual income of about $ 30,000 per year of about 60% of the total sales of General.
Shifting behavior at the dollar shop can burn food and drink companies back.
Since dollars stores SNAP shopkeepers, they are more likely to make changes in their shelves to serve those customers, Ma said. If Utah consumers cannot use their SNAP benefits to buy soda, for example, dollar stores in that states may prefer stocking other products.
“They are small boxes, and they have a more limited shelf location,” Maa said. “This can be a step in the right direction from a health and well -being perspective, but for some food manufacturers, on the other side there may be a double vaimi for things.”
If low -income families have less money than Snap to cover their grocery bills, it means that they will have less to spend on housing, electricity or other expenses outside the grocery corridors, Lauren Bauur, Lauren Baur said Lauren Baur in economic studies at Bruckings Institution.
Shopkeepers who receive snap funding also replace low-priced retailers for non-vegetable purchases. About 95% SNAP shopkeepers bought non-gesture cutting items in Walmart in the last one year and spent an average of $ 1,878 during that time. Dollar Tree and Dollar General also win many non-food purchases from the group, the firm found.
And, Bauur said, if customers have low grocery money, they may be able to bear less healthy items such as lean meats and fresh fruits and vegetables because they are pricier than processed and packed foods.
Cutting challenges
Despite the support of the Trump administration, states still have a tough battle to ban sugars drinks and junk food from Snap. For the beginning, suppliers are opposed.
“You are not cut in the program, you are only determining what some people can do and put the government in the grocery shop to choose the winners and losers in the grocery store and make decisions for consumers,” said Meridath Potter said, “You are not cutting the program,” you are not cutting the program.
The previous attempts to ban soda or candy from Snap at the state level have failed, no matter who is sitting in the White House. The previous Trump administration denied exemption due to additional cost to administer restrictions, according to Potter.
To ban certain products from SNAP after request from a governor, a state must operate a cost-platted pilot, including a test period, evaluation and a start and end date.
Dutash Bank analyst Steve Power wrote to customers in a note at the end of March, Dutash Bank analyst Steve Power is also possible, the legal rights of the USDA are also possible.
The shrinking of the program can also lead to economic implications, as it will reduce the money flowing for retail vendors, farmers’ markets and other businesses that accept snaps in communities, said Bauur of Brookings Institution.
In the past, funds have increased for the program during the challenging economic time.
The US increased Snap funding to get more dollars in the hands of needy Americans during the Great Recession and Kovid -19 epidemic.
“It’s excitement,” Baur said. “It creates economic activity and makes economic activity especially during the economic recession.”
