KANSAS CITY — It’s no sudden revelation that government initiatives like the Supplemental Nutrition Assistance Program (SNAP) are a big part of the U.S. food business. Still, developments over the past year have brought the importance of SNAP and other food assistance programs into sharper focus.
Robert Moscow, equity analyst at TD Cowen, commented on the underperformance of food and beverage stocks in 2023, saying that among many factors, the cut in food assistance benefits at the beginning of the year was key.
“Based on the calculations we’ve made, if all that money were translated into reduced food costs, overall food spending would be reduced by 3%,” Moscow said.
Food sales volumes were a challenge for most consumer packaged food companies last year, even though it is impossible to accurately estimate the savings associated with reducing food spending. The cuts to SNAP are evident in the federal government’s monthly spending on the program. Monthly government costs for SNAP fell to $7.2 billion in July 2023, down 35% from December 2022, according to data from the U.S. Department of Agriculture Food and Nutrition Service (USDA). The reduction reflects the end of SNAP emergency allocations last February. (EA) He was paid in 32 states.
The reduction reduced the funds SNAP households receive by at least $95 per month. The additional benefits were designated as temporary assistance related to hardships caused by the COVID-19 pandemic. With the sudden repeal of EA, the food industry has a rare snapshot of what will happen if cuts are applied to SNAP, which serves about 41.2 million people, or 12.5% of the U.S. population. Got the shot.
The temporary end of coronavirus benefits was inevitable, but given the ongoing debate in Congress over the budget and federal deficit, it remains to be seen whether further SNAP cuts will occur for the food industry. That should be a cause for concern. A proposal has been floated in Congress that would cut funding for SNAP and other assistance programs by $800 billion over the next 10 years.
Food industry organizations staunchly support SNAP. The American Bakers Association calls the program “the cornerstone of the nation’s nutrition assistance safety net” and praises its structure, which by law treats SNAP customers “on par with non-SNAP customers” and with “dignity.” The Consumer Brands Association (CBA) describes SNAP as “a vital lifeline for many consumers to support their families.” CBA, which represents household goods manufacturers, supports the program, which “empowers individuals to choose food products that meet their dietary needs,” the organization said, adding it is also a strong supporter of The Special. It added. Supplemental Nutrition Program for Women, Infants, and Children (WIC).
The Department of Agriculture, which administers the program, has long tried to tout the positives of SNAP to counter public concerns about the government’s gift program. Recently, the Department of Agriculture released data showing that SNAP and WIC cuts may not be as budget-friendly as spending-cut proponents imagine. For example, the ministry cited research showing that as household food security deteriorates, the prevalence of chronic diseases such as hypertension and diabetes rises significantly. SNAP, “the cornerstone of the nation’s safety net,” is the nation’s most effective weapon against food insecurity. It accounts for less than 2% of the federal budget.
Attempts to significantly reduce the SNAP program have been rejected in the past due to bipartisan support for fully funding the program. Still, efforts to tighten program eligibility have sometimes been successful. Other proposals have been made to limit the products SNAP recipients can purchase with their benefits, but the industry adamantly opposes such restrictions. The impact on consumer demand of the February 2023 benefit cuts cited by Moscow is a sign of the importance of grain-based foods and the need for the entire food sector to remain vigilant and ensure that SNAP and other food assistance programs are properly distributed. He emphasizes that he is a full-throated advocate for maintaining his level.