Although convenience stores represent more than 45% of U.S. retailers participating in SNAP, they account for less than 6% of the redemptions.
By Mark Battersby, Contributing Editor
President Trump on Dec. 20, 2018 signed into law the Agriculture and Nutrition Act of 2018, also known as the Farm Bill.
A portion of the expansive bill reauthorizes the Supplemental Nutrition Assistance Program (SNAP). More than 119,000 convenience stores accept SNAP benefits and serve the communities in which they operate.
The program assists approximately 44 million Americans each month.
Although convenience stores represented more than 45% of U.S. retailers accepting SNAP payments, they account for less than 6% of the overall redemptions.
Surprisingly, however, more than 52% of SNAP dollars, or $3 billion, was redeemed at big-box stores such as Walmart and Target.
According to Eva Rigamonti, an associate in the government affairs and public policy practice at Steptoe & Johnson LLP and an advisor to the National Association of Convenience Stores (NACS), the c-store industry is awaiting new food category standards from the U.S. Department of Agriculture (USDA).
PORK BARREL
“The USDA’s efforts to increase the categories of required items from the current three to seven items are mired in controversy centered over the definition of many of those items,” Rigamonti said. “Should bacon and ham be separate categories or fall into the all-encompassing category of pork?”
According to Rigamonti, convenience store operations, particularly larger chains operating across state lines, prefer the more straightforward, consistent federal rules.
The Food and Nutrition Act of 2008 defined eligible food as any food or food product for home consumption, including seeds and plants, which produce food for consumption. In 2014, Congress passed legislation that imposed additional obligations on retailers that redeemed SNAP benefits.
The 2014 requirements mandated certain SNAP-authorized retail food stores have available on continuous basis at least three varieties of items in each of four staple food categories. Subsequently, USDA increased this to a mandatory minimum of seven varieties in each of the four categories. Retailers were also required to implement point-of-sale technology capable of preventing fraudulent transactions.
Under the final rule, retailers aren’t eligible to be SNAP retailers if 50% or more of a c-store’s total gross sales (including fuel) are of heated foods. This is a big improvement compared to the original proposal, which disqualified retailers if 15% or more of a store’s total food sales came from items cooked or heated on site before or after purchase.
Last year, as part of the Trump Administration’s largely ignored budget proposal, an “application fee” for retailers seeking to participate or renew participation in SNAP was proposed. The proposed fee was be levied on a per-store basis (not per company), and would be dependent on how much business each store generated.
HARVEST BOX
For smaller retailers, the fee could be as little as $250 with larger retailers paying as much as $20,000.
This year, grocery retailers were concerned about the administration’s proposed $130 billion in cuts to SNAP. According to the Wall Street Journal, the reduction would amount to a 20% smaller annual budget, and would come at a time when grocery retailers can’t afford to lose sales.
Now assumed by industry experts to be largely dead, many grocers remain concerned about the administration’s plan to deliver so-called “Harvest Boxes” filled with shelf-stable food to more than 16 million SNAP recipients. The move sought to cut $129 billion in spending over the next 10 years and source items from wholesale channels rather than retailers.
Under this largely-ignored proposal, SNAP recipients who currently receive at least $90 per month through the program would instead receive about half of their benefits in the form of a Harvest box, enabling recipients to make their own meals with the ingredients provided.
The package would include items such as “shelf-stable milk, ready-to-eat cereals, pasta, peanut butter, beans and canned fruit and vegetables.” The remainder of the benefit would go on the SNAP Electronic Benefit Transfer (EBT) card for use at approved grocery retailers.
In addition to causing SNAP benefits redeemed at stores, including c-stores, to plummet, the proposal would reportedly give individual states “substantial flexibility” about the delivery process. In other words, each state could transport the boxes to recipients in a different manner.
Should any of these earlier proposals have become a reality, National Public Radio predicted more than 80% of the SNAP benefits redeemed at stores—including convenience stores—would fall.
However, because the current definition of food is a specific part of the act, any changes would require congressional action.
Although the USDA’s rule-making process is a lengthy one, including a 30-day commenting period, the updated SNAP retailer requirements, including the expanded list of acceptable food categories, would be unlikely to become a reality before mid-year.
The 2018 Farm Bill, unveiled on Dec. 11, 2018, left largely untouched the requirements for qualifying for SNAP benefits. NACS reported the Farm Bill is especially relevant to the convenience store industry because it reauthorizes SNAP.
The Farm Bill Conference Committee resolved work requirement issues.
NACS, along with other retail trade associations, has reportedly spent the last two years lobbying for the permanent ban on fees.
The compromise bill also permanently bans processing fees on EBT transactions and reiterates the ban on market interchange fees.
Rigamonti pointed out, convenience stores will need to keep a close watch on program developments, both in Washington, D.C., and at the state level. After all, any changes, even ones that are small could have major repercussions on the already-challenged profit margins of convenience store retailers.
NACS Commends Ban on SNAP Processing Fees
The National Association of Convenience Stores (NACS) applauded Congress for passing legislation that bans processing fees on all Electronic Benefits Transfer (EBT) transactions and reiterates the current ban on interchange fees from these transactions.
The U.S. House of Representatives last month passed H.R. 2, the Agriculture and Nutrition Act of 2018, known as the Farm Bill, by a vote of 369-47, clearing one of the final hurdles for the bill to become law. The compromise bill was finalized earlier this week and sailed through the Senate on Tuesday afternoon by a vote of 87-13.
The final Farm Bill was championed by Senate Agriculture Committee Chairman Pat Roberts (R-Kan.) and Ranking Member Debbie Stabenow (D-Mich.) and House Agriculture Committee Chairman Mike Conaway (R-Texas) and Ranking Member Collin Peterson (D-Minn).
More than 119,000 convenience stores accept SNAP benefits and serve the communities in which they operate. During the Farm Bill process, NACS has advocated for the critical role convenience stores play in providing access to food for SNAP beneficiaries.
