This article highlights a very beneficial federal program that directly addresses poverty in a number of both expected and unexpected ways by simply helping low-income people buy nutritious food. It’s something HAWNY firmly supports and hopes to see expanded.
Boost in Food-Stamp Funding Percolates Through Economy
By Roger Thurow and Timothy W. Martin
DAVENPORT, Iowa — The lush red strawberries caught the attention of Rachel Patrick, a mother of five shopping at a farmers market along the Mississippi River here. She selected two cartons and ignited a little-noticed chain reaction that is an important part of President Barack Obama’s economic stimulus plan.
Ms. Patrick handed a plastic card loaded with her monthly food-stamp allocation to farmer Ed Kraklio Jr., who swiped it through his electronic reader. Mr. Kraklio now regularly takes in several hundred dollars a month from food-stamp sales, a vital new revenue stream that has allowed him to hire another assistant to help tend a cornucopia of fruits and vegetables. The new worker, in turn, spends her income in nearby stores, restaurants and gas stations.
Roger Thurow/The Wall Street Journal
An influx of stimulus cash into the food-stamp program has boosted business at Ed Kraklio’s stand at the Davenport, Iowa, farmers market.
The president’s stimulus plan has been aimed primarily at the top of the economy, pumping money into banks and car companies and state and city governments. But it also has put more money into the hands of the poorest Americans by boosting monthly food-stamp allocations. Starting in April, a family of four on food stamps received an average of $80 extra.
Money from the program — officially known as the Supplemental Nutrition Assistance Program — percolates quickly through the economy. The U.S. Department of Agriculture calculates that for every $5 of food-stamp spending, there is $9.20 of total economic activity, as grocers and farmers pay their employees and suppliers, who in turn shop and pay their bills.
While other stimulus money has been slow to circulate, the food-stamp boost is almost immediate, with 80% of the benefits being redeemed within two weeks of receipt and 97% within a month, the USDA says.
The quick influx of cash into the economy reflects the often desperate situation faced by millions of households struggling to put enough food on the table. For many families, monthly food-stamp allotments rarely last more than a few weeks, leaving them with dwindling grocery supplies — and sometimes bare cupboards — by the end of the month.
Angie Minix rushes to her local Save-a-Lot grocery store on Chicago’s South Side at the start of every month, when her new food-stamp allocation appears on her card. So do many of her neighbors. “You can’t even get in the parking lot,” she says.
On a recent shopping trip, she headed straight to the fresh produce section. Before her increase in April to $606 from $525, Ms. Minix said she would rarely even troll the fresh-food aisles. Now, she talks about how she has introduced her two sons to cauliflower, cabbage, lettuce and cucumbers.
Employed by the state as a home aide, she has seen her hours cut and her mortgage payments rise. Still, the food-stamp boost has increased her purchasing power.
“I can’t buy a new car, but I can feed my family,” she says.
For years, the food-stamp program was plagued by criticism that it was an inefficient way to help the poor. Many who qualified wouldn’t apply because of a lack of information, daunting paperwork or the embarrassment of handing over stamps in a grocery checkout line. And it did little to increase access to more nutritional food, since fresh produce remained scarce in poor areas.
In recent years, though, registration has been streamlined; many food pantries offer information and direct sign-up services. The switch from stamps to plastic cards offers a cloak of anonymity. Meanwhile, more farmers markets offering fresh produce in urban areas have adopted the technology to accept the cards.
Nationwide, enrollment in the program surged in March to about 33.2 million people, up by nearly one million since January and by more than five million from March 2008. In a recent research report, Pali Capital Inc. estimated that food-stamp spending will increase between $10 billion and $12 billion this year from $34.6 billion in 2008.
For grocery stores and farmers markets, the added food-stamp revenue has helped offset slower sales to other consumers.
“When we look at the acceptance of food stamps, it becomes part of a larger and longer strategy to us,” says Ken Smith, chief financial officer of Family Dollar Stores Inc., a Charlotte, N.C., chain with 6,600 outlets in 44 states. A recent customer survey estimated that about 20% of Family Dollar customers receive food stamps.
In Chicago, where the number of households relying on food stamps is up 15% over a year ago, according to the Chicago Community Trust, food-stamp receipts are cushioning the blows of the recession. Without the food-stamp increases, “we would have been hurting more,” says Joe Garcia, controller at Moo & Oink Inc., a meat retailer with four stores in the Chicago area.
Farmers markets in Iowa have been particularly aggressive in courting the business of food-stamp recipients. At the Davenport market, food-stamp purchases have boosted business at Sawyer Beef. As farmer Norman Sawyer’s sales increase, he says he plans to buy more fencing and water tanks to improve grazing areas for his cattle. “This has been a good deal for us,” he says.
Write to Roger Thurow at roger.thurow@wsj.com and Timothy W. Martin at timothy.martin@wsj.com
Printed in The Wall Street Journal, page A11
Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved
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