Food Stamp Cuts Could Deal a Blow to Small Grocers

New York Times

2 days ago

Republican cuts to the federal food stamp program could put millions of people at risk of losing benefits, which would make it harder for them to afford groceries. But the changes could have further consequences, as the reductions squeeze small grocery stores that depend on those customers.
Grocers and food policy researchers have warned that cuts to the food stamp program, officially known as the Supplemental Nutrition Assistance Program or SNAP, could result in stores laying off workers, raising prices or shuttering entirely as their revenues drop. That has spurred concerns that the cuts could hit local economies and lead to the loss of grocery stores in rural counties that already have few food retailers.
The domestic policy bill that President Trump signed last month imposes stricter work requirements on food stamp recipients, applying them to able-bodied adults through age 64. The law also subjects parents with children 14 and older to the mandate. Previously, adults up to age 54 were subject and people with dependents were exempt. The law also shifts some program costs to states, making them pay more administrative costs and a portion of the benefits for the first time unless they maintain lower payment error rates.
Several states have said the changes will put hundreds of thousands of households at risk of losing some or all of their SNAP benefits. Some states, including Pennsylvania, have questioned whether they can continue operating the program if they cannot shoulder the extra costs of providing benefits.
Republicans say the changes will help reduce dependence on federal benefits and ensure that SNAP serves the neediest families. They have also said the changes would hold states better accountable.
But the measures have alarmed some researchers who say they could make it harder for small grocers to stay in business, particularly in rural areas that are more likely to have both higher shares of SNAP participants and lower access to food retailers. Roughly 27,000 food retailers that largely operate in rural counties face the highest risks from the cuts, according to an analysis from the Center for American Progress, a liberal think tank.
Gina Plata-Nino, a deputy director at the Food Research and Action Center, a nonprofit that supports anti-hunger programs, said the changes could have broad consequences for local economies. If grocery stores bring in fewer dollars, employees at those stores could lose their jobs, she said. Property tax revenue could also fall because of store closures, she added.
Ms. Plata-Nino said the cuts could be particularly painful for rural areas with fewer grocery stores. If grocers close or reduce their hours, people could spend more time and money traveling to buy food, she said. The changes could also result in families purchasing less fresh produce and more food with a long shelf life because it is less convenient to go to the store, she added.
Robert Greenstein, a visiting fellow at the Brookings Institution, said that some families would squeeze other parts of their budgets to try to offset the loss of SNAP benefits, but the overall reduction in food purchases would be substantial.
'We'll likely see more independent grocery stores in low-income and rural areas going under, especially during a recession,' Mr. Greenstein said.
Stephanie Johnson, the group vice president of government relations at the National Grocers Association, a trade group for independent grocers, said the domestic policy bill provided some benefits to businesses by making certain tax breaks permanent. But she said the group's members already had low net profit margins and some have said that jobs could be affected by the cuts to SNAP.
'Those changes to their SNAP sales may be difficult,' Ms. Johnson said. The association has estimated that the federal program supports about 388,000 jobs across the food industry.
Brooke Rollins, the agriculture secretary, said the program was 'never intended to be a windfall for food companies, retailers, and nonprofits,' but rather a 'temporary safety net for families and communities in need.'
'Finally, President Trump's policies are improving the economy and communities across the country,' Ms. Rollins said in a statement. 'With those improvements come jobs, which will reduce dependence on government assistance, preserving it for those truly in need.'
Some local officials said they worried about how the cuts could affect food access in their communities. Matt Wireman, the judge executive of Magoffin County, Ky., said there were only two full-service grocery stores in the county, along with several dollar stores that sold food items. Mr. Wireman said he was concerned that grocers could raise prices or struggle to stay in business, given that about 30 percent of the county's roughly 11,300 residents receive SNAP benefits.
Store closures could lead to more people traveling as much as 30 minutes to surrounding counties to buy groceries, Mr. Wireman said. He added that he worried poverty could worsen because Republicans have also passed cuts to Medicaid.
'With looming cuts to that and SNAP, we are heading for an economic collapse in rural east Kentucky,' Mr. Wireman said.
George Hudson, who owns Hudson's Grocery in Claiborne County, Miss., said that a significant share of his revenue depended on SNAP benefits. 'If I don't get that 15 to 20 percent, or that drops, then that's detrimental to my business,' Mr. Hudson said.
Mr. Hudson, who is also a county supervisor, said there were two full service-grocery stores in the county, which has a population of about 9,000 people. He said he did not intend to lay off workers or close his store, but it could be harder to keep prices lower.
'Prices could have to rise in order to make ends meet,' Mr. Hudson said.
Some researchers said they were skeptical about the extent of the cuts and did not expect to see a large effect on spending at grocery stores. Kevin Corinth, a senior fellow at the conservative American Enterprise Institute, praised the changes to SNAP. He said he hoped to see an increase in employment and thought the stricter work requirements would affect a 'relatively modest share' of people.
He said he also expected many states to lower their error rates in the coming years, and that most would probably not have to pay a major portion of the benefits.
'I don't think there's going to be a large reduction in SNAP benefits going to households,' Mr. Corinth said. 'It's possible some states will have to cover a small share, but my guess is that this incentive will be pretty strong.'
States will be subject to the new cost-share rules starting in fiscal year 2028, although certain states with higher error rates will have more time to adjust before the changes take effect. States with an error rate of 6 percent or greater will have to pay 5 percent to 15 percent of the benefit costs. States with a lower error rate will not have to shoulder any of those costs.
Some estimates have found that millions enrolled in the program, which provides monthly benefits to roughly 42 million people, could be affected by more stringent work requirements.
The Congressional Budget Office estimated that changes to the work mandate would reduce participation in SNAP by more than three million people in an average month over the next decade, although that analysis is based on an earlier House version of the bill that included stricter work requirements for parents.
The left-leaning Center on Budget and Policy Priorities has estimated that more than five million people live in a household that would be at risk of losing at least some food assistance because of the expanded work requirements.
Katie Bergh, a senior policy analyst at the center, said that the bill dramatically expands work requirements and that she did not think they would help people achieve self sufficiency, pointing to a body of research that has found that work requirements do not increase employment. She also said the vast majority of states had an error rate above 6 percent at some point over the last two decades.
'It is very likely that at least in some years, most, if not all, states will ultimately owe this cost share for food benefits,' Ms. Bergh said.
The domestic policy bill also cuts off food stamps for some immigrants who are lawfully present in the country and makes it harder for areas to qualify for work requirement waivers if they have higher rates of unemployment. It also ends work requirement exemptions for veterans, homeless people and certain former foster youth.
'It is really an unprecedented structural change to the program that jeopardizes food assistance for millions of low-income families,' Ms. Bergh said.