New Food Stamp Rule to Devastate Convenience Stores

Walmart, large chains will benefit from new requirements for SNAP participation

July 5, 2016

The U.S. Department of Agriculture has proposed a rule that would force stores that accept food stamps to offer a wider array of food choices, potentially harming around 47,000 smaller stores that participate in the program.

On Feb. 16 the department announced a rule that would require Supplemental Nutrition Assistance Program (SNAP)-authorized retail establishments to offer seven varieties of foods in four staple food groups such as dairy, breads and cereals, meats, poultry and fish, and fruits and vegetables on a continuous basis. Stores would also be required to stock at least six units of each variety, meaning there would have to be at least 168 of the required foods at the store.

Big-box retailers such as Walmart would not be harmed by the rule like smaller stores, since they have higher amounts of inventory. For convenience stores like 7-Eleven, the rule would present a challenge to their business model due to limited space and more restricted supply chains.

"For small retailers there is limited space on shelves and coolers, and the proposed regulation would mandate that we have 168 single ingredient staple foods on display on shelves at all times," explained Anna Ready, director of government relations at the National Association of Convenience Stores, a international trade association that represents more than 2,200 retail members.

"They changed the underlying definition of staple foods to exclude foods that have multiple ingredients so that a mixed fruit cup or can of chicken noodle soup could no longer be counted towards a retailer’s stocking requirements," Ready said. "This is extremely onerous for small format retailers with limited storage space and it would be very costly to change supply and delivery, or even remodel a store, to comply with this."

"The rule also changes the definition of a retail food store to accept SNAP," Ready said. "A store would no longer be considered a retail food store if 15 percent or more of your total food sales are of foods that are heated or cooked on site. That provision alone pushes out 47,000 convenience stores immediately of the 106,531 convenience stores that participate in SNAP."

Ready says there should be more healthy options for beneficiaries but it’s also important to ensure that convenience stores and other small format retailers, such as drug stores, are eligible to stay in the program.

"Convenience stores play a fundamental role in SNAP because often times we are the most convenient place—in terms of both locations and hours of operation—for a beneficiary to easily access food for their family," she said. "If a majority of convenience stores are pushed out of SNAP, which our data indicates would be the case if the proposed rule goes into effect, this will ultimately hurt the beneficiaries who rely on us."

Opposition to the rule has gained bipartisan support as 163 members of Congress including Democrats and Republicans sent a letter to Agriculture Secretary Tom Vilsack, saying that they are concerned the proposal will limit access to food for food stamp beneficiaries.

"This proposal contains several provisions that restrict the ability of small format retailers to participate in SNAP and in turn jeopardize access to food for the more than 45 million low income SNAP beneficiaries, including more than 20 million children," the letter read. "We are concerned this proposal will have unintended adverse effects on SNAP beneficiaries by forcing many small format retailers out of the program, which would limit a family’s access to food."

The U.S. Department of Agriculture maintains that the rule is about increasing access and choices for low-income Americans.

"This rule has always been about increasing access and choices of healthier food for low-income Americans," a USDA spokesperson said. "It is disappointing to see some take a position against increasing healthier food options for our low-income Americans."

"This is an opportunity to help our most vulnerable," the spokesperson said. "The comment period for the proposed rule closed in May and USDA is now in the process of analyzing these comments in order to prepare the final rule."

Published under: SNAP