In 2011, a record 46 million people - or 1 in 7 Americans -- participated in the Supplemental Nutrition Assistance Program (SNAP), better known as Food Stamps.
The increased use of Food Stamps is a huge social and political issue for America, and it's also big business. In 2011, the U.S. government spent $72 billion on Food Stamps.
Among the beneficiaries, food producers such as Cargill, PepsiCo. (PEP), Coca-Cola (KO) and Kraft (KFT), as well as retailers like Wal-Mart. Of course, Wall Street gets a cut too, led by JPMorgan Chase (JPM), which administers the SNAP benefits in 24 states.
In the accompanying video, I discuss the (big) business of Food Stamps with Marion Nestle, professor of Nutrition, Food Studies, and Public Health at New York University and author of several books, most recently Why Calories Count.
Generally speaking, Nestle is a supporter of the program, calling it "the only safety net we have left for the poor."
However, with obesity rates rising among the poor -- and obesity a huge factor in rising health-care costs -- Nestle and other health experts wonder whether there should be restrictions on what kind of foods can be purchased with Food Stamps.
Currently, there are few restrictions on what can be purchased with Food Stamps, other than alcohol and prepared foods.
Here's Where the Profits Come In
"Here's where the profits come in," Nestle says. "A vast percentage of Food Stamps' money goes into the pockets of soda companies and snack food companies...and also the stores that sell these foods."
Wal-Mart "gets a large fraction of Food Stamp dollars," which contributes 25% to 40% of revenue at select stores, according to Nestle. "These companies, therefore, have a vested interest in making sure Food Stamps are allowed for any purchase at all."
Funding for Food Stamps comes from the Farm Bill, which is currently being debated in Congress. "You can bet the food companies like it just the way it is and they are lobbying" to prevent restrictions on how Food Stamp dollars are spent, Nestle says.
Citing a recent report by public health lawyer Michele Simon at EatDrinkPolitics.com, Nestle recently made the following observations on her blog about "some of the politics behind efforts to maintain the status quo":
- Food industry groups such as the American Beverage Association and the Snack Food Association teamed up with anti-hunger groups to oppose health-oriented improvements to SNAP.
- Companies such as Cargill, PepsiCo, and Kroger lobbied Congress on SNAP, while also donating money to America's top anti-hunger organizations (who fear any changes to the Food Stamps program will result in benefit cuts).
- At least 9 states have proposed bills to make health-oriented improvements to SNAP, but none have passed, in part due to opposition from the food industry.
- Coca-Cola, the Corn Refiners of America, and Kraft Foods all lobbied against a Florida bill that aimed to disallow SNAP purchases for soda and junk food.
- Banks and other private contractors are reaping significant windfalls from the economic downturn and increasing SNAP participation.
"The point here is that banks that administer SNAP have a vested interest in keeping SNAP enrollments high and makers of junk foods have a vested interest in making sure that there are no restrictions on use of benefits," she writes.
As you'll see in the accompanying video, one other thing stands out when discussing these issues: There is no public data available on how Food Stamp funds are being spent.
"If there are data on what Food Stamps are spent on, they are proprietary data the companies have and either the government doesn't know, doesn't have access or isn't saying," Nestle observes.
Whatever you think of the program or whether there should restrictions on Food Stamps, we have a right to know how (and where) these taxpayer funds are being spent.