Food Stamps

Although one in seven Americans who receive federal aid in the form of food stamps will soon need to work on budgeting themselves more, it seems that food makers and grocers may also have to struggle with some lost revenue. They will face the challenge of having to figure out how they are going to prevent consumers from moving to other brands or going to other grocery stores in an effort to make those food stamp benefits stretch further.

The 2009 Recovery Act had provided additional founding to the Supplemental Nutrition Assistance Program. That funding will expire on November 1 unless congressional action occurs, which many people now believe is unlikely to happen. As a result, $11 billion in funding for food stamps will be cut by the end of the government’s 2016 fiscal year based on information from Stacy Dean, the vice president for the food assistance policy at the Center on Budget and Policy Priorities.

Experts claim that the funding reduction for nearly 47 million people that receive food stamps is going to cause some noticeable changes for the grocery and consumer packaged foods industries. People who are on food stamps and are affected by the cuts are still going to need to feed their family and the people in their household, but they’re going to have to do so with less benefits. As a result, experts belief that these people will start seeking private-label and store-branded products to help them save money. This could mean that the revenue that is lost will be offset by higher margins that are made on store brands, but those who are brand-name food producers may find that they are losing shelf space and shares in the market.

There are some food makers, however, that do not seem to be concerned about the implications of the changes that could be coming up in the future. Campbell Soup Co. Chief Executive Officer Denise Morrison mentioned on Thursday that she didn’t think there would be a material impact from the funding cuts based on information from an earning conference for the company. There are a lot of grocers, food manufacturers, and retailers that don’t want to talk about food stamp cuts because it has become such a political issue – likewise, they don’t want to violate the privacy associated with participation.

Ultimately, everything depends on whether or not there are any changes with the food stamp bill. Congress could clearly decide to make less cuts, which would minimize many of the concerns and would make the changes above less likely to occur, or make them occur on a lower scale if it were inevitable. Although there are many who still feel that a congressional move is now starting to become out of the question, there are many companies and food stamp recipients who are holding this option as one of their main forms of hope, especially in consideration of finding ways to help provide for their families.