How Fruit and vegetables suffer when the SNAP / EBT PROGRAM SHUTS DOWN

 

A government shutdown can significantly impact the fresh fruit and vegetable industry, primarily through disruptions to critical U.S. Department of Agriculture (USDA) services, financial lifelines, and the supply chain.  

Key effects include:

1. Financial and Program Disruptions for Farmers

• Halted Loans and Payments: The Farm Service Agency (FSA) is often largely closed, halting the processing of new loans (including mortgages and operating loans) that farmers rely on for seasonal cash flow to purchase supplies for the next year's crop. Payments for conservation contracts, disaster assistance, and other commodity programs are also typically suspended.  

• Loss of Technical Assistance: Furloughs at agencies like the Natural Resources Conservation Service (NRCS) mean farmers lose access to crucial technical support, planning assistance, and payments for conservation projects that aid soil health and water quality.  

2. Market Uncertainty and Data Blackouts

• Suspended Market Reports: Agencies like the National Agricultural Statistics Service (NASS) and the Economic Research Service (ERS) suspend the release of key agricultural reports, data, and forecasts.  

• Increased Volatility: This lack of current, reliable government data can increase market uncertainty and volatility, making it difficult for farmers, traders, and businesses to make informed decisions about pricing, supply planning, and hedging, particularly during harvest and planning seasons.  

3. Food Safety and Regulatory Slowdowns

• Reduced Routine Food Inspections: While "mission-critical" food safety functions like meat and poultry inspections often continue, routine inspections of many food facilities, including those handling fresh and processed produce, by the Food and Drug Administration (FDA) may be suspended or limited to high-risk cases.  

• Delayed Approvals and Certifications: The shutdown can delay certifications, permits, and new product approvals from regulatory bodies.  

• Stalled Long-Term Initiatives: Work on long-term food safety initiatives, policy, and research is generally paused.  

4. Supply Chain and Trade Issues

• Import/Export Delays: Reduced staffing at ports and harbors, including partnering agencies like the USDA, can slow down customs clearances, inspections, and the movement of goods, potentially impacting the supply of imported fresh produce or delaying U.S. exports.  

• Suspended Programs: Enforcement and activity related to specific market programs like the National Organic Program may cease.  

In short, a shutdown creates significant uncertainty and can cause financial distress for farmers by cutting off access to crucial funds and data, while also adding supply chain friction and regulatory risk for the entire fresh fruit and vegetable industry.  

The effect of a government shutdown on supermarket sales from SNAP (Supplemental Nutrition Assistance Program) EBT cards is typically delayed but potentially severe if the shutdown is prolonged.

Here's a breakdown of the impact on both beneficiaries and supermarkets:

1. Impact on SNAP Benefits and Beneficiaries

• Initial Continuation: SNAP benefits for the current month (e.g., October if a shutdown starts on October 1st) are usually safe and distributed on schedule because they are funded in advance. Beneficiaries can continue to use their existing EBT card balances without interruption.

• Risk of Future Interruption: The major problem arises if the shutdown extends into the next month. SNAP is a federally funded program, and without a new appropriation bill, the U.S. Department of Agriculture (USDA) typically has insufficient funds to issue new benefits.

• Delayed or Canceled Benefits: If the shutdown is long, the monthly distribution of new SNAP benefits (e.g., November benefits) would be delayed or halted entirely. This affects over 40 million Americans who rely on these funds for groceries.

• Back Pay (Eventually): If benefits are delayed, recipients would eventually receive the missed funds once the government reopens, but the immediate crisis is the lack of money to buy food.

2. Impact on Supermarket Sales and Operations

• Initial Stability, Followed by a Cliff: Supermarket sales supported by SNAP EBT cards remain stable during the initial weeks of the shutdown. However, if the shutdown continues and the next month's benefits are not deposited, grocers will experience a sudden and significant drop in revenue from a large segment of their customer base.

• SNAP is a major economic driver: Every \$1 in SNAP benefits is estimated to generate up to \$1.80 in local economic activity, making it a crucial component of sales for many food retailers, especially those in low-income areas.

• Operational Nightmares: A sudden halt or delay in benefits creates an "operational nightmare" for retailers, impairing accurate demand forecasting. Store managers would have difficulty planning inventory for fresh foods like produce, dairy, and meat, potentially leading to bare shelves or increased food waste.

• Industry Alarm: Food industry trade groups (like the National Grocers Association and FMI – The Food Industry Association) typically issue strong statements urging Congress to restore funding, highlighting the dual risk to customer food security and their members' businesses.

In summary, for supermarkets, a long shutdown means millions of customers will lose their grocery spending power, leading to a sharp decline in sales and significant operational disruption.

According to USDA research on the food expenditure patterns of SNAP households, the percentage of SNAP/EBT card purchases dedicated to fresh fruit and vegetables is typically reported as an aggregate of all fruits and vegetables.

Based on USDA data:

• Fruits and Vegetables (Combined): Around 11.9% of total food expenditures by SNAP households are spent on all vegetables and fruits.

• Vegetables: Approximately 7.2% of SNAP food dollars.

• Fruits: Approximately 4.7% of SNAP food dollars.

Note on "Fresh": This figure represents all vegetables and fruits, which includes fresh, frozen, canned, and dried forms, as well as 100% fruit/vegetable juice. Studies specifically looking at fresh produce purchases have shown that the spending is often closer to 8% of total SNAP food spending.  

Context on Healthy Eating Incentives

It is also worth noting that programs designed to promote healthy eating have shown an ability to increase this percentage:

• Thrifty Food Plan (TFP): The USDA's TFP, which determines the maximum SNAP benefit, is designed based on the idea that a household can afford a nutritious diet, including recommended amounts of fruits and vegetables, by allocating approximately 40% of their food budget to these items. However, actual spending by SNAP households is much lower due to various factors like consumption preferences and purchasing other essential food groups.  

• Incentive Programs (e.g., HIP, FINI): Programs that offer incentives, such as providing a dollar-for-dollar match for SNAP spending on fresh produce, have been shown to increase fruit and vegetable purchases by the participating households by 11% to 16%.