At the end of May, President Trump unveiled his latest proposed budget blueprint for 2018. The proposed budget contains significant funding cuts for many government programs, including more than a 25 percent cut to the Supplemental Nutrition Assistance Program (“SNAP”), formerly known as the Food Stamp Program.
SNAP is a federal aid program administered by the U.S. Department of Agriculture, though benefits are distributed at the state level. The program supplies approximately 44.2 million low-income Americans with food assistance via an Electronic Benefit Transfer (“EBT”) card account. These EBT debit cards are then used by recipients to pay for food at grocery stores, convenience stores and other food retailers.
SNAP benefits cost $70.0 billion for fiscal year 2016, but President Trump’s budget proposes a $193 billion cut to SNAP from 2018 through 2028. This substantial reduction in funding would speed up an already expected gradual reduced cost of SNAP to $64.8 billion by 2026. According to an estimate by the Congressional Budget Office, as of December 2016, the average SNAP household receives $252 per month in benefits. If President Trump’s budget is passed, the average SNAP household’s benefits are estimated to drop to $173 per month, more than a 31 percent reduction.
This proposed cut to SNAP has many food retailers worried, as some depend heavily on SNAP benefits from lower income customers. Approximately 52 percent of SNAP benefits are used at big box supercenters, although many traditional grocery stores and dollar stores also receive significant SNAP redemptions. Dollar stores particularly rely on sales from SNAP recipients, as a significant percentage of dollar store customers are among the Americans eligible for SNAP benefits.
Though we do not yet know exactly what the final approved budget will include, any reductions affecting American’s food spending power will likely be felt by already struggling retailers, especially budget grocery stores in certain geographic areas.