How Much Do Corporations Benefit from Food Stamps?
As Congress proposes cuts to hungry families, my new report raises questions about how much food makers, retailers and big banks profit from food stamps.
With the debate over the 2012 Farm Bill currently underway in the Senate, most of the media’s attention has been focused on how direct payments—subsidies doled out regardless of actual farming—are being replaced with crop insurance, in a classic shell game that Big Ag’s powerful lobby is likely to pull off.
Meanwhile, the Senate may hurt the less powerful by cutting $4.5 billion from the largest piece of the farm bill pie: the Supplemental Nutrition Assistance Program (SNAP, formerly called food stamps). Reducing this lifeline for 46 million struggling Americans (more than 1 in 7—nearly half of them children) has become a sideshow in the farm bill circus, even though SNAP spending grew to $78 billion in 2011, and is projected to go higher if the economy does not improve.
While New York Sen. Kristen Gillibrand’s amendment to restore cuts to SNAP by reducing insurance payments is a noble effort, what’s missing from this conversation is the role of corporations. Much attention has focused on how agricultural subsidies fuel our cheap, unhealthy food supply. In reality, the largest and most overlooked taxpayer subsidy to Big Food in the farm bill is SNAP, which now represents more than ten percent of all grocery spending.
In a report I released today—Food Stamps, Follow the Money: Are Corporations Profiting From Hungry Americans?—I examine the role of three powerful industry sectors that benefit from SNAP:
- Major food manufacturers such as Coca-Cola, Kraft and Mars
- Leading food retailers such as Walmart and Kroger
- Large banks, such as J.P. Morgan Chase, which contract with states to help administer SNAP benefits. Findings from the report include:
- Powerful food industry lobbying groups such as the American Beverage Association and the Snack Food Association teamed up to oppose health-oriented improvements to SNAP, at times working with anti-hunger groups
- At least nine states have proposed bills to make health-oriented improvements to SNAP, but none have passed, in part due to opposition from the food industry
- In one year, nine Walmart Supercenters in Massachusetts together received more than $33 million in SNAP dollars—more than four times the SNAP money spent at farmers markets nationwide
- In two years, Walmart received about half of the one billion dollars in SNAP expenditures in Oklahoma
- J.P. Morgan Chase holds contracts in 24 states to administer SNAP benefits, indicating concentrated power and a lack of competition
- In New York, a seven-year deal originally paid J.P. Morgan Chase $112 million for EBT services, and was recently amended to add $14.3 million—an increase of 13 percent
- States are seeing unexpected increases in administrative costs, while banks and other private contractors are reaping significant windfalls from the economic downturn and increasing SNAP participation.
Most details about where SNAP dollars go remains hidden. For example, although such data is readily available, the U.S. Department of Agriculture (USDA) (which administers food assistance) refuses to make public how much money individual retailers make from SNAP. In addition, Congress does not require data collection on specific SNAP product purchases (such as Coke versus Tropicana), despite such information being critical to effective evaluation of the program.
USDA also does not collect national data on how much money banks make on SNAP. States bear much of the burden of these administrative costs. Are lucrative contracts with private banks the most cost-effective way to administer a critical food assistance program at a time of severe budget cuts? Could we feed more hungry Americans with some of the profits these corporations are making?
Anthony Smukall is a SNAP participant living in Buffalo, New York, where he says his fellow residents are “facing cuts year after year, with no sustainable jobs to be able to get off of programs such as SNAP.” He thinks that “transparency should be mandatory. The people have a right to know where our money is going, plain and simple.” He added: “J.P. Morgan is shaking state pockets, which then rolls down to every tax-paying citizen. I am disgusted with the numbers in this report, it is unimaginable. If the people knew how such programs were run, and how money is taken in by some of the world’s conglomerates, there would be outrage on a grand scale.”
Jennifer L. of Massachusetts is a single mother who recently re-entered the workforce and hopes Congress does not cut SNAP because as she explains: “SNAP makes a huge difference in my ability to support my children and pay the bills. Food prices have been skyrocketing while salaries remain unchanged. Many people I know have two jobs to try to make ends meet.” She added: “I am in favor of making retailers’ and banks’ information regarding SNAP public. What are they hiding?”
Instead of hurting families during these hard times with cuts to SNAP, Congress should require program improvements that would restore its original purpose: providing a safety net for those in need while also helping farmers. Congress should also make SNAP more transparent by mandating accurate tracking of SNAP expenditures. Why should only the likes of Walmart and Coca-Cola know how billions of our tax dollars are spent each year? Is SNAP truly “putting healthy food within reach” as its tagline proclaims?
You can download the full report by clicking here.
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Kevin T. Smiley
When hurricanes and other extreme storms unleash downpours like Tropical Storm Beta has been doing in the South, the floodwater doesn't always stay within the government's flood risk zones.
New research suggests that nearly twice as many properties are at risk from a 100-year flood today than the Federal Emergency Management Agency's flood maps indicate.
Flooding Outside the Zones<p>About <a href="https://furmancenter.org/files/Floodplain_PopulationBrief_12DEC2017.pdf" target="_blank">15 million</a> Americans live in FEMA's current 100-year flood zones. The designation warns them that their properties face a 1% risk of flooding in any given year. They must obtain flood insurance if they want a federally ensured loan – insurance that helps them recover from flooding.</p><p>In Greater Houston, however, <a href="https://doi.org/10.1111/j.1539-6924.2012.01840.x" target="_blank">47% of claims</a> made to FEMA across three decades before Hurricane Harvey were outside of the 100-year flood zones. Harris County, recognizing that FEMA flood maps don't capture the full risk, now <a href="https://www.hcfcd.org/floodinsurance" target="_blank" rel="noopener noreferrer">recommends that every household</a> in Houston and the rest of the county have flood insurance.</p><p>New risk models point to a similar conclusion: Flood risk in these areas outstrips expectations in the current FEMA flood maps.</p><p>One of those models, from the <a href="https://firststreet.org/flood-lab/research/2020-national-flood-risk-assessment-highlights/" target="_blank">First Street Foundation</a>, estimates that the number of properties at risk in a 100-year storm is 1.7 times higher than the FEMA maps suggest. Other <a href="https://doi.org/10.1088/1748-9326/aaac65" target="_blank" rel="noopener noreferrer">researchers</a> find an even higher margin, with 2.6 to 3.1 times more people exposed to serious flooding in a 100-year storm than FEMA estimates.</p>
What FEMA’s Flood Maps Miss<p>Understanding why areas outside the 100-year flood zones are flooding more often than the FEMA maps suggest involves larger social and environmental issues. Three reasons stand out.</p><p>First, some places rely on relatively old FEMA maps that don't account for recent urbanization.</p><p>Urbanization matters because impervious surfaces – think pavement and buildings – are not effective sponges like natural landscapes can be. Moreover, the process for updating floodplain maps is locally variable and can take years to complete. Famously, New York City was updating its maps when Hurricane Sandy hit in 2012 but hadn't finished, meaning flood maps in effect <a href="https://projects.propublica.org/nyc-flood/" target="_blank">were from 1983</a>. FEMA is required to assess whether updates are needed every five years, but the <a href="https://www.fema.gov/cis/nation.html" target="_blank" rel="noopener noreferrer">majority of maps</a> <a href="https://www.oig.dhs.gov/sites/default/files/assets/2017/OIG-17-110-Sep17.pdf" target="_blank" rel="noopener noreferrer">are older</a>.</p><p>Second, binary thinking can lead people to an underaccounting of risk, and that can mean communities fail to take steps that could protect a neighborhood from flooding. The logic goes: if I'm not in the 100-year floodplain, then I'm not at risk. Risk perception <a href="https://doi.org/10.1088/1748-9326/ab195a" target="_blank" rel="noopener noreferrer">research</a> backs this up. FEMA-delineated flood zones are the major factor shaping flood mitigation behaviors.</p><p>Third, the era of climate change scuttles conventional assumptions.</p><p>As the planet warms, extreme storms are becoming <a href="https://nca2018.globalchange.gov/" target="_blank">more common and severe</a>. If greenhouse gas emissions continue to increase at a high rate, computer models suggest that the chances of a severe storm dropping 20 inches of rain on Texas in any given year will increase from about 1% at the end of the last century to 18% at the end of this one, a chance of <a href="https://doi.org/10.1073/pnas.1716222114" target="_blank" rel="noopener noreferrer">once every 5.5 years</a>. So far, <a href="https://www.rstreet.org/wp-content/uploads/2020/02/195.pdf" target="_blank" rel="noopener noreferrer">FEMA hasn't taken into account the impact climate change is having</a> on extreme weather and sea level rise.</p>
Racial Disparities in Flooding Outside the Zones<p>So, who is at risk?</p><p>Years of research and evidence from storms have highlighted social inequalities in areas with a high risk of flooding. But most local governments have less understanding of the social and demographic composition of communities that experience flood impacts outside of flood zones.</p><p>In analyzing the damage from Hurricane Harvey in the Houston area, I found that <a href="https://doi.org/10.1088/1748-9326/aba0fe" target="_blank">Black and Hispanic residents disproportionately experienced flooding</a> in areas beyond FEMA's 100-year flood zones.</p><p>With the majority of flooding from Hurricane Harvey occurring outside of 100-year flood zones, this meant that the overall impact of Harvey was racially unequal too.</p><p>Research into where flooding occurs in Baltimore, Chicago and Phoenix points to some of the potential causes. <a href="https://www.nap.edu/read/25381/chapter/4#16" target="_blank" rel="noopener noreferrer">In Baltimore and Chicago</a>, for example, aging storm and sewer infrastructure, poor construction and insufficient efforts to mitigate flooding are part of the flooding problem in some predominantly Black neighborhoods.</p>
What Can Be Done About It<p>Better accounting for those three reasons could substantively improve risk assessments and help cities prioritize infrastructure improvements and flood mitigation projects in these at-risk neighborhoods.</p><p>For example, First Street Foundation's risk maps account for <a href="https://firststreet.org/flood-lab/research/flood-model-methodology_overview/" target="_blank">climate change</a> and present <a href="https://floodfactor.com/" target="_blank" rel="noopener noreferrer">ratings</a> on a scale from 1 to 10. FEMA, which works with communities to update flood maps, is <a href="https://www.fema.gov/media-library-data/1521054297905-ca85d066dddb84c975b165db653c9049/TMAC_2017_Annual_Report_Final508(v8)_03-12-2018.pdf" target="_blank" rel="noopener noreferrer">exploring rating systems</a>. And the National Academies of Sciences, Engineering and Medicine recently <a href="https://www.nationalacademies.org/news/2019/03/new-report-calls-for-different-approaches-to-predict-and-understand-urban-flooding" target="_blank" rel="noopener noreferrer">called for a new generation of flood maps</a> that takes climate change into account.</p><p>Including recent urbanization in those assessments will matter too, especially in fast-growing cities like Houston, where <a href="https://authors.elsevier.com/a/1boBRyDvMFW6W" target="_blank" rel="noopener noreferrer">386 new square miles</a> of impervious surfaces were created in the last 20 years. That's greater than the land area of New York City. New construction in one area can also <a href="https://scalawagmagazine.org/2018/01/city-in-a-swamp-as-houston-booms-its-flood-problems-are-only-getting-worse/" target="_blank" rel="noopener noreferrer">impact older neighborhoods downhill</a> during a flood, as some Houston communities discovered in Hurricane Harvey.</p><p>Improving risk assessments is needed not just to better prepare communities for major flood events, but also to prevent racial inequalities – in housing and beyond – from <a href="https://www.npr.org/2019/03/05/688786177/how-federal-disaster-money-favors-the-rich" target="_blank" rel="noopener noreferrer">growing</a> after the unequal impacts of disasters.</p>
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