Supervalu Joins Farmers Behind U.S. Food Stamps at $71.8 Billion

Louis Holland had five employees at his carpentry business in Walkersville, Maryland, during the housing boom. Now he’s working alone, and his family has joined many local residents collecting food stamps.

“We’re all in the same boat here,” said Louis’s wife, Kellie, 40, who’s been looking for part-time work while caring for their sons, ages 8 and 14, and her ailing mother. “Trying to keep up, and hoping things turn around.”

Driven by high unemployment, food-stamp use nationally has soared by two-thirds since the end of 2007 to more than 46 million recipients, about a seventh of the U.S. population. The government spent a record $71.8 billion on the program in the last fiscal year, or about 12 percent of the national grocery bill, underscoring the benefit’s importance as revenue for grocers led by Kroger Co. (KR), Safeway Inc. and Supervalu Inc., the three biggest U.S. chains by sales.

A coalition of farmers, grocers and anti-poverty activists has helped food stamps survive federal budget-cutting pressures and maintain bipartisan support in Congress, said Dale Moore, a former U.S. Department of Agriculture chief of staff. In times of high unemployment, the aid serves as a cash infusion that has kept communities afloat and people working, he said.

Food stamps, created as a temporary measure in 1939 and revived in the 1960s “war on poverty,” are now provided through plastic cards rather than stamp-like coupons. Photo: Joe Raedle/Getty Images Close

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Food stamps, created as a temporary measure in 1939 and revived in the 1960s “war on poverty,” are now provided through plastic cards rather than stamp-like coupons. Photo: Joe Raedle/Getty Images

“There’s no politically sure way to ratchet back benefits,” Moore, who now lobbies for the American Farm Bureau Federation, the biggest U.S. farmer group, said in an interview. “You have urban lawmakers who need support from rural members for their programs, and rural members who want backing for their projects.”

Political Donations

Agribusiness employees contributed at least $18.4 million from Jan. 1 through Sept. 30 to federal candidates and political parties, according to the Center for Responsive Politics in Washington, which tracks political donations. Donors tied to farm-related companies, which include grocers, crop buyers such as Archer Daniels Midland Co. and food processors such as Kraft Foods Inc. (KFT), gave more than defense or transportation, the center’s website shows.

Pat Burns, president of the Fresh Grocer, a Pennsylvania- based grocery chain that operates its own stores and also manages five locations for Save-a-Lot, a discount chain owned by Eden Prairie, Minnesota-based Supervalu, said many of the 1,200 people on his payroll would be out of work if not for food stamps, which account for 34 percent of his business.

“That’s 34 percent of your workforce that could go away without it,” Burns said in an interview. “We would be paying the social costs of that.”

Plastic Cards

Food stamps, created as a temporary measure in 1939 and revived in the 1960s “War on Poverty,” are now provided through plastic cards rather than stamp-like coupons. Officially, the program is called the Supplemental Nutrition Assistance Program, or SNAP.

Intended as a safety net that would cost more when the economy falters, SNAP has set records for the number of Americans receiving aid every month but one since December 2008.

The number of Americans who faced hunger at some point in 2010 declined 2.7 percent to 48.8 million, the least since 2007, partly because of the food assistance, according to the USDA.

While households must meet means tests to receive food stamps, they can be eligible automatically if participating in certain other federal welfare programs. A family of four, such as the Hollands, must have a net monthly income of no more than $1,863. The monthly maximum benefit for such a family is $668. The cards can’t be used in restaurants or for alcohol, tobacco, pet food, hot foods or household supplies.

Half Under 18

About half of SNAP participants are younger than 18, and 8 percent are older than 60, according to the USDA. About 41 percent of all recipients live in households where family members are employed.

Almost one in three people who qualify for food stamps isn’t getting them, the USDA estimates. States, which manage the federal benefit program, lack incentives to expand eligibility because they must pay half the program’s administrative costs.

The number of food-stamp recipients shopping at Kroger stores has doubled in recent years, David Dillon, chairman and chief executive officer of the Cincinnati-based chain, said at a conference for analysts in New York in April.

Supervalu (SVU) supports SNAP “as an effective, efficient way of reducing hunger and improving access to food for those in need,” Mike Siemienas, a spokesman, said in an e-mail. Pleasanton, California-based Safeway didn’t respond to a request for comment.

KFC, Taco Bell

Yum! Brands Inc. (YUM), owner of the KFC and Taco Bell fast-food chains, abandoned last month an attempt to persuade officials in some states to allow the use of food stamps at its restaurants after the USDA objected.

In a measure of the enduring support for food stamps, the benefits were exempted from automatic cuts called for after the congressional supercommittee failed to craft a deficit-reduction compromise.

In November, Congress approved an appropriations bill that projects $80.4 billion in SNAP spending in the current fiscal year, a 12 percent increase from last year, with participation projected to grow to more than 47 million people.

Some Republicans have criticized the program’s rising cost and potential for abuse.

Romney’s Stance

Food-stamp responsibilities should be transferred to the states, which can spend the money more effectively, Republican presidential candidate Mitt Romney said in a candidate’s forum on Dec. 4.

A Republican plan rejected in the Senate on Dec. 1 would have paid for a payroll-tax cut through steps including tightening eligibility to be certain wealthy people can’t qualify for food stamps.

“We cannot afford to waste taxpayer dollars intended for struggling families,” Representative Jeff Fortenberry, the Nebraska Republican who leads the oversight panel of the House Agriculture Committee, said at a Dec. 1 hearing on food-stamp fraud, which the Government Accountability Office estimated at $2.2 billion in 2009.

Fraud generated 179 convictions and $26.5 million in fines in the year ended Sept. 30, USDA Inspector General Phyllis Fong said at the hearing.

Kevin Concannon, head of the USDA’s Food and Nutrition Service, which administers food stamps, said the aid has become embedded in local economies.

Washington, Mississippi

In Washington, about 45 miles (72 kilometers) south of the Hollands’ home, almost a quarter of the capital city’s population uses food stamps. In Mississippi, the most-dependent state, it’s more than 20 percent. That makes the program a driver of economic activity in those areas, Concannon said.

“The truck drivers, the folks who work for the food industry, but especially farmers, this makes a difference” as food-stamp dollars trickle through the economy, Concannon said in a telephone briefing Nov. 22.

Increasing food-stamp payments by $1 boosts gross domestic product by $1.73, according to Mark Zandi, chief economist for Moody’s Analytics.

For the Hollands, the food aid lets them spend more on items such as their children’s dental care, although they’re still going without coverage for themselves.

“It’s allowed us to get dental insurance for our kids,” said Holland, whose younger son had root-canal work two weeks ago. “The children complain, but they’re lucky.”

To contact the reporter on this story: Alan Bjerga in Washington at abjerga@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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