Are Corporations and Big Banks Making a Windfall From Food Stamps?June 15th, 2012
By Christopher D. Cook and Michele Simon
Perhaps you’ve heard: At a time of record need for food assistance among America’s poor, the U.S. Senate is poised to cut roughly $4.5 billion from food stamps, the Supplemental Nutrition Assistance Program (SNAP), which 46 million Americans — one in seven of us — rely upon.
While Congress is obsessed with saving money by cutting assistance to our poorest citizens, there’s been nary a peep about how major banks and food corporations profit from food stamps, and what that means for recipients and the rest of the taxpaying public.
With minimal oversight or accountability, banks such as JPMorgan Chase administer SNAP in each state, reaping big contracts that reveal little about how they turn a profit off these public benefits. You’d think the austerity-minded Congress might want to know.
Consider a few facts, revealed in an in-depth report released Tuesday by California-based Eat Drink Politics (of which Michele Simon is president and Christopher Cook a contributing researcher):
- JPMorgan 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 JPMorgan 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. Although a full national accounting of these contracts is not available from the US Department of Agriculture (which administers SNAP), we know that a handful of corporations fight doggedly for these deals, and they are not in the charity business.
In California, a seven-year contract worth $69 million went to Affiliated Computer Services, a subsidiary of Xerox. In Florida, JPMorgan Chase enjoys a five-year contract worth about $83 million, or $16.7 million a year. Northrop Grumman, of military contracting fame, runs SNAP programs in Illinois and Montana. But how much of this money represents outright profits for these private contractors? And why can’t the public know this?
Meanwhile, Walmart and other big supermarket chains are reaping huge, and largely secret, rewards from the food stamp program. Although USDA and state agencies insist that retail revenues from SNAP are confidential information, a couple of earlier investigations revealed the following:
- In one year, nine Walmart Supercenters in Massachusetts together received more than $33 million in SNAP dollars–over four times the SNAP money spent at farmers markets nationwide;
- In two years, Walmart received about half of the $1 billion in SNAP expenditures in Oklahoma.
How much more food stamp money is Walmart getting across the country? We don’t know, because USDA and state agencies refuse to release this information. We also have no clue how much money the likes of Coca-Cola, Kraft, and General Mills make from SNAP. The feds don’t even bother to collect that data, despite a national epidemic of diet-related chronic diseases fueled in part by your tax dollars. Then add healthcare on top of that.
But one area of profit from food stamps is quite transparent: food corporations and industry groups have been lobbying intensely to make sure that junk food such as candy and soda can be purchased using SNAP. As New York City and nine states have pushed for health-based reforms to limit such purchases, these industry lobbies have pushed back hard to protect their pot of gold. 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. Strange bedfellows?
There’s a long history of judging and regulating what poor people do; despite some reforms, it still can be difficult for SNAP recipients to purchase prepared foods with their benefits, even though many do not have kitchens in which to cook. But here we are talking about big business protecting their sales and profits, at the expense of participants’ health, and ultimately, all taxpayers.
In our cynical, seen-it-all times, perhaps it’s not surprising that big banks and food corporations are profiting from food stamps — but it should be. The whole point of the program, originated during the Great Depression, is to help poor people get basic nourishment while also giving farmers a market for their surplus products (as in real food).
Yet in the farm bill being hashed out on the Senate floor this week, we see the exact opposite: a prevailing move to cut assistance to the poor, while expanding “crop insurance” (essentially a stand-in for much-maligned subsidies) for agribusiness. Is the Senate really this blind to the realities on the ground–and to the consequences of the farm bill they are slouching toward? Instead of cutting nutrition assistance to the poor, Congress should demand full transparency to determine how much corporations are profiting from food stamps. And then, if they still feel compelled to cut, they can start by cutting corporate profit margins.
Don’t just take our word for it. Listen to Anthony Smukall, 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.”
Smukall insists, “Transparency should be mandatory. The people have a right to know where our money is going, plain and simple.” He adds: ”JPMorgan is shaking state pockets, which then rolls down to every taxpaying 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.”
Christopher D. Cook is award-winning investigative journalist and author of Diet for a Dead Planet: Big Business in the Coming Food Crisis. His website is www.christopherdcook.com. Michele Simon is the author of Appetite for Profit: How the Food Industry Undermines Our Health and How to Fight Back, and is president of Eat Drink Politics, which produced the report, “Food Stamps, Follow the Money: Are Corporations Profiting From Hungry Americans?”