Are Stores Making Bank Off Food Stamps?

Retailers won’t disclose how much money they’re getting from SNAP. That could soon change.

How much of Walmart’s revenue comes from its shoppers’ food stamps? The store isn’t required to say. But a January Court of Appeals ruling could change that. If the unanimous decision by the Eighth Circuit’s panel of three judges holds, the United States Department of Agriculture will be required to release data indicating exactly how much of the Supplemental Nutrition Assistance Program’s $80 billion in annual sales is paid to specific retailers and to individual stores.

The issue, said Irene Wielawski of the Association of Health Care Journalists, which has been outspoken about the case, “isn’t conservative, it isn’t liberal. It’s an issue of: The government collects all this data. Who’s making money off the food stamps program?”

The Argus Leader, a Sioux Falls, South Dakota, paper, brought suit against the USDA in 2011 after the agency denied a Freedom of Information Act (FOIA) request seeking data on USDA’s annual payments to grocers, gas stations, and other retailers in the SNAP program. USDA routinely tracks the payments, which retailers process as they do credit cards: the stores accept recipients’ Electronic Benefits Transfer cards as payment, and in turn the government pays the stores.

Stephanie Bengford, the US attorney representing the USDA, argued that under federal code, specific details about SNAP revenue should be considered private business information. In the appeals court opinion, Chief Judge William Jay Riley held that the USDA had misread the code, and issued a decision in favor of the Argus. The agency has until April 28—90 days from the January decision—to file an appeal with the U.S. Supreme Court. If USDA does not file an appeal, the case will likely return to the District Court.

The USDA is still “reviewing the ruling and determining next steps” concerning the Argus case, said Brooke Hardison, an agency spokesperson.

FOIA experts are skeptical that the case will progress much further. Because the case involves a narrow interpretation of a law, rather than a broad constitutional issue, it’s an unlikely candidate for the Supreme Court, said Ginger McCall, associate director of the Electronic Privacy Information Center (EPIC), a civil liberties group.

The Argus case follows a 2010 incident in which Massachusetts officials threatened reporter Michael Morisy of Muckrock.com with “fines or imprisonment” for publishing SNAP retailer sales data obtained from the state’s welfare agency under a basic information request. Morisy had been inspired by an article on hipsters and food stamps to learn where SNAP clients spent their benefits. The state released the data, but when Morisy mapped out sales by store and published it online, the agency said the information had been released erroneously and demanded that he remove it, citing the same statute on which the USDA centered its Argus case.

Morisy is one of three reporters who have succeeded in obtaining SNAP sales data to date. Earlier this month, Marketplace’s Krissy Clark reported that Walmart executives estimate that 18 percent of all SNAP sales are conducted at its stores—about $13 billion annually. In 2011, reporters at the Tulsa World found that Walmart accounted for half of all SNAP spending in Oklahoma.

It is unusual for payments by government to private business to be kept secret. Data on government spending is typically available upon request, and many that have been kept under wraps are now being released. This month, for example, federal officials began releasing Medicare spending data that discloses payments to individual physicians and hospitals. While that release was prompted by a court case, said Charles Ornstein a Medicare reporter at ProPublica, the agency ultimately released the data voluntarily.

“It’s exactly what people are seeking for food stamps,” said Ornstein. “It’s [Medicare] going in one direction and the [USDA] suing to the end to prevent itself from going in that direction.”

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Food retailers contend that sales data is protected by a FOIA exemption for private business information, regardless of who is paying the bill. Laura Strange, a spokesperson for the National Grocers Association, believes that sales through SNAP are proprietary information. Both NGA, which represents the interests of independent grocers, and the Food Marketing Institute (FMI), which represents national chains, said they were following the case closely. “Disclosure of this private information could give competitors an unfair advantage,” Strange wrote in an email.

With profit margins as thin as one percent, said an industry insider, supermarkets are intensely competitive. “It’s never good for retailers to have their competitors know what their strategy is and how successful it is,” he said—especially not information about sales via a specific program or to a specific demographic. “This would potentially allow competitors to see how well others are doing” with SNAP, he said.

If USDA argues the case in District Court, it would likely return to the private business information exemption, which it argued in the Court of Appeals, but which the decision did not address. That argument contradicts Department of Justice guidelines around government contracts, a reasonable comparison, said EPIC’s McCall. “This is payment information…where the government is tracking, for budgetary purposes, what amount of payment is going out,” she said, which DOJ says must be disclosed.

Jonathan Ellis, the Argus reporter whose information request sparked the case, agreed, “We think [that argument] is kind of idiotic; there are other areas where businesses routinely release the amount of money that they get paid by the government.”

All of this comes as government transparency is dropping sharply. An Associated Press analysis of FOIA requests in 2013 showed the government denied or censored more than one-third of them, making it a record year of denial for the Obama administration. Of those requests, one-third were refused for “deliberative process” reasons—an exemption critics refer to as “withhold it because you want to.”

Retailers likely prefer having SNAP sales hidden, said food policy advocate Michele Simon, because it keeps discussion of the program’s benefit for retailers so vague that it limits debate. “The big retailers know SNAP has become a hot button issue so the less information the public knows, the better,” said Simon.

Indeed, SNAP is an increasingly lucrative business. The program has boomed, with sales nearly quadrupling in the last decade. Today 48 million Americans make use of the benefit, which frequently supplements low wages. In Walmart’s annual SEC filing this January, America’s largest grocer listed “changes to Supplement Nutrition Assistance Plan [sic] and other public assistance plans” among its potential financial risks. Dollar stores expanded their grocery departments during the recession, enabling them to capture sales through SNAP, and even higher-end stores are beginning to pay attention to the program. In the last year, Whole Foods Market has opened stores in mixed-to-low-income urban neighborhoods with large SNAP populations in Detroit and New Orleans, and has plans for three more, including one in New York City’s Harlem.

Currently, the USDA releases data on food stamp spending by zip code and store type. Advocates and developers often use that information in efforts to expand food access, a cornerstone of First Lady Michelle Obama’s “Let’s Move” initiative. Used alongside demographic and market information, SNAP data can help persuade grocers to open in “food deserts,” or neighborhoods with too few supermarkets for the number of residents. In low-income neighborhoods, SNAP sales can account for more than half of grocers’ sales, and the program’s monthly payment schedule can drive store decisions around staffing and stocking at those stores.

James Johnson Piett, a developer and consultant working nationwide on low-income supermarkets and healthy corner stores, says that retailer data would make it possible to judge whether new, government-subsidized stores are serving SNAP shoppers. “We’re working kind of blind when it comes to real hard empirical data,” he said. The data would be “very useful in helping us understand how the program is working and how it needs to be improved,” agreed Mari Gallagher, a food access researcher whose work in Chicago and Detroit helped push for public action on the issue in those cities.

The Argus case could also lay the groundwork for the release of other SNAP data that retailers have fought to keep private: what SNAP recipients buy with their benefits. Last year, food retailers lobbied intensely and successfully to sideline a farm bill amendment proposed by Rep. Thomas Marino (R-PA) that would have established a pilot program requiring retailers to track what SNAP shoppers, as a whole, bought with their benefits. Many stores already track shopper sales through loyalty cards, and public health experts trying to lower obesity and diabetes rates say similar data on food stamps would be a boon to their efforts.

Marlene Schwartz, director for the Rudd Center for Food Policy and Obesity at Yale University, wants to see that kind of data ”not to say, ‘You’re spending so much on junk food,’ but to say, ‘What can we do to change this?’ What would it take to shift the purchasing from the less healthy foods to the healthy foods?” That was the spirit of the amendment, according to Bill Tighe, Marino’s chief of staff.

Food retailers were having none of it. “We DO NOT want a freaking vote on it,” Greg Ferrara, a vice-president of the NGA, wrote in an email obtained by Mother Jones. Ferrara added that Marino’s amendment “will expose [grocers] to significant new attacks from the left and right if this becomes law.” Emails from the NGA and FMI argued that the requirements were too expensive and referred to the proposal as the “Marino Food Surveillance Amendment,” likening it to the NSA.

With increased government transparency, public health, and food access all in play, Ellis, the Argus reporter, says the stakes are high. “Access to…this kind of data, that talks about who’s making what off an $80 billion program is just important for the debate that we have in a democracy about how to best use our resources,” he said.

And retailers who oppose the change, said Gallagher, the food access researcher, do have a way out: “If retailers don’t want that information revealed, then they don’t have to part of the program.”

A version of this story was originally produced in partnership with Mother Jones. All rights reserved. This article may not be reproduced without express permission from FERN. If you are interested in republishing or reposting this article, please contact info@thefern.org.