Food stamp spending fuels inflation, group says

With the farm bill set to expire at the end of September, Congress will be under pressure to pass something soon.

The farm bill is the largest investment of federal dollars tied to the produce industry at nearly $1 billion a year affecting the whole supply chain. A big part of the spending comes through USDA’s Supplemental Nutrition Assistance Program (SNAP), also called food stamps.

A government watch dog group says the massive expansion of the food stamp program under the Biden administration is a prime contributor to grocery inflation.

The Foundation for Government Accountability says USDA in 2021 expanded food stamps by 27 percent above previous levels, contributing to overall spending on the program that went from $4.5 billion in 2019 to $11 billion in 2022.

FGA says World Bank research shows “a one percent increase in per-capita food stamp benefits increased grocery store prices by 0.08 percent. Put another way: Food prices increase by one percent for every 12.5 percent increase in food stamp spending.”

While food inflation has cooled this summer from the highs of 2022, it is still growing each month, and when added together, it amounts to average prices about 25 percent higher than pre-pandemic.

The FGA says food stamp spending hikes could account for two-thirds of food inflation, as per capita food stamp spending nearly doubled from December 2019 to March 2023.

The group also says USDA violated the law by increasing spending by that degree without approval from Congress. It advises Congress to repeal the expansion, which would cut about $200 billion over the next decade and slow food inflation.

The farm bill is one of the key policy issues at the upcoming IFPA BB #:378962 Washington Conference, September 12-15 in Washington, DC.