Friday, December 16, 2011

Legislating Consumer Behavior

   Sen. Ron Wyden (D, OR) today introduced a bill that would use electronic payment technology to radically alter the Supplemental Nutrition Assistance Program, or SNAP, formerly the Food Stamp Program. To a lesser extent it would also affect the smaller Supplemental Nutrition Program for Women, Infants and Children, known as WIC.

The program formerly known as Food Stamps
could be in for big changes if Ron Wyden's
FRESH Act becomes law.
    The FRESH Act of 2011 would do a couple of things. First, it would require large stores that accept SNAP payments through electronic benefits transfer, or EBT, to report annually to USDA on exactly what they sold to customers who pay with EBT cards. USDA, which administers both the SNAP and WIC programs will have to collect that data from thousands of stores and report back to Congress on how taxpayer dollars are spent on the SNAP program.

   Second, Sen. Wyden's bill would force states to allow SNAP and WIC customers to use their smartphones or tablet computers as a payment device in food stores that participate in those programs. This would be analogous to the way some fliers use their smartphones rather than a paper boarding pass to board airplanes.

   Third, if enacted into law, the bill would require that USDA  for the first time allow online food retailers to accept SNAP EBT benefits. Current USDA regulations allow only SNAP EBT sales over the counter at participating retailers. USDA has for some time been investigating the use of online retailing to open up access to the program. But this has been a slow slog. One can only guess that Sen. Wyden has become frustrated with the pace and wants to bypass the bureaucratic route through an Act of Congress.

    Finally, the Act would require that 50% of food purchased for use in USDA's child nutrition feeding programs, such as the School Lunch Program, be grown locally where the food is being provided to young consumers.

SNAP EBT cards like these could have company
if the FRESH Act becomes law. The bill,
introduced today, would allow SNAP shoppers
to use smartphones to authorize their purchases.
   The FRESH Act is part of a trend in government and the nutrition community to move USDA's food programs beyond their traditional role of income maintenance subsidies and into engines of public health. It's an interesting concept and one still open to debate. On one side you have the large food retailing lobby which will complain loudly and vociferously about being the ones stuck monitoring what their SNAP customers eat. (If you don't think that the SNAP reporting requirements are the first step in turning that program into a WIC-type program where every item to be purchased has to be pre-approved,  you've in for a surprise.)

   In addition, retailers will be faced with expensive upgrades to their cash register systems in order to be able to authorize SNAP transactions with a smartphone or tablet. They'll be joined in the lobbying trenches by the makers of salty snacks, packaged dessert cakes and sweetened beverages - all routinely purchased today with SNAP benefits. Throw in the Tysons and ADMs of the world who process billions of pounds of food that are shipped around the country in lengthy supply chains. They can't like the fact that they'll be faced with giving up half their USDA sandwich to local growers. Good bye chicken nuggets. Hello arugula.

   But on the other hand you have an impressive array of progressive Democrats who see childhood obesity as a serious public health threat. They're led by the technocrats who never saw a problem that enough electrons couldn't fix. They also have a long and abiding faith in these programs and want to see them updated and preserved. Their view is shared by many in Congress.

   And this is a case where opposites attract. Fiscally conservative Republicans see the use of technology as a way to be able to peek in recipients' market baskets to see just exactly where those millions of dollars go each year. The ability to monitor spending makes them strange bedfellows to the Democrats who want to use the same technology to update the mission of the programs.

   It sounds odd, but this is the same coalition that launched the Food Stamp Program in the first place: progressive Democrats with urban populations to feed and conservative Republicans from farm states with food  to sell. If these two groups were to come together on Sen. Wyden's bill the retail lobby would meet its match.

   The whole thing is interesting to me, although I'm skeptical whenever government tries to legislate healthy behavior. For nearly 50 years the government has legislated, punished, and harrassed the tobacco industry and people still smoke. A lot of them at high speeds behind the wheel. By the way, how'd that 55 mile per hour thing work out?

    I don't have a horse in this race, but if I did, I'd bet on the unholy alliance of urban progressives and rural conservatives in a 1-2. I'd bet on the producers and the consumers of food and against the middlemen. This might be where the retailers' incredible run of lobbying success comes to an end.

   That's my opinion. What's yours?



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