www.ers.usda.gov/Publications/EIB29/DBGen.htm

The Farm Bill, Title 5 – NutritionRe-Authorizes Food Stamp Program

• Entitlement program for low-income households

• provides food purchasing benefits via Electronic Benefit Transfer (EBT) cards

• In FY2006, served 26.7 million people at a cost of $32.8 billion

Food Stamp Program (FSP)The Name May Change—What About the Program

Itself?

• Reduce hunger

• Improve nutrition

Program goals

Food Stamp ProgramImproving Incomes, Increasing Food Spending

But What About Nutrition?

• Obesity rates among FSP participants are high

• Fruit and vegetable intakes average less than 2 cups/day, compared to recommendation of at least 3.5 cups/day for typical adults

How Can the Food Stamp Program Promote Healthier Diets?

• Increases food purchasing power of almost 1 in 12 Americans

• Provides nutrition education

Potential Changes in theFood Stamp Program

• Increase FSP benefits across the board• Provide targeted bonuses or incentives for

purchasing healthy foods• Ban “bad foods” from purchase with FSP benefits • Expand and improve Food Stamp Nutrition

Education

Food Stamp Program:Potential Changes

• Untargeted increases in FSP benefits essentially act to increase income

• How will income be spent—more fruits and vegetables? Or something else?

Increasing Benefit Amounts

Increasing FSP Benefit Amounts Unlikely to Have Much Effect on Fruit and Vegetable Expenditures

Food Stamp Program: Potential Changes

• FSP participants eat only about half of the minimum recommended amounts of fruits and vegetables

• targeting benefits through bonuses or coupons for “encouraged” foods such as fruits and vegetables

• Acts to lower the price of the targeted food

Bonus for Healthy Food Purchases

A Targeted Bonus Could Increase Spending on Fruits and Vegetables

ERS research indicates that a 10-percent discount in the price of fruits and vegetables would increase the amount purchased by 6-7 percent.

Estimated Impact of Bonus on Consumption

2.082.2

1

1.25

1.5

1.75

2

2.25

2.5

2.75

3

3.25

3.5

3.75

4

10% Bonus 20% Bonus

Fru

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& V

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s (

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Baseline Consumption

Recommended Consumption

Estimated Impact of Bonus on Consumption

Market Response Could Increase Effectiveness

If Consumer Demand Creates An Incentive

Food Stamp Program: Potential Changes

State of Minnesota proposed not allowing purchase of soft drinks and candy with Food Stamp benefits

Restricting Food Choices

Will Restricting Food Stamp Purchases Ensure that

FSP Participants Cannot Purchase “Banned” Items? In Most Cases No……

• Most FSP participants also spend some of their own money on food—they could just shift what they purchased with FSP benefits vs. cash.

Example:• The average low-income family of

4 has an average FSP benefit of $326, and spends $462 per month on food, $43 dollars of it on sugars, sweets, and beverages

$326

$136

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

Cash Portion of FoodBudget

Average Food StampBenefit

If Banned Foods Were Successfully Eliminated,

Would Consumers Choose The Intended Alternatives?

They May But……

They may buy products that, although not restricted, are essentially similar to banned items.

No!

Yes?

Market Incentives Could Produce New Alternatives

Ultimately consumer preference still matters

Food Stamp Nutrition EducationA Rapidly Growing Part of the

Program

Creating Effective Public Nutrition Education Programs Is Challenging

Food Stamp ProgramCan Behavioral Economics and Consumer

Psychology Suggest Improvements?

• FSP technology, such as EBT cards, may offer flexibility to help FSP participants manage the conflict between short-term preferences and long-term goals.

How Could This Benefit Participants? Examples:

• FSP participants could opt to receive benefits biweekly, rather than monthly.

• Or elect to have some of their benefits earmarked for buying fruits and vegetables—helping them to stick to good intentions.

• Allowing participants to opt for the allocation that suits them would be optimal--benefiting some without penalizing others.

• The costs and benefits of such flexibility require further research.

How Can We Know If Proposed Changes Make a Difference?

• Pilots, if well evaluated, can provide more information

• ERS working to improve data, measures for improved future evaluations