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Vilsack, Concannon: Tighten food stamp store definition

Congress should tighten up the definition of stores that are eligible to accept food stamps in order to reduce fraud, Agriculture Secretary Tom Vilsack and Agriculture Undersecretary for Food, Consumer and Nutrition Services Kevin Concannon said this week.

Vilsack and Concannon made the statements as congressional committees held hearings on nutrition programs and food stamp fraud.

USDA officials have said that both the fraud rate of 1 percent and the payment error rate of 3.8 percent are the lowest in history. But with the number of food stamp beneficiaries now at 46.5 million even a low level of fraud and error concerns policymakers.

“With record numbers of Americans using food stamps, with an annual price tag of $75.3 billion, anything short of rigorous anti-fraud measures will be very costly to taxpayers,” House Oversight and Government Affairs Committee Chairman Darrell Issa, R-Calif., wrote to Concannon in February.

At a Senate Agriculture Committee hearing on nutrition Wednesday, Vilsack noted that most of the problems have occurred in small stores. Responding to a question from Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., on what actions the committee could take to help USDA in its effort to fight fraud and abuse, Vilsack noted that the law is very broad on what stores would qualify and suggested that the committee could make the standards stricter.

The leaked, unofficial draft of the farm bill proposal that the House and Senate agriculture committees sent to the Joint Committee on Deficit Reduction said that the nutrition title “requires participating retailers to stock more staple foods like fruits and vegetables and bans stores from participating if their sales of prohibited items like liquor and tobacco is higher than 45 percent of the store’s total sales.”

At a House Oversight and Government Affairs hearing today on food stamp fraud, Concannon noted that the definition of the stores that qualify for food stamp redemption is written in statute, and said he would advise Congress to increase “the depth of stock” stores must offer customers in order to be considered an eligible food retailer.

Concannon also noted that USDA is encouraging these stores to stock more fruits and vegetables and other healthy food options.
Rep. Darrell Issa, R-Calif.

Rep. Darrell Issa
Issa said during the hearing that some stores calling themselves “convenience stores” are really liquor stores that sell only a few food items.

After the hearing, Issa noted that making changes to the law is the responsibility of the agriculture committees, but said that he would like to see “a narrow exclusion” for stores “whose primary delivery is not food.”

Issa told reporters that traditionally USDA has tried to maximize the number of outlets that accept food stamps, and that the number is now 231,000 retailers.

“Do you really want that?” Issa asked.

Although some neighborhoods have only small stores, Issa said that in many neighborhoods there are both grocery stores with full food offerings and small stores that may not be primarily food stores.

Concannon told The Hagstrom Report in an email after the hearing that he is not worried that tightening up on the requirements for stores would increase food deserts, neighborhoods without access to nutritious foods.

“Stores that have limited food available are unlikely to contribute effectively to food access,” he said. “And most stores that are interested in trafficking are unlikely to offer a wide range of nutritious food at affordable prices.”

Concannon also noted that the great majority — more than 80 percent — of supplemental nutrition assistance program or SNAP (the formal title for food stamps) benefits are redeemed at large supermarkets or big box stores, and that 96 percent of SNAP recipients shop at such stores at least once per month.

Concannon also said he is not worried that the increased depth of stock requirements would be seen as discriminating against small business because updated requirements would apply to businesses of all sizes, and would be subject to the same statutory requirements that protect small businesses today.

The hearing today was entitled, “Food Stamp Fraud as a Business Model: USDA’s Struggle to Police Store Owners” and was heavily promoted by committee staff, who also released a video of television news clips on retail trafficking around the country.

House Oversight and Government Reform ranking member Elijah Cummings, D-Md., said in opening remarks that he was concerned the purpose of the hearing “may be to discredit the entire program in order to justify draconian cuts.”

Issa noted that House Budget Committee Chairman Paul Ryan, R-Wis., who proposed converting SNAP into a block grant program and cutting funding by $127 billion over 10 years, was not at the hearing and that the point was to investigate the stores, not to attack the food stamp program itself.

But the hearing itself was much lower key than the promotion. The committee has 51 members, but only a handful of members from each party showed up.

At the hearing, Issa highlighted investigative reporting by the Scripps Howard News Service (linked below) that found retailers who had supposedly been barred from accepting food stamps still able to accept them.

Concannon acknowledged some of the Scripps Howard findings, but said some were erroneous. He said that some retailers had managed to get back in business by changing the names of store owners, but that the agency is trying to clamp down on that practice.

USDA Inspector General Phyllis Fong said her office has not independently evaluated the Food and Nutrition Service’s fraud and payment error rates, but is undertaking that analysis this year.

Concannon said that USDA does not have the authority to gain access to retailers’ criminal records to determine whether they are fit to do business with, and Fong concurred with that statement.

Rep. Trey Growdy, R-S.C., said he did not understand how USDA did not have that power when childcare providers are checked out for criminal records in many states.

Jennifer Hatcher, a senior vice president of government and public affairs for the Food Marketing Institute, testified that FMI provides food stamp education to its member stores.

“Being an authorized SNAP retailer is part of their identity and reputation in the community, which is very important for them to protect,” she said.

Hatcher noted that none of the stores in the Scripps Howard story are FMI members.

Issa said after the hearing the committee’s investigation will continue. SNAP is an entitlement for individuals, he said, “but it’s not an entitlement for companies.”