www.ers.usda.gov/publications/eib29/dbgen.htm. the farm bill, title 5 – nutrition re-authorizes...
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www.ers.usda.gov/Publications/EIB29/DBGen.htm
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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
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Food Stamp Program (FSP)The Name May Change—What About the Program
Itself?
• Reduce hunger
• Improve nutrition
Program goals
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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
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How Can the Food Stamp Program Promote Healthier Diets?
• Increases food purchasing power of almost 1 in 12 Americans
• Provides nutrition education
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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
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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
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Increasing FSP Benefit Amounts Unlikely to Have Much Effect on Fruit and Vegetable Expenditures
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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
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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.
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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
its
& V
eg
eta
ble
s (
cu
ps
)
Baseline Consumption
Recommended Consumption
Estimated Impact of Bonus on Consumption
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Market Response Could Increase Effectiveness
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If Consumer Demand Creates An Incentive
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Food Stamp Program: Potential Changes
State of Minnesota proposed not allowing purchase of soft drinks and candy with Food Stamp benefits
Restricting Food Choices
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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
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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?
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Market Incentives Could Produce New Alternatives
Ultimately consumer preference still matters
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Food Stamp Nutrition EducationA Rapidly Growing Part of the
Program
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Creating Effective Public Nutrition Education Programs Is Challenging
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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.
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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.
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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