As a matter of fact, the emergency growth of SNAP benefits during the pandemic served as a crucial subsidy for millions of Americans. However, with these benefits now expired, major food companies all over the State are witnessing a significant decline in sales, amounting to billions of dollars.
As soon as the emergency SNAP benefits expired a year ago, coinciding with the waning of the pandemic, food inflation had reached its peak. Despite this, grocery bills have yet to see a decrease.
Other factors apart from the expiration of Emergency SNAP
The combination of higher prices and reduced spending power has left hundreds of thousands of Minnesotans struggling to feed their families. According to the Star Tribune, Jean Leake from Brooklyn Center described the experience as a form of grieving. “It felt like a grieving process at first,” she said. “That cushioned us, the increased income, and losing that has an effect on your emotional spirit.”
- The pandemic emergency subsidies significantly helped millions afford food.
- The expiration of these benefits has led to a sharp decline in sales for major food companies.
- Grocery bills remain high despite the peak of food inflation having passed.
- Many Minnesotans are now facing financial difficulties in feeding their families.
The end of emergency SNAP benefits has left a lasting impact on both consumers and food companies, highlighting the ongoing challenges faced by many in the wake of the pandemic.
An 81-year-old woman living on a fixed income had been able to stock her freezer and explore new foods thanks to the additional money from the federal subsidy, previously known as food stamps.
Throughout the pandemic, Congress boosted benefits to the maximum amount for all SNAP participants. Meanwhile, the Biden administration permanently increased benefits, more than doubling the money spent on the program nationally in recent years.
A Lifeline for Many
“That extra benefit was really special,” she shared. “After the loss of those dollars, it was an extra worry: how to survive.”
Economic Impact on Food Companies
The added aid was so substantial that it even made an impact on Minnesota’s multibillion-dollar food companies. Post Consumer Brands, General Mills, and Hormel have all noted a significant drop in the amount of food they’ve sold since the emergency benefits ended in spring 2023.
Industry Observations
Post CEO Rob Vitale commented earlier this year that they “think SNAP is a big component of it,” The Fruity Pebbles-maker cited this as a reason for declining cereal sales.
Indeed, the end of these emergency benefits has rippled through households and industries alike, highlighting how essential these supports were for many Americans.
Federal SNAP spending is projected to hit its lowest level in four years, and a new proposal aims to cut SNAP benefits further as part of the long-delayed Farm Bill. Additionally, restored eligibility requirements are excluding some individuals who might desperately need support.
Food Banks Under Pressure
Food banks are feeling the strain as demand surges.
“Food insecurity rates, which had been declining, have surged once again, and the charitable food system simply cannot meet all that demand,” said Zach Rodvold, public affairs director at Second Harvest Heartland. “When you go to a food shelf, that’s not putting money into the local economy.”
The Ripple Effect of SNAP Benefits
Advocates for SNAP often highlight the broader economic benefits the program generates. Money from SNAP benefits flows from retailers to manufacturers and farmers, creating a chain of economic activity. These positive economic impacts become more pronounced as benefits are reduced.
Record SNAP Benefits in Minnesota
In 2022, Minnesotans received a record $1.2 billion in SNAP benefits, more than double the amount distributed before the pandemic.
“That money stays in the economy, in circulation,” emphasized Salaam Bhatti, the SNAP Director at the Food Research and Action Center. “It’s a self-contained investment, and it gets spent within weeks of being received. It’s a boon for American jobs.”
Criticism of SNAP: Addressing the Concerns
Critics of the Supplemental Nutrition Assistance Program (SNAP) argue that too much money is spent on junk food and non-nutritious meals. They also suggest that the emergency expansion of SNAP during the pandemic might have contributed to food inflation.
The Impact of SNAP During the Pandemic
However, without the emergency expansion, millions of Americans would have fallen below the poverty line, according to the Urban Institute. Currently, about 12% of Americans rely on SNAP benefits to meet their nutritional needs.
SNAP Participation in Minnesota
Despite the importance of SNAP, the program is not reaching its full potential in Minnesota. The state has one of the lowest participation rates in the nation, with only 62% of eligible individuals utilizing the benefits. According to Second Harvest, approximately 275,000 Minnesotans who qualify for SNAP do not take advantage of the program. Summing up:
- SNAP money stays in the economy and supports American jobs.
- Criticism exists regarding the use of SNAP funds on non-nutritious food and its impact on food inflation.
- The emergency expansion of SNAP during the pandemic prevented millions from falling into poverty.
- Minnesota has a low SNAP participation rate, with many eligible residents not using the benefits.
Understanding and addressing these points is crucial to improving the effectiveness of SNAP and ensuring that it serves those who need it most.
“That is a lot of individuals who can be helped and a lot of SNAP dollars that can be unlocked and brought into our state as a result,” said Sarah Peterson, director of neighbor services at Second Harvest. “We’re still seeing neighbors having trouble paying for food because it’s not the only thing they’re paying for that has gotten more expensive.”
Impact of Reduced SNAP Benefits on Minnesotans
As the price of food remains stubbornly high, Minnesotans are now receiving $50 million less per month in SNAP benefits, according to state data. That’s about $80 less per person, per month compared to 2022.
Economic Ripple Effects
The nation’s largest food companies might see sales drop another $12 billion annually as SNAP spending continues to decline nationally, according to a recent report from Piper Sandler analyst Michael Lavery.
This reduction could threaten thousands of Minnesota jobs, from local grocery stores to the General Mills headquarters in Golden Valley. Even as shoppers are spending more on groceries, they are bringing home less food, according to U.S. Department of Agriculture data. When adjusting for inflation, grocery spending is at its lowest level since 2018, while restaurant spending continues to rise.
- High Food Prices: Minnesotans are struggling with increased costs, not just for food but for many other necessities.
- Reduced SNAP Benefits: State data shows a significant reduction in SNAP benefits, translating to $50 million less per month.
- Economic Impact: Declining SNAP spending could lead to a $12 billion annual sales drop for major food companies.
- Job Threat: Thousands of jobs in Minnesota, from grocery stores to major corporations, could be at risk.
- Inflation Adjustment: Grocery spending is at its lowest since 2018, while spending in restaurants is increasing.
As we navigate these challenging times, it’s crucial to recognize the broader economic impacts and the importance of supporting our communities through effective policies and assistance programs.
Expect Increased Discounting
According to Lavery, “We anticipate a surge in discounting in the near future, especially as consumers, particularly those on the lower end of the income spectrum, continue to feel the financial strain.”
The Crisis of Our Time: Hunger in America
Bhatti emphasized that hunger in America is “the crisis of our time” and urgently requires a robust response from policymakers. “The unwinding of pandemic interventions has exacerbated the situation at the worst possible time,” he noted.
The Struggle of Losing Extra Benefits
For Leake, the challenge of losing her extra benefits came at an already difficult period when her late husband was ill.
“Only recently did I truly understand the importance of having extra income. When you’re on a fixed income, that’s your budget for life,” she shared. “This loss, while not as devastating as losing a loved one, felt like another heavy blow—another ‘Here we go again’ moment.”