In this articleMNSTSJMHSYGISWMTDLTRFollow your favorite stocksCREATE FREE ACCOUNTShoppers at the Walmart Supercenter in Burbank in Burbank Thursday, Nov. 21, 2024.Allen J. Schaben | Los Angeles Times | Getty ImagesFor millions of low-income Americans — already rattled by the threat of tariffs and higher prices — changes to a program that helps with grocery costs could make life more expensive.House Republicans are seeking to cut $230 billion of the U.S. Department of Agriculture’s budget over the next decade to pay for tax cuts. The Senate version of the bill calls for at least $1 billion in USDA cuts. Most, or all, of those savings would come from cutting funding for the Supplemental Nutrition Assistance Program, formerly known as food stamps.The proposed cut, if approved, would be three times steeper than the largest previous reduction ever made, after adjusting the average annual cut for inflation, according to UnidosUS, which advocates for Latinos in the U.S.Still, the plan faces hurdles: Congress still needs to reconcile the two very different bills passed by the House of Representatives and the Senate, and it could ultimately toss out the potential reductions to the food assistance funding to avoid losing critical votes needed to pass the farm bill. But the changes could threaten sales for major retailers or divert spending to lower-priced brands at a time when consumers have already shown signs of financial stress.In a statement, the USDA defended the cut and said the Trump administration “is attempting to right size the program.””The Supplemental Nutrition Assistance Program is just that, supplemental,” the statement said. “It was never intended to be a windfall for food companies and retailers, rather a temporary safety net for families and communities in need.”The number of people participating in SNAP has historically fluctuated with the state of the economy and rules around eligibility, but the cohort is a significant sales driver.Shoppers who use the benefits tend to come from larger households and spend 20% more on their monthly groceries compared with non-SNAP shoppers, according to Numerator, a market research firm that surveys U.S. consumers.SNAP accounts for about $112.8 billion, or 4% of the total U.S. food spending, according to an Evercore ISI analysis of USDA data. For the likes of Walmart, Kroger, General Mills and PepsiCo, the sales from SNAP shoppers meaningfully add to their top lines every quarter.On the state level, changes could be coming, too. At least 11 states have proposed limits on what families could buy with funding from the SNAP program, such as bans on using the government funding to buy soda, candy or other junk food. On Tuesday, Arkansas and Indiana both formally requested to prohibit the use of SNAP funds for such products.Those state-level efforts to ban sugary and less-nutritious food and beverages from the program look likely to move forward, given support from the Trump administration. The proposals have gotten a boost from Health and Human Services Secretary Robert F. Kennedy Jr. and his campaign to fight chronic diseases, dubbed “Make America Healthy Again,” or “MAHA” for short.”I’m working with [Secretary of Agriculture Brooke Rollins] and governors now in 24 states for advancing MAHA legislation to get soda pops off of the food stamp program, off the SNAP program,” Kennedy said during a Cabinet meeting at the White House on April 10.While Kennedy doesn’t have the authority to approve those changes, Rollins has already said that she will sign waivers that states need to ban those purchases using SNAP benefits.Already stretchedAbout 42.1 million people per month used SNAP benefits to buy their groceries in fiscal 2023, according to data from the USDA. That translates to roughly 1 out of every 8 people living in the U.S., based on U.S. Census data.For low-income families who rely on SNAP benefits to buy groceries, the proposed funding cuts come at a time when grocery budgets are already stretched by inflationary pricing.Dollar General, which caters to lower-income shoppers, has noticed strain among its customer base, CEO Todd Vasos said on a mid-March earnings call.”Our customers continue to report that their financial situation has worsened over the last year as they have been negatively impacted by ongoing inflation,” he said on the call. “Many of our customers report that only have enough money for basic essentials with some noting that they have had to sacrifice even on the necessities.”Walmart — the nation’s largest grocer — said consumer spending patterns have looked bumpier in recent months. Its Chief Financial Officer John David Rainey said during the company’s investor day in Dallas last week, “the uncertainty and decline in consumer sentiment has led to a little more sales volatility week to week, and frankly, day to day.”More recently, tariffs on imported goods from across the globe, including clothing, furniture and shoes, have fueled concerns that prices will rise again and force Americans to pick and choose where and what to buy.Consumer sentiment this month came in worse across all demographics, including age, income and political affiliation, according to Joanne Hsu, the director of the closely watched University of Michigan survey.Even recent sales results of luxury retailers, including Restoration Hardware and Tiffany & Co. and Louis Vuitton parent LVMH, have reflected a slowdown.Benefits at risk[embedded content]As rising prices and potential SNAP cuts eat into grocery spending, food and beverage makers like Hershey and Monster Beverage could feel the sting.Nearly 9% of food-at-home spending comes from SNAP recipients, according to Bernstein Research estimates.Widescale cuts to SNAP would hit General Mills …
