This is truer than ever now, with pressing fiscal issues preventing the expansion of most federal programs. How, then, can we influence the dietary quality of food stamp recipients, especially given the fact that increased benefits are unlikely to cause recipients to purchase healthier foods? I argue that the answer lies in creating marketplace incentives targeted to certain products , rather than the current FNS approach of developing nutrition-education and social-marketing messages . Congress and the USDA could create such an incentive program for food stamp participants by redirecting part or all of the funding currently distributed through the commodity support program. Any cuts or changes to the commodity support program would probably have to be designed to minimize impacts to existing food assistance programs, depending on commodity distribution. For example, some commodities that currently qualify for direct payments — which eventually make their way to entities such as food banks and schools through FNS food distribution programs — could be negatively affected by a reduction in commodity availability and price. A FSP incentive program could reduce the retail price of healthful food items by providing retailers,square plant pot wholesaler distributors and growers with reimbursements and direct subsidies to cover costs and lost revenues.
Lower costs would lead to increased demand, which, coupled with targeted subsidies and reimbursements, would act to stimulate production and increase retail access. The enactment of country-of origin labeling laws would provide a mechanism to ensure that only products of U.S. growers would qualify. Such an incentive program might work as follows. Food stamp recipients would receive a significant discount — 50%, for example — when they use benefits to purchase qualified products that meet certain nutritional guidelines at FNS-authorized retail stores. FNS would then direct reimbursements to retailers, wholesaler distributors and growers to make up for decreased revenues at the retail level. Because roughly 30% of the retail price of fruits and vegetables represents gross retail profits, reducing retail prices by 50% would allow for retail profit margins to remain constant with decreased revenues coming out of product costs, which would be paid by USDA directly to wholesaler-distributors. A similar transfer would occur at the wholesale level, with the USDA paying up to 100% of the amount normally paid to growers — roughly 20% of the retail price. The USDA would ensure that everyone’s gross profit remains constant. To do so, it would actually not need to reimburse the retailer for lost revenues at all . The retailer would continue to purchase produce from wholesaler-distributors, but a portion of that payment would in fact be made by the USDA, effectively discounting the price for retailers. This would allow retailers to charge customers a lower retail price while paying for costs and generating the same gross profits off larger gross margins, due to decreased product costs.
Instead of dedicating 70% of the retail price to pay for product costs, the retailer would now dedicate only 40%, thereby generating the same gross profits off a larger gross margin . The USDA would make payments at the farm gate and at the wholesale level. It would pay the wholesaler-distributor three-fifths of the discount, ensuring that the gross profit at the wholesale level remains equal to what it was before the price was discounted to the retailer. The remaining two-fifths would be paid to the grower, ensuring that their payments remain unchanged as well . Needless to say, the exact manner in which the USDA would pay reimbursements would need to be carefully designed and implemented to avoid market distortions and fraudulent activities. Similarly, the method for determining which foods do and do not qualify for discounts would need to be developed by an entity not influenced by the food industry or particular crop associations — perhaps the Institute of Medicine, which was recently charged with reformulating the Women, Infants, and Children food package.So far, I have discussed targeting incentives to purchases made only at traditional, FNS-authorized retail outlets such as supermarkets. Such a program would no doubt provide indirect incentives for the expansion of fruit and vegetable production nationwide . But because the vast majority of produce supplied to the conventional retail grocery industry is grown on the largest, most profitable farms, the bulk of payments would still be directed to those farms, as is the case currently with the commodity support program. However, the USDA could use this opportunity to ensure that smaller-scale and regionally based growers engaged in direct marketing benefit as well, by expanding the Farmers’ Market Nutrition Program, another FNS program that distributes coupons to WIC recipients and qualified seniors once yearly on an annual federal budget of only around $20 million .
Food stamp recipients, and perhaps WIC recipients, might also receive a 50% discount when benefits were used to purchase qualifying products at certified farmers’ markets, with reimbursements going to growers and market operators instead of wholesaler-distributors. Dedicating other funding, perhaps through the Risk Management Agency or Agriculture Marketing Service, toward a farmers’ market incentive program could increase the amount of discount offered, and provide farmers’ market operators and participating growers with a level of reimbursements necessary to subsidize the development and operation of farmers’ markets in currently under served low-income neighborhoods.Costs. When crunching the numbers, one finds that a redirection of all 2003 farm commodity payments to a marketplace based incentive program would represent $104 per month per food stamp household, or a 56% increase in the average monthly household benefit. Redirecting the 87% of farm commodity payments paid to the top 20% of farms would provide each food stamp household with an additional $90 in purchasing power each month. Remember that these dollars are not being paid directly to food stamp participants as benefits, but rather to retailers, wholesaler distributors and growers to create retail price reductions that apply to purchases made by participants. Furthermore, it is unlikely that these incentives would simply result in product substitution, because food stamp recipients — like the majority of Americans — do not currently purchase significant quantities of fruits, vegetables and whole-grain products. Benefits. Many low-income Americans find healthful foods expensive and hard to find, and they need and deserve targeted assistance to help purchase them. A typical food stamp household, with one female adult and two children ages 3 and 7, might receive roughly $250 in benefits each month. The Thrifty Food Plan is an economic model developed by the USDA Center for Nutrition Policy and Promotion to create a “market basket” of items that meet U.S. Dietary Guidelines for nutrient intakes while constraining costs; the TFP is used as the basis for food stamp allotments and assumes that all food is purchased at stores and prepared at home. According to the USDA,plastic potting pots the monthly cost of the TFP for this family in July 2003 — containing 25.2 pounds of vegetables other than potato products and 46.48 pounds of fruit — was $301.20 , of which perhaps $100 is allocated to purchase fruits and vegetables. However, it is highly unlikely that our typical food stamp family is following the TFP and purchasing anything close to 70 pounds of fruits and vegetables each month. This is because over half of all food purchases today are consumed outside the home, and because fruits and vegetables are often much more expensive and less available in the inexpensive restaurants, small neighborhood markets, and food-service settings likely to be frequented by low income Americans. What would in effect be half-off sales would provide a significant incentive for food stamp recipients to purchase more nutritious foods. Although these “sales” certainly would not guarantee that all food stamp recipients meet the recommendations in the 2005 Dietary Guidelines for Americans overnight, such incentives would no doubt cause a great many recipients to start purchasing and eating more health-promoting foods such as fruits, vegetables and whole grains .
In fact, these incentives might go a long way toward eliminating two of the main barriers that consumers cite as keeping them from eating a better diet: cost and access. What’s more, by linking incentives directly to products that have known health benefits, there is a high likelihood that these redirected subsidies would result in additional future cost savings, in the form of improved health, increased productivity, and other economic and social benefits. With such significant potential impacts, one must ask why the USDA isn’t more willing to consider making targeted cuts in the commodity support program in order to improve the FSP. Does it really make sense to support the production of products such as high-fructose corn syrup by giving corn growers direct subsidy payments, and to support the purchase of products like Coca-Cola by giving food stamp recipients benefits but no incentives to spend extra for nutrients instead of maximizing calories? Why not instead invest in the health and good dietary habits of low-income Americans, while providing marketplace support for the producers of health-promoting food products? The USDA and members of Congress would do well to ask themselves these questions, perhaps while they’re debating the 2007 Farm Bill .For example, cereal crops decreased in harvested area by 3.6% between 1985 and 2005, yet their total production increased by 29%, reflecting a 34% increase in yields per hectare. Oil crops, on the other hand, showed large increases in both harvested area and yield , resulting in a 125% increase in total production18. While most crops increased production between 1985 and 2005, fodder crops did not: on average, they saw an 18% production drop as a 26% loss in harvested area overrode an 11% increase in yields. Using geospatial data, we can examine how yield patterns have changed for key commodities . These geographic patterns show us where productivity gains have been successful, where they have not, and where further opportunities for improvement lie.The allocation of crops to nonfood uses, including animal feed, seed, bio-energy and other industrial products, affects the amount of food available to the world. Globally, only 62% of crop production is allocated to human food, versus 35% to animal feed and 3% for bio-energy, seed and other industrial products. A striking disparity exists between regions that primarily grow crops for direct human consumption and those that produce crops for other uses . North America and Europe devote only about 40% of their croplands to direct food production, whereas Africa and Asia allocate typically over 80% of their cropland to food crops. Extremes range from the Upper Midwestern USA to South Asia . As we face the twin challenges of feeding a growing world while charting a more environmentally sustainable path, the amount of land devoted to animal-based agriculture merits critical evaluation. For example, adding croplands devoted to animal feed to pasture and grazing lands , we find the land devoted to raising animals totals 3.73 billion hectares—an astonishing ,75% of the world’s agricultural land. We further note that meat and dairy production can either add to or subtract from the world’s food supply. Grazing systems, especially on pastures unsuitable for other food production, and mixed crop–livestock systems can add calories and protein to the world and improve economic conditions and food security in many regions. However, using highly productive croplands to produce animal feed, no matter how efficiently, represents a net drain on the world’s potential food supply.The environmental impacts of agriculture include those caused by expansion and those caused by intensification . Below, we use new data and models to examine both. Agricultural expansion has had tremendous impacts on habitats, biodiversity, carbon storage and soil conditions. In fact, worldwide agriculture has already cleared or converted 70% of the grassland, 50% of the savanna, 45% of the temperate deciduous forest, and 27% of the tropical forest biome. Today, agriculture is mainly expanding in the tropics, where it is estimated that about 80% of new croplands are replacing forests. This expansion is worrisome, given that tropical forests are rich reservoirs of biodiversity and key ecosystem services. Clearing tropical forests is also a major source of greenhouse gas emissions and is estimated to release around 1.1 3 1015 grams of carbon per year, or about 12% of total anthropogenic CO2 emissions. Slowing or halting expansion of agriculture in the tropics—which accounts for 98% of total CO2 emissions from land clearing—will reduce carbon emissions as well as losses of biodiversity and ecosystem services.