A potential win-win for families and farmers

Photos by Bob M. Montgomery Images.

More families are seeking help from the federal food stamp program, which, to date, has reached an all-time high of 36 million people, an increase of 10 million participants in just two years. According to recent data collected by The New York Times (www.nytimes.com/interactive/
2009/11/28/us/20091128-foodstamps.html
), the food stamp program, called the Supplemental Nutrition Assistance Program (SNAP), now feeds one in eight Americans and nearly one in four children. The program is expanding at a rate of 20,000 people per day nationwide.

Food stamp recipients use plastic electronic benefit transfer cards (EBTs), the modern debit card version of the food stamp voucher, and in many states the cards are now used at farmers’ markets.

“The SNAP money is tremendous right now. There is a market [for this population] in farmers’ markets,” says Helen Costello, program manager for Recipe for Success Program at the New Hampshire Food Bank, who conducted research for the University of New Hampshire Cooperative Extension on food stamp use at farmers’ markets. The research resulted in a free downloadable publication, “Accepting Food Stamp Electronic Benefit Transfer (EBT) Cards at Farmers’ Markets and Farm Stands: A Primer for Farmers and Market Managers,” which highlights the process by which an individual farmer or an entire market can become authorized to become a food stamp merchant. The booklet also lists the various ways to process transactions, the equipment needed and other technical aspects needed to be successful in accepting food stamps. (To download the booklet, visit http://extension.unh.edu/Pubs/PubsFN/Docs/farmebt.pdf.)

Not only can SNAP recipients buy fruits and vegetables at some farmers’ markets, but there is also a growing population receiving food coupons from other federally subsidized programs, namely the WIC (Women, Infants and Children) Farmers’ Market Nutrition Program (FMNP) and Senior Farmers’ Market Nutrition Program (SFMNP).

Accepting EBT cards or nutrition program coupons can be a win-win situation for both disadvantaged families, who can have access to fresh and healthy food, and for farmers, who can tap into a new niche and market.

Programs have positive impact on some farmers’ market sales

Nationwide research has shown that federally subsidized nutrition programs have had some positive impact on farmers’ market sales, but success varies by the program and by region of the country.

According to the USDA, as of the end of fiscal year 2008, 753 farmers’ markets were authorized to accept food stamp benefits nationwide, a 34 percent increase from fiscal year 2007. While the percentage of people actually redeeming benefits at farmers’ markets is still small, the amount of these funds going to small farmers has increased from about $1 million in 2007 to $2.7 million in 2008.

WIC’s FMNP program contributes more to vendor sales than any other federally subsidized nutrition program. According to USDA’s Food and Nutrition Service, 2.3 million WIC participants received FMNP benefits in 2008, with 16,016 farmers, 3,367 farmers’ markets and 2,398 roadside stands authorized to accept FMNP coupons. These coupons led to approximately $20 million in revenue for farmers in the 2008 fiscal year.

Nationally, the participation of nutritional vouchers or EBTs in farmers’ markets was the highest, at 87.9 percent, in the Northeast; the lowest was the Rocky Mountain region at 35.8 percent. The average monthly sales generated by the WIC farmers’ market program was also the highest in the Northeast, at $2,528 per month.

Obstacles to getting healthy food at farmers’ markets

It makes sense to bring together low-income people and farmers’ markets, but the numbers show that recipients of food stamps and vouchers are not shopping as much as they could at farmers’ markets.

There are two reasons for this:

1. There is difficulty from the farmers’ point of view in establishing and promoting these nutrition programs at farmers’ markets (particularly the food stamps, which require electronic point-of-sale swipe devices to operate efficiently).

2. The perception by food stamp recipients that farmers’ markets are too costly.

The EBT card obstacle

The biggest barrier to farmers’ markets accepting food stamps is the EBT cards, which are costly and complicated to set up and accept payment.

It costs about $1,500 to set up a wireless point-of-service swipe machine, which will not only accept EBT cards, but also debit and credit cards.

It is useful if the system is set up as a central point-of-sale (POS) that allows all eligible vendors in multiple-vendor farmers’ markets to sell to food stamp recipients. This allows each vendor to use the system without being separately authorized by the USDA Food and Nutrition Service.

If the farmers’ market or individual farmer already has a credit/debit card machine installed, the next step to becoming an EBT vendor and getting a food stamp permit is that much easier. (Visit www.fns.usda.gov/fsp/retailers/application-process.htm to find out how to become a vendor and costs associated with the process).

Right now, one-sixth of the farmers’ markets in the U.S. are equipped to accept food stamps.

“But the system is set up more for supermarkets than farmers’ markets,” notes Andy Fisher, executive director for the Community Food Security Coalition, a North American coalition of diverse people and organizations working from the local to international levels to build community food security.

The investment of $1,500 for the swipe machines also causes some farmers’ markets to pause. One solution to the cost barrier is under way: the Farmers’ Market Promotion Program is a $5 million annual program for 2009 and 2010 ($10 million annually for 2011 and 2012), and at least 10 percent of all the funds granted through this program must go toward new EBT projects. To find out more, visit www.ams.usda.gov/AMSv1.0/fmpp.

The WIC program is easier for farmers to use, and WIC will issue $600 million worth of coupons in the upcoming year just for fruits and vegetables. While these coupons don’t require any special equipment, they still can be confusing and time-consuming to deal with.

“The (coupons) have a lot more restrictions. The client has to use it in the month issued, and the farmer has to deposit it within 45 days. It requires some training and there are some products people can’t buy,” says Fisher, who is currently conducting a comprehensive national study to address the barriers to farmers’ markets accepting food stamps and coupons.

Does it make sense to go through the trouble?

While accepting food stamps seems to be a good idea—the market is there (and growing)—it is not a given that it will be a successful move or make economic sense for the farmers’ market to spend a lot of time and money promoting it.

The jury is still out if the effort is worth the return on the investment necessary to make it work, particularly in more rural markets where the low-income population may be too geographically scattered to access the farmers’ market on a regular basis. “It won’t work in every market,” Costello says.

The obstacles to getting low-income families to shop at farmers’ markets

Selling to low-income people means selling more affordable products, and not selling as many high-end, expensive fruits and vegetables.

“To be successful, a farmers’ market needs to sell basic things at basic prices,” says Fisher.

“There is a fundamental contradiction between low-income customers and farmers who need to make a living,” admits Fisher.

There are markets that have successfully walked this fine line, such as farmers’ markets in large urban areas like New York City, where there is a large population that is eligible for food stamps and WIC subsidies, lots of farmers and well-equipped farmers’ markets within walking distance of disadvantaged neighborhoods.

Demonstration projects at markets in Nashua, Manchester and Enfield, N.H., proved that accepting food stamps could be profitable for farmers’ markets, if the market met certain criteria to attract food stamp recipients:

  • Location in or within walking distance to a low-income neighborhood.
  • Strong relationships with human service offices and education of their staff about the availability of using EBT cards at your farmers’ market.
  • Strong community involvement to support the infrastructure and promotion.
  • Education and promotion with food stamp recipients.
  • A leader on the market’s steering committee or board of directors who is committed to the project.

In rural areas of the Northeast, such as New Hampshire, the biggest barrier is the cost in installing the EBT machine and the return on that investment.

“In most New Hampshire [farmers’ markets] you won’t get that kind of volume in sales to make it worthwhile,” says Costello. “Farmers’ markets may be more willing to do it if the machines were more affordable, because it is a big business expense and time commitment, that, frankly, farmers’ market managers or farmers don’t have.”

There is also the problem of outreach to food stamp recipients. “Some recipients think they can’t use food stamps at farmers’ markets, or it is too expensive. Then there are the cultural and sometimes language barriers,” says Fisher.

Costello says there is a lot of misunderstanding about pricing in farmers’ markets. “There is a perception that it is higher priced.” But for basic staple items that are in season, the price is usually comparable or even lower than grocery stores.

Fisher found it is critical to partner with community groups that low-income people trust, such as churches and other community associations. “The goal is to increase access to healthy food for low-income folks,” he says.

Costello, through her four-year research at farmers’ markets in New Hampshire, found that while some farmers’ markets were successful (i.e., made a profit) when using food stamps and coupons, others were not.

“Where there were resources to promote it, people came out and used it,” she says.

That said, she believes that regardless of socioeconomic standing, a customer either is a farmers’market customer or not. “I think it doesn’t matter what income level you are at. Either the farmers’ market interests you or it doesn’t.”

Steps to Accepting EBT Cards

  1. Meet with farmers’ market vendors to discuss the possibility of accepting EBT cards and its costs and impact on vendor dues.
  2. Discuss options for accepting food nutrition program cards or vouchers (swipe machine or point-of-sale device).
  3. Decide if you will use a wired or wireless machine, which is more expensive, but grant monies are available.
  4. Apply for USDA Food and Nutrition Service to become a food stamp merchant. Individual farmers may apply, or a farmers’ market can apply as one entity. For more information, contact your regional USDA FNS office. (Apply at the USDA Web site at www.fns.usda.gov/fsp/retailers/application-process.htm).
  5. Once approved, the state’s contracted supplier of EBT service will contact your market and help acquire and set up the POS device.

The author is a freelance writer from Keene, N.H.