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KANSAS CITY – As 2014 gets under way the issue to watch in the coming weeks is the farm bill negotiations. The outcome will have an impact on what is turning out to be a sluggish, slowly recovering consumer marketplace.
House and Senate negotiators left Washington in early December and delayed action on the new farm bill until this month. Despite the delay, Representative Frank Lucas of Oklahoma, chairman of the House Committee on Agriculture, and Senator Debbie Stabenow of Michigan, chairwoman of the Senate Committee on Agriculture, Nutrition and Forestry, the chief negotiators, said they were confident they would reach an agreement and be ready to vote sometime this month.
Food and beverage industry executives will be particularly interested in what changes are made to the Supplemental Nutrition Assistance Benefits Program (SNAP). Both chambers have signaled support for reducing benefits, but are far away in determining how much to reduce SNAP spending. The House version of the bill calls for a reduction of $39 billion over the next 10 years while the Senate version calls for a reduction of $4 billion.
With the expiration of the 2009 American Recovery and Reinvestment Act this past November, industry executives have already experienced what a reduction in SNAP benefits may do to consumer purchasing patterns. Gregg Tanner, the chief executive officer of the Dean Foods Co., Dallas, noted this past November that 8% of SNAP benefits are spent in the dairy category. He expressed caution when benefits were reduced in November and noted that if further reductions are made it may have a greater impact on the category.
Gary Rodkin, c.e.o. of ConAgra Foods, Inc., echoed Mr. Tanner’s comments on Dec. 19 when he said any reduction in SNAP benefits is going to make it tougher for some families that are struggling.
A day before Mr. Rodkin made his comments, Ken Powell, chairman and c.e.o. of General Mills, Inc., Minneapolis, noted that the United States’ economy is recovering, but consumers are opting to buy cars or improve their homes. For many consumer products, that means the categories are growing more slowly.Mr. Powell added that the U.S. economy will move past this stage, and that is what makes the farm bill negotiations so important. Any SNAP benefit reductions will not take place immediately and may come at a time when economic recovery is gaining steam. Such a development may add yet another obstacle to an already fragile economic recovery.