Stores accepting food stamps ” including Wal-Mart ” face stricter rules

Market Watch

U.S. regulators are pushing stricter rules for stores that accept food stamps, ultimately determining which retailers win and lose the billions of taxpayer dollars at stake.

The proposal is throwing gas stations and corner stores into a battle with giants like Wal-Mart Stores Inc. WMT, +1.27%   and Kroger Co. KR, +1.19%  over the $74 billion Supplemental Nutrition Assistance Program, or SNAP.  

By year end, the U.S. Department of Agriculture wants to adopt rules that require stores redeeming food stamps to stock a wider variety of meats and vegetables and sell fewer hot meals, like pizza.

At a time when sales growth is hard to come by, redeeming food stamps is critical for grocers. Last year, SNAP funds comprised an average of 5.8% of sales at participating stores, according to a poll of 6,500 stores by the Food Marketing Institute, a trade group.

Big supermarket chains like Wal-Mart already happen to meet the tougher requirements because of their breadth of inventory. But some 195,000 smaller stores would have to add as many as 168 items to their shelves — a move they say would be costly and unprofitable, given their limited shelf space and spoilage issues for fresh food.

The new stocking requirements are challenging, said Noon’s Food Stores, a chain of three in Missoula, Mont. “Unlike corporate grocery stores, or big-box stores like Wal-Mart that literally have acres of space under one roof, our stores are each around 2400 sq. ft. in total,” President Dirk Cooper said in a letter to the USDA.

foodstamps_small Stores accepting food stamps ” including Wal-Mart ” face stricter rules

He said the proposed rules benefit large retailers by sending SNAP customers their way when small stores like his are forced out of the program.

The proposal has become a hotly contested debate, pitting Congress against the USDA, and prompting 1,257 letters from various stakeholders.