Food Stamp Program Boosts Farm Income and Jobs
Kenneth
Hanson
While the primary goal of the Food Stamp
Program is to help low-income households buy the
foods they need for a nutritionally adequate diet,
the program also serves another purpose: it increases
demand for food products and farm commodities and
increases cash receipts for these sectors. ERS researchers
estimate that the additional food purchases resulting
from each $1 billion of program benefits redeemed
generates $97 million in farm cash receipts, which
translates into 950 farm jobs and $32 million of
income to farmers and hired farmworkers.
In fiscal year 2005, USDA provided
$28.6 billion worth of food stamps to needy Americans.
When households redeem food stamp benefits at local
grocery stores, their food purchases have an impact
on production, income, and employment throughout
the food system and other sectors of the economy.
The magnitude of the impact on agriculture depends
on the amount of additional demand for food generated
by the program and on the share of the additional
food expenditures that goes to the farmer.
Though households may use food
stamps only to purchase food for home consumption,
the benefits enable them to shift cash otherwise
budgeted for food to nonfood expenditures, such
as clothing, rent, or child care. Consequently,
the additional food expenditure is less than the
extra dollar increase in the value of food stamp
benefits. An estimated 26 cents of every food stamp
dollar goes to additional food demand. ERS used
this estimate in a model of the U.S. economy to
calculate the effect of additional food expenditures
on the farm sector. This model includes the linkages
among producers and consumers, as well as the inter-industry
linkages among producers. Food stamp participants
were assumed to use their program benefits to purchase
foods similar to those purchased by low-income households,
as determined through surveys on household food
expenditures.
On average, each dollar spent
on food by low-income shoppers generates 37.3 cents
of farm cash receipts, though the magnitude varies
by food items. About 55 percent of the cash receipts
goes to producers of dairy, poultry, and other livestock,
while the remaining 45 percent goes to producers
of crops, including feed for animals.
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