“Gouged” by Some Small Groceries, Gov’t Food Program Cracks Down
Ever go into an AM-PM? The price for cookies, soda’s and other goods are higher. Go to Stater Bros. and prices are cheaper. It is competition.
“The California WIC program, which provides staple foods like milk, dried beans and peanut butter to 1.48 million low-income Californians, is the largest in the country. But it is being hit hard by runaway food costs, driven by high prices at small stores, costing the program tens of millions of dollars a year. Under pressure from the United States Department of Agriculture, which oversees the program, California is scrambling to bring food costs down.
“No one should be using these programs to reap obscene profits off of the backs of mothers and young children,” said the Rev. Douglas Greenaway, president and chief executive of the National WIC Association, a nonprofit group.”
This is a back door way for the State to control the prices of food in California. Government has a slippery slope to price control—in the end, to
run and own our grocery stores—and all of this in the “name” of protecting the poor—by making all of us poor.
Inflated prices cost taxpayers tens of million of dollars each year
A box of Cheerios on sale for $9.94 in a special WIC section at a small grocery store in San Pablo where shoppers can gain points to earn free appliances like coffee makers or toasters.
At Rancho Grande Supermarket in San Pablo, a package of 18 corn tortillas recently cost $7.80.
Taxpayers footed the bill for the pricy tortillas, which were bought in early April with a government voucher from the California Women, Infants and Children program, a federally financed nutrition program that is administered by the state.
Despite its name, Rancho Grande Supermarket is a small grocery store located in a strip mall on San Pablo Avenue. Less than a mile away at FoodMaxx, a megastore where WIC vouchers are also accepted, the same tortillas are sold for $1.44.
The California WIC program, which provides staple foods like milk, dried beans and peanut butter to 1.48 million low-income Californians, is the largest in the country. But it is being hit hard by runaway food costs, driven by high prices at small stores, costing the program tens of millions of dollars a year. Under pressure from the United States Department of Agriculture, which oversees the program, California is scrambling to bring food costs down.
“No one should be using these programs to reap obscene profits off of the backs of mothers and young children,” said the Rev. Douglas Greenaway, president and chief executive of the National WIC Association, a nonprofit group.
In recent years, California WIC has seen a flood of small stores seeking to join the program, and it has welcomed many of them. Those stores, some of which have been increasing their prices and aggressively marketing to WIC shoppers, can receive higher reimbursements from California WIC than bigger stores do.
In February 2012, California stores with just one or two cash registers were reimbursed for WIC foods at prices that were 50 percent higher than prices paid to other vendors for comparable foods, according to the U.S.D.A. That is twice as high as the difference in prices paid to stores with one or two registers in fiscal year 2008-9.
While prices are going up in small stores, more WIC vouchers are being redeemed at them. Between October 2009 and September 2011, food costs to the WIC programs in other Western states went down a combined average of more than 7 percent. In California’s WIC program, they increased more than 4 percent.
“When food costs go up, it reduces the pool of food resources available to serve mothers and young children,” said Greenaway. The California WIC program currently spends about $94 million a month on food, according to the California Department of Public Health.
It is not the first time the program has struggled to contain escalating costs. In 2004, the proliferation of so-called WIC-only stores, catering to WIC shoppers, inspired Congress to impose new regulations on those stores, which curbed the problem.
In April 2011, when California was deluged with applications by stores seeking to join the program, the state imposed a moratorium on authorizing new vendors. The moratorium has remained in place as the state tries to reduce costs.
WIC shoppers have little incentive to seek lower-priced items for their WIC purchases, because the vouchers carry no dollar amount.
Some grocers use free gifts and prizes to lure more WIC shoppers to their stores. A flier for Rancho Grande Supermarket promises “Free Gift! For Redeeming Your Vouchers over pictures of a blender, a rice cooker and an iron.
Inside the store, WIC shoppers are offered free food items for every voucher they redeem there, like an extra pound of cheese, while earning points toward taking home the small appliances too.
“If those expenses are somehow getting recycled into the program, then that has to be stopped,” said Representative George Miller, the senior Democrat on the House Education and the Workforce Committee, which oversees the program.
Some stores even seek to attract WIC customers by offering free gifts of unhealthy foods that subvert the nutritional intent of the program.
At 23rd and Sanford Market in San Pablo, just over a mile from the Rancho Grande Supermarket, free items offered to WIC shoppers include a bottle of Jarritos, a sugary soft drink, and Abuelita, a hot chocolate mix, an ad shows.
Jason Henry for The Bay Citizen
A special WIC section of products with higher prices, like this loaf of bread for $7.54, where shoppers can gain points to earn free appliances like coffee makers or blenders at a small grocery store in San Pablo.
The Agriculture Department has pressured California to get high prices at small stores under control.
In February, Kevin W. Concannon, under secretary for food, nutrition and consumer services at the department, denounced high food costs in the California WIC program in a letter to Diana Dooley, the secretary of California’s Health and Human Services agency.
Earlier this month, under direction from the U.S.D.A., California WIC issued a “vendor bulletin” announcing caps on how much stores with one to four cash registers can be reimbursed for WIC products.
The new rules are set to take effect on May 25.
The Agriculture Department said that if the plan had been in place in 2011, it would have saved the program an estimated $50 million.
Concannon called the action “a critical first step,” adding, “We will continue to work together to ensure that taxpayer dollars are spent wisely.”
California officials said they believed that this strategy would control costs and prevent eligible mothers’ and children’s loss of access to food benefits.
Some experts, however, are skeptical that the new price controls will do enough to curb the problem.
“I am concerned that the new rule will not be effective, because it does not deal with incentives,” said Art Burger, executive vice president at Burger, Carroll & Associates, a New Mexico-based consulting firm that works with WIC programs around the country. “The best and most expedient approach would be for the governor of California to ban incentives on WIC transactions.”
California WIC is already struggling to enforce the program’s rules.
At Rancho Grande Supermarket, the WIC purchases are rung up at a separate cash register from other foods. Under the rules, WIC customers cannot be required to use a separate checkout line to make their purchases.
When a reporter, who did not identify herself as a member of the news media, accompanied a WIC participant to the store, a cashier initially warned them away from the WIC section.
“That stuff is not for sale — it is for WIC,” she said.
In the WIC section, a 64-ounce bottle of Hansen’s brand orange juice was $7.99, while the same bottle of orange juice in another part of the store cost $4.69. Under the rules, stores are not allowed to charge WIC shoppers more than other customers for the same item.
In a telephone interview, Rieo Madrigal, the store’s owner, denied charging higher prices in the WIC section, while maintaining that other shoppers could also buy food from that area.
As for ringing up WIC purchases at a separate register, Madrigal said it was “more convenient” for WIC shoppers and other customers.