Avinash Kumar - Sep 27, 2019

Re-imagining America's Harvest Box as meal kit policy

The idea of “America’s Harvest Box” shouldn’t be government agencies buying shelf-stable food ingredients and putting them in a box to be delivered to the recipients’ doorstep. The idea of Harvest Box was conceived from meal kits, but it was made distant due to self-interest lobby groups. The Trump administration should reflect on the poor reception of the first pilot Harvest Box program, and acknowledge that Harvest Box will only succeed when its reverted back to its conception idea.

Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program (FSP), is the largest public assistance program administered by the U.S. Department of Agriculture (USDA), under the Food and Nutrition Services (FNS). In FY 2018, the program on an average served nearly 39.7 million people monthly living in about 20.4 million households. With origins in the Great Depression period, SNAP began as a pilot program in 1961, and was permanently authorised in 1964. Since then, participation and expenditures have grown and declined in response to economic conditions and policy changes. In response to economic changes as well as changes in the political landscape, policymakers have made many revisions in the program’s design, which often involved trade-offs - enhancing one program goal at the expense of another.

SNAP is the cornerstone policy of USDAs food and nutrition assistance program, and a critical component of the United States social safety net for low-income households. Today, it benefits about 13% of the total U.S. population in augmenting low-income households obtain a nutritionally adequate diet. SNAP includes among its goals to increase food security and reduce hunger by increasing food access, a healthful diet, and nutrition education for low-income Americans. Various studies have shown that it is extraordinarily successful in achieving its main goal of reducing food insecurity and hunger, and in addition, improving the overall well-being of low-income Americans over multiple other dimensions. Of particular importance are:

  1. Improved health outcomes for young children who live in households that received SNAP benefits. This was evidently so when benefits were increased as part of the 2009 American Recovery and Reinvestment Act (ARRA). Following the increase, children in families receiving SNAP were significantly more likely to be classified as “well” than young children whose families were eligible but did not receive the benefits.
  2. The dignity and autonomy it provides to its recipients, allowing them to independently choose the grocery items they feel are most appropriate for their families and food expenditure budget.
  3. The vast number of eligible stores, ranging from big-box superstores and supermarkets, grocery stores, convenience stores, and farmers’ markets, across the nation reduce food insecurity in “food desert” regions.

In addition, SNAP stimulates economic activity during an economic downturn and serves as an automatic stabiliser for the economy. SNAP benefits not only support a household’s food purchasing needs, benefits also augment the income and spending of others such as farmers, retailers, food processors, and food distributors. USDA Economic Research Service (ERS) has estimated a multiplier effect of SNAP benefits on Gross Domestic Product (GDP) of 1.54; that is, an increase of $1 billion in SNAP benefits in a slowing economy increases GDP by $1.54 billion and supports 13,560 additional jobs. Despite the resounding success of SNAP, it has many drawbacks and design issues. Of particular importance are:

  1. Although, SNAP provides autonomy to its recipients, allowing participants to make their own food choices, food restrictions (specifically food considered as unhealthy) in SNAP are minimal. Historically, nutrition education has been the primary strategy to promote more healthful diets among SNAP participants. The challenge is that SNAP participants do not always exercise their choices in a way that promotes nutrition and health.
  2. All the attempts to restrict foods either to improve nutrition or to preclude the use of SNAP benefits to purchase “luxury foods” and imported foods have been unsuccessful in part due to insurmountable administrative problems. The complexity arises in identifying thresholds that would disqualify a food item from SNAP without disrupting well established food habits.
  3. SNAP participants in areas with higher food prices cannot purchase as much food, or as much higher quality food, as recipients in areas with lower food prices. This is because SNAP benefits are based on the Thrifty Food Plan (TFP) which is calculated using food prices that represent national averages.
  4. The TFP makes an assumption that low-income households prepare meals from scratch, and therefore does not account for the time constraints faced by most households, especially those headed by both-working or single-working parents. Meals involve more than food preparation, it also involves transportation (to and from the grocery store), grocery shopping, food processing and cleaning-up after meals. As the opportunity cost of time rises, consumers typically substitute away from meal preparation from scratch and move towards ready-to-eat foods leading to lower nutritional benefits of SNAP allotment.
  5. Increasing number of fraud cases in SNAP allotment. It jumped to $592.7 million in 2016, an increase of 61% from $367.1 million in 2012. In SNAP, fraud is typically defined as the exchange of benefits for cash or other ineligible items or purposefully misrepresenting information (such as income, assets, etc.) on SNAP application in order to receive benefits that you are not entitled to receive. Eliminating fraud within SNAP has become a priority for the government to maximise the intended benefit to the needful.

The increasing challenges in delivering maximum benefits to low-income American households enrolled in SNAP program led the Trump administration to propose the idea of “America’s Harvest Box”. It delivers innovation in policy. The America’s harvest box would be “a bold, innovative approach to providing nutritious food to people who need assistance feeding themselves and their families,” Secretary of Agriculture Sonny Perdue said in a statement. “It maintains the same level of food value as SNAP participants currently receive, provides states flexibility in administering the program, and is responsible to the taxpayers.” The proposal recommends the creation of a “Blue Apron-type” program that would ship food packages known as “America’s Harvest Box” to SNAP recipients receiving more than $90 monthly in benefits nationwide, which would encompass 81% of the total SNAP recipients. Thus, the new Harvest Box would take the place of half of SNAP recipients’ current benefits and replace with shelf-stable food products such as milk, juice, ready-to-eat cereals, peanut butter, canned beans, canned meat, poultry or fish, and canned fruits and vegetables. The USDA argues that by purchasing directly from the producers, it could deliver food at approximately half the retail cost, saving about $129 billion over the next 10 years.

The Trump administration believed that this commonsense proposal is a win for SNAP recipients, taxpayers and farmers. The Harvest Box will use America’s agriculture abundance to provide wholesome staple foods, while allowing people to make their own food purchases with the remaining portion of their SNAP benefits. The Trump administration pitched Harvest Box as a “bold, innovative approach”, however, policy experts raised critically important questions about the efficacy, fairness, and overhead costs of the Harvest Box program. Of particular concern are:

  1. “America’s Harvest Box” as proposed by the Trump administration rather than as “Blue Apron-type” program which contains fresh food ingredients that consumers can prepare and cook, it included canned meat, canned fruits and vegetables, and other non-perishable foods such as milk, juice, grains, ready-to-eat cereals, pasta, peanut butter etc.
  2. SNAP has been the most successful public assistance program because it gives families the autonomy and dignity to make their own food choices. Harvest Box replaces half the benefits with government decided food products and the remaining half is transferred electronically to EBT cards for consumption. The one-box-fits-all approach of Harvest Box leaves no room for individual dietary preferences and restrictions, essentially, reducing the autonomy of SNAP recipients.
  3. Harvest Box imposes an impression that SNAP recipients make poor food choices that differ dramatically from similar households, thus, reducing the dignity of SNAP recipients. The idea of Harvest Box also makes the SNAP program more paternalistic.
  4. Delivering food boxes to more than 20 million households each month will be logistically challenging and very expensive exercise. The policy proposed left many unanswered questions: Who would be handling the delivery of these boxes - FedEx, UPS, USPS or other private firms? How will the additional cost be absorbed in the budget? What would happen if boxes went missing? What would happen if boxes were damaged? What if a recipient is homeless, or does not have a place to receive mail? What if a recipient moves frequently?
  5. Harvest Box is hardly pro-market to displace the private sector and build a parallel, state-run distribution system. It puts big-box superstores and supermarkets, grocery stores, and convenience stores that benefit from recipients spending their SNAP benefits in an unclear situation. It’s also a loss for SNAP recipients because the fierce competition in the retail food industry drives consumer prices down, therefore benefitting those on limited food budget.
  6. The idea of Harvest Box is hardly an innovation. India’s government, for example, purchases more than 30% of national grain’s production at above market prices and then sells it to consumers living below the poverty line at below market prices through ration shops. Imitating the same approach by delivering the food in a box is hardly an innovation.

Unfortunately for SNAP recipients Harvest Box initiative solves a non-existent problem and the policymakers are still debating on the need for reforms in SNAP policy. Harvest box was a novel idea but it was poorly executed, and the Trump administration failed to capture the full extent of innovation ongoing in the food industry. Harvest Box resembled nothing like “Blue Apron-type” program rather it was designed like Blue Apron had socialist hangover. Blue Apron, irrespective of its flawed business model, at least allow consumers to exercise their choice on 14 different options available. Blue Apron hasn’t been very successful and has received many criticism itself, however, it achieved an important milestone, of capturing consumers imagination that meal kits are a viable alternative to traditional grocery shopping and meal cooking. Meal kit industry is still in its infancy, and basing the success of an entire industry on the success or failure of one company is unjustified. Regardless of criticism received, taking US federal budget for 2019 as an indicator, then the Trump administration is not keen on losing the idea of “America’s Harvest Box”, but pushing Harvest Box closer to the true definition of meal kits can be win for all the stakeholders involved in the SNAP ecosystem. Meal kits has numerous advantages and of particular importance are:

  1. Meal kits are essentially boxes of fresh food ingredients carrying vital micronutrients without using any artificial preservatives. As compared with canned products and ready-to-eat food, meal kits provide higher nutritional value, thus maximising the benefits of SNAP allotment.
  2. In low-income families, especially families with both-working parents or single-working parent, meal kits can improve their opportunity cost of time by relieving them from meal planning, purchasing and processing. Meal kits has the potential to become a tool for families to enjoy cooking and connect around the dinner table, thus nudging people towards fresh, healthy and nutritious food choices.
  3. Allowing private sector to enter into the meal kit industry and cater to SNAP participants will mark Harvest Box as pro-market solution. The competitive nature of existing retailers and new entrants will drive innovation and dramatically reduce consumer prices of meal kits, therefore benefitting those on limited food budget.
  4. Meal kits allow the government to have higher governance on channelising domestic agricultural abundance and restricting “luxury foods” and imported foods from SNAP. State governments can provide incentives to create meal kits based on commodity that is in surplus, instead of yielding to agribusiness lobbyists to forcefully dispose off surplus commodities to SNAP recipients.

Today, the average cost of value meal kits is approx. $4 per person per meal (ppm), while the average cost of a meal for SNAP participants is approx. $2 ppm (not accounting for the opportunity cost of time lost in transportation, grocery shopping, etc). Meal kit industry is a quintessential example of perfectly competitive industry; a large number of firms competing with identical products sold by all firms, perfect knowledge of prices and technology, and very low entry and exit barriers. Meal kit industry is less capital intensive and low technology industry, which will enable many new small businesses to enter the market. Most large grocery stores have their existing meal kit brand and the fierce competition between these stores have already brought the consumer prices down. However, the prices of meal kits are still higher than the food budget of SNAP participants, mostly due to stagnant market conditions. Allowing local businesses such as restaurants and other local meal kit companies that want to cater meal kits to SNAP participants will introduce new competition in the market, improving the operational efficiency and further reducing the consumer prices. Moreover, these local businesses are more aware of local taste preferences, thus these businesses can creatively utilise the incentives provided by state governments to include commodities that are in surplus. In addition, allowing local businesses to operate in meal kit industry eligible for SNAP recipients will create local job opportunities and strengthen the local economy. Therefore, with all its advantages, the government should consider opening-up the meal kit industry for all businesses to serve SNAP recipients.

Written by Avinash Kumar