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WIC Specialty Stores Exploiting Low-Income Moms & Infants

Web Note:
In nearly all of the 3300 counties in the U.S., it is illegal for low-income
WIC (Special Supplemental Nutrition Program for Women, Infants and Children,
or W.I.C.) recipients to buy organic food with their WIC coupons. Instead,
as the article below points out, they are forced to buy low grade industrial
food products at highly inflated prices. The OCA's position is that organic
food should be available to all, especially low-income groups, and that WIC
and Food Stamp allocations should be increased substantially.


From:
THE
AGRIBUSINESS
EXAMINER
June 8, 2004, Issue #352
Monitoring Corporate Agribusiness
>From a Public Interest Perspective

EDITOR\PUBLISHER; A.V. Krebs
E-MAIL: avkrebs@earthlink.net
WEB SITE: http://www.ea1.com/CARP/
TO RECEIVE: Send name and address

ALARM OVER PROLIFERATION OF HIGH PRICE FOOD STORES
CATERING TO LOW-INCOME PEOPLE

ROBERT PEAR, NEW YORK TIMES: Federal and state officials are expressing
alarm about the proliferation of food stores that cater to low-income people
but charge more than other grocery stores, thus driving up the cost of a
major federal nutrition program.

The program, the Special Supplemental Nutrition Program for Women, Infants
and Children, or W.I.C., helps feed 7.7 million people each month by
providing vouchers for infant formula, juice, eggs, milk, cheese, cereal and
dried beans. Now a growing number of stores are selling only to W.I.C.
families, accepting only the government vouchers, not cash, for payment.

About 47% of all babies born in the United States each year participate in
the program.

"The rise in W.I.C.-only stores is a fairly recent phenomenon," said Eric M.
Bost, under secretary of the Agriculture Department, which runs the program.
Analysis of food costs in California and Texas shows that "W.I.C.-only
stores in these states have higher prices, on average, than other authorized
retailers," Mr. Bost said.

The stores have found a niche in the market that Congress did not
anticipate. Proprietors said the stores had become popular because they
offer convenient locations and superior service.

Healthy Kids, a "one-stop W.I.C. shop" in Virginia Beach, is tucked into a
small shopping center, next to a state health clinic that issues W.I.C.
vouchers. Every item in the store meets the specification of the program,
said the manager, Tracy Wynne. By contrast, Ms. Wynne said, at supermarkets,
"it's often a hassle finding the right products and dealing with cashiers."

"I wish they had these stores ten years ago when I was on W.I.C.," she said.

The W.I.C. families are not particularly sensitive to shelf prices because
their vouchers buy a specific food package, regardless of the amount charged
to state agencies, which administer the program with federal money.

State officials say the prices at W.I.C. specialty stores are typically ten
percent to 20% higher than those at supermarkets and other retail grocers.

Linnea E. Sallack, director of the W.I.C. program in the California
Department of Health Services, said: "We consistently find that prices
charged in W.I.C.-only stores are higher, on average, than in other stores.
If food prices are high, for whatever reason, it means that our federal
grant cannot go as far and cannot serve as many people."

Ms. Sallack said California had 659 W.I.C.-only stores, accounting for 16%
of all stores in the state's program. But they account for more than 37% of
W.I.C. business in California, she said.

The increase in the specialty stores coincides with a rise in food prices,
which was already squeezing the budget for the program.

The producer price index for dairy products increased 10.4 percent in April,
the biggest monthly rise since July 1946, said Brian C. Catron, an economist
at the federal Bureau of Labor Statistics. James J. Miller, a dairy
economist at the Agriculture Department, said the average farm price for
milk reached a record high in May, $20.30 for 100 pounds of raw milk, up
from $11 a year earlier.

Donna T. Seward, director of the W.I.C. program in Virginia, said the prices
at W.I.C. stores "may be as much as double the prices at Wal-Mart, Food Lion
or Kroger."

Ms. Seward said that some of the specialty stores bought food at retail
supermarkets and resold it, at higher prices, to people in the program. The
higher costs are passed on to the federal Treasury, which finances the
program with money appropriated by Congress, $4.6 billion this year.

Congress is considering legislation to limit prices at W.I.C.-only stores,
but it does not want to drive them out of the program.

Senator Tom Harkin of Iowa, the senior Democrat on the Senate Agriculture
Committee, said the W.I.C. stores posed "a growing threat" to efforts to
control the cost of the program. Senator Robert F. Bennett, Republican of
Utah and chairman of the subcommittee responsible for agriculture
appropriations, said, "It concerns us greatly that many of these vendors
charge prices well above other stores."

In recent weeks, the W.I.C.-only stores have retained a team of lobbyists to
press their case on Capitol Hill. The lobbyists include John W. Bode, an
assistant secretary of agriculture in the Reagan administration, and Mickey
Ibarra, a White House aide to President Bill Clinton. The Latino Coalition,
a Hispanic business group that supports the W.I.C. stores, said it had
enlisted Cassidy & Associates, a top lobbying firm, to arrange a meeting on
Capitol Hill.

Mr. Bode said the W.I.C.-only stores were "modestly more expensive than
large supermarkets, in part because they have higher product costs and
cannot negotiate directly with manufacturers, as major retailers like
Wal-Mart and Safeway do."

Customers of W.I.C.-only stores say they avoid the possible stigma and
embarrassment of using W.I.C. vouchers at a supermarket. Filling out
vouchers and separating W.I.C. items from the rest of a customer's order can
slow the checkout line in a regular grocery store.

Latoya R. Varnedoe of Oakland, California, a 27-year-old mother of four,
said she had had excellent experiences at a W.I.C.-only store. "It's
fabulous," said Ms. Varnedoe, who works as a mail carrier. "It has every
item covered by the W.I.C. coupons. At big stores, they may run out of apple
juice or grape juice or other items."

In Arkansas, Roger C. Chinn, assistant director of the W.I.C. program, said
the state had 42 W.I.C. specialty stores, accounting for eight percent of
all stores in the program, but 22 percent of sales.

A study commissioned by the Texas Health Department concluded, "W.I.C.-only
stores tend to be among the most expensive, in Texas and nationally."

In California, a similar study found that for the most common food package,
which provides milk, eggs and cheese to nearly one million people each
month, the specialty stores charged $20.28, or 16% more than other stores.

Arthur W. Burger, executive vice president of Burger, Carroll & Associates,
which did the studies, said some specialty stores were "gouging the
government by marking up prices to levels much higher than those charged by
mainstream grocery stores."

Under federal rules, states set limits on how much they pay for each W.I.C.
food item. Those limits must be high enough to ensure that low-income people
have access to benefits in isolated rural areas. State officials said that
W.I.C.-only stores were much more likely to charge the maximum allowable
price. Large retailers set prices well below that level so they can attract
and keep other customers.

Douglas A. Greenaway, executive director of the National W.I.C. Association,
which represents state and local agencies providing nutrition services,
said: "Normal market forces do not operate in W.I.C.-only stores because
they do little if any business with price-sensitive customers. When
W.I.C.-only stores charge the government more than other grocers, fewer
people can be served."

About four million births occur each year in the United States. W.I.C.
serves nearly two million infants in the first year of life, plus 5.7
million pregnant women, new mothers and children age one to four. Family
income may not exceed 185% of the poverty level. For a family of three, the
maximum income is $28,990 a year.

Michael A. Amiri, chief executive of Nutricion Fundamental, which runs 32
specialty stores in California, said: "We are willing to discuss a mechanism
for cost control, but it must not discriminate against W.I.C.-only stores. I
agree that our prices should be similar to those at grocery stores of
similar size in similar locations."

To attract customers, the specialty stores sometimes offer free
transportation and gifts including baby strollers, bicycles, diapers, pots
and pans, baby clothes and soap powder.

Laurie True, executive director of the California W.I.C. Association, a
nonprofit group representing local programs, said, "W.I.C. stores sometimes
send employees to hospitals to offer gifts, make a sales pitch and sign up
new mothers as customers."

Some lawmakers want to ban such incentives, but store owners are resisting.