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Why New Food Stamp Regulations Are Bad News For Small Businesses

Shopper at a supermarket.Photo by Mandel Ngan—AFP via Getty Images

The U.S. Department of Agriculture is facing opposition from Congress regarding new food stamp regulations.

The USDA wants retailers that participate in the Supplemental Nutrition Assistance Program (SNAP) to provide more varieties of perishable food items. Though the group’s intention is to get those who benefit from SNAP to eat healthier, the Wall Street Journal reports that the proposed rules could damage sales at smaller stores if implemented.

The proposal more than doubles the varieties of perishable products that stores are required to carry, which is an easy transition for large retailers like Walmart that likely already meet the requirements. However, nearly 200,000 smaller stores would have to stock up on an additional 168 items at most or, according to USDA estimates, an average of 54 additional items.

The rules would force places like gas stations and convenience stores to allot more shelf space to fresh produce, which could be costly and unprofitable, especially if they spoil or take up space that could have been dedicated to nonperishable food items.

“Unlike corporate grocery stores, or big-box stores like Walmart that literally have acres of space under one roof, our stores are each around 2,400 square feet in total,” Noon’s Food Stores president Dirk Cooper said in a letter to the USDA. Noon’s has three locations in Montana. Cooper added that the new rules would likely force small businesses out of the SNAP program and send those customers to larger retailers. One convenience store manager, Al Patel, told the Journal that his store tried adding coolers with fresh meat “a long time ago,” but customers still used their food stamps to buy junk food.

In addition to hurting retailers, the rules could also be hard on consumers. If they make certain convenience stores or gas stations ineligible to participate in SNAP, those who rely on food stamps may not have any other options close by.

The proposal has faced bipartisan opposition in Congress, which plans to block the more controversial regulations. Given the cold reception, the USDA will work to revise some of the rules, though it plans to go through with the bulk of them.