Food stamp customers buy more at farmers' markets when point-of-sale system is available

Record numbers of Americans are receiving Supplemental Nutrition Assistance Program (SNAP) benefits, as food stamps are now known, and many SNAP participants live in neighborhoods with little or no access to healthy food.

A study conducted at the Clark Park Farmers' Market, in Philadelphia, PA, has found that making it easier for vendors to collect SNAP payments with electronic point-of-sale systems increased fresh produce sales to SNAP recipients by 38%. However, the costs associated with such systems may put them out of reach for farmers. The study, by researchers from the Robert Wood Johnson Foundation Health and Society Scholars Program and The Food Trust, is published online today in Journal of the Academy of Nutrition and Dietetics.

Co-investigator Allison E. Karpyn, Director of Research and Evaluation at The Food Trust, says, “There has been considerable policy interest recently in increasing the redemption of food benefits at farmers' markets. From our experiences managing dozens of farmers' markets here in Philadelphia, we knew that the way SNAP transactions are processed at markets might impact sales. So we set out to learn if making it easier to process these transactions would increase fresh produce and other purchases by SNAP participants.”

Typically, the way that SNAP benefits are processed at farmers' markets is cumbersome. SNAP participants access their benefits through an Electronic Benefits Transfer (EBT) card. To accept them, vendors must rent wireless point-of-sale (POS) terminals, pay for wireless service, and cover transaction fees. Because of the associated costs, many market managers operate a single wireless POS terminal for the entire market. SNAP beneficiaries may buy a token that they can exchange for produce, but they can't receive change. Alternatively, customers can make their selections with a vendor, get a paper receipt for the total amount of the purchase, and present the receipt to the central terminal, where the customer's EBT card is swiped for the exact amount of purchase. This must be repeated for each vendor the customer wants to visit. In contrast, traditional retailers use free POS systems provided by USDA Food and Nutrition Services (FNS) and transactions are carried by a land line.

In 2008, The Food Trust received a grant from the USDA's Farmers' Market Promotion Program to provide each vendor at the Clark Park Farmers' Market with a wireless POS terminal for EBT and credit/debit card transactions. The grant covered all associated wireless charges, transaction fees, and processing fees during a pilot program which ran from June 2008 through February 2009. After the pilot period, the market returned to a single market-operated terminal and receipt system.

Researchers analyzed sales data at the market for four years, beginning 17 months before the pilot project and ending 22 months afterwards. “During the time period for our study, the economic downturn really got underway, and SNAP participation and benefits increased enormously in Philadelphia. We had to control for the amount of SNAP benefits issued in the city each month in our evaluation models,” explains co-investigator Alison M. Buttenheim, Assistant Professor at the University of Pennsylvania School of Nursing and a former Robert Wood Johnson Foundation Health & Society scholar.

Their findings were striking. There was a 38% increase in SNAP/EBT sales during the months with multiple vendor-operated terminals. Dr. Karpyn notes, “There's both good news and bad news in our results. We were able to substantially increase the purchase of fresh foods by SNAP participants with a very simple intervention. The bad news is that after the pilot project ended, sales to SNAP participants declined.”

“Vendors told us, and we confirmed with a cost benefit analysis, that they would not be able to break even on sales after paying the associated costs,” the authors say. “Our study highlights the need for an equitable approach to subsidizing EBT fees at farmers' markets, given that EBT technology and processing are currently provided free of charge of charge to supermarkets and other brick-and-mortar FNS retailers.”

SNAP participation is at an all-time high, and there is growing concern about the diet quality and food choices of people receiving these benefits. “Farmers' markets are seen as a powerful way to support both local farmers and food consumers. The farm bill reauthorization that Congress will undertake this year will drive agricultural and food policy for the next four years. It's important that, as part of that process, we understand how to make farmers' markets as effective as possible in promoting healthy eating for low-income Americans,” concludes Dr. Karpyn.

In an accompanying podcast Dr. Buttenheim and Dr. Karpyn discuss the impact of wireless point-of-sale terminals at farmers' markets on sales to SNAP beneficiaries and the policy implications of their research. The podcast is available at http://andjrnl.org/content/podcast.