By Jesse McKnight, The Saint Consulting Group
Price-gauging vendor abuse in California by convenience stores that charge $7 for a gallon of milk or $25 for a box of cereal has led the federal government to suspend granting licenses for WIC (Women, Infants and Children) subsidized food shopping to grocery stores in California.
As a result, any new grocery store opening in California that wants to sell subsidized food shopping, which can account for up to 10 percent of a store’s grocery revenue, cannot get a WIC license because of the federal moratorium – state and local officials cannot issues licenses for this subsidized shopping.
The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) provides federal grants to states for supplemental foods, health care referrals, and nutrition education for low-income pregnant, breastfeeding, and non-breastfeeding postpartum women, and to infants and children up to age five who are found to be at nutritional risk.
The United States Department of Agriculture put a moratorium on new grocery stores participating in the WIC program in California after numerous complaints of vendor abuse, particularly by convenience stores of eye-watering price-gauging.
The complaints were laid at the door of California’s state Dept. of Health and Human Services, which runs the federally funded WIC subsidies. HHS went without a director for a year, mismanaged the program, over-issued vendor licenses to convenience stores and could not regulate WIC, leading to price-gauging.
Until this situation changes, any new store that sells groceries will have to do so without being able to serve WIC participants. This includes all new groceries, big boxes (such as Target and Walmart) and convenience stores. The money spent by WIC participants accounts for approximately 10 percent of grocery revenue. As result, grocers could lose as much as a $1 million or more each in business to potential WIC participants while the WIC families pay more at expensive smaller convenience stores that sell a much smaller choice of vegetables, fruit and foodstuffs at much higher prices.
In addition, new grocery stores that opened without WIC licenses because of the moratorium will lose $1 million or more a year that would come from WIC business that now goes elsewhere.
The problem is not well publicized, and it impacts in many urban inner city areas or remote communities which have to rely on convenience stores. It prevents new stores applying for WIC licenses and impacts on development plans for new stores. As Bobby Bivens, president of the NAACP Stockton branch, wrote recently in the Stockton Record, “the bad situation has only gotten worse. The 1.45 million Californians enrolled in the program are, in some cases, shut out of stores that provide more affordable options.”
The moratorium proved an embarrassment when First Lady Michelle Obama flew to southern California to open a store in an inner city that had no access to grocery store for 20 years. The store opened, but without WIC license due to the moratorium, and all the WIC business continues to go elsewhere.
California Grocers Association has been complaining to state HHS and the USDA. After moratorium imposed two years ago, they worked with HHS and USDA to create an exemption list. On basis of exemption list, two new stores built and one week before they opened, the stores were told exemptions had been revoked, the exemption list has been scrapped, and the moratorium remains in place.
It’s time for the state to step up and properly manage their program so that the federal moratorium will be lifted. Anti-poverty and inner city groups and big city mayors should pressure Gov. Brown and HHS to expedite the program overhaul. Otherwise it will be another year before an exemption list can be reinstated to allow some grocery stores to get WIC licenses.
Jesse McKnight is executive vice president of The Saint Consulting Group, working in San Ramon, CA, email email@example.com