The Company Store Is Back: Ripping Off A Govt Poverty Program

By ROBERT PEAR

Published: June 6, 2004, NY Times

WASHINGTON, June 5 — 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 percent 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 10 years ago when I was on W.I.C.," she said.

[LOOPHOLE ALERT!]

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 10 percent to 20 percent higher than those at supermarkets and other retail grocers.

(emphasis mine)

Now that's the true American entrepreneurial spirit in the 21st century!