Technical Difficulties May Jeopardize Food Stamps At Farmers Markets

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While using food stamps to purchase vegetables at a farmers market may seem like a simple exchange, it depends on complex government contracting requirements and increasingly sophisticated technology.

A change this year in federal contracts has left some farmers market operators and advocates nervous. A company that has long provided the technology to 1,700 farmers markets across the country that accept benefits from the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, says it is pulling out of the business. And that could jeopardize recipients' access to fresh food.

Earlier this year, federal officials picked a new contractor to provide equipment to help expand the number of markets that handle SNAP transactions. That contractor, when choosing the companies it would work with, did not include the Novo Dia Group, whose Mobil Market+ app is popular with many markets. After that, Novo Dia announced it would no longer provide its service, even to existing clients, after July of this year.

The announcement, which came at the height of the market season, took many by surprise and set off an urgent scramble to avoid a disruption in service. The National Association of Farmers' Market Nutrition Programs stepped in to fund the processing platform's operations through August, and New York Gov. Andrew Cuomo later announced a short-term agreement with the company to provide service nationally through the end of February.

What happens next is unclear.

The change was part of a competitive contracting process, according to the U.S. Department of Agriculture, which both promotes American farmers markets and oversees the federal SNAP program. Every few years, USDA's Food and Nutrition Service selects a firm to manage the wireless processing equipment program for farmers markets and farmers who want to begin accepting SNAP benefits. In March of this year, it selected Financial Transaction Management of Reston, Va.

The Farmers Market Coalition, the previous contractor, had offered equipment to markets through three providers, including Novo Dia, an early and leading provider of SNAP processing technology. Novo Dia first received USDA approval to process SNAP benefits in 2012.

The new contractor opted not to work with Novo Dia. When choosing equipment options, Financial Transaction Management says it focused on cost effectiveness and compliance with standards that protect farmers markets from liability in the event of a data breach, according to CEO Angela Sparrow by email.

The decision seemed to catch many by surprise.

"It did throw Novo Dia into a tailspin," says Diane Eggert, executive director of the Farmers Market Federation of New York, who helped put the stopgap funding for the company in place and is seeking a long-term solution.

Novo Dia didn't respond to a request for comment, but told The Food and Environment Reporting Network this summer that without new customers coming from the federal contract, it couldn't remain financially viable.

For some farmers, SNAP customers are an important part of their market business, and they don't want to turn customers away.

"I think it would be noticed if it went away," says Anita Amsler, whose family sells produce and eggs from their Oldhome Farm at the Rochester Public Market in Rochester, N.Y., year-round. She says SNAP customers make up a "good-sized portion" of her business.

Meanwhile, some advocates see the current situation as an opportunity to improve the long-term prospects for the acceptance of SNAP and other nutrition benefits at farmers' markets.

"A crisis is a terrible thing to waste," says David Sandman, president and CEO of the New York State Health Foundation, who has written about the recent SNAP processing problems. He says his organization and others are interested in options for continuing to make the Nova Dia app available nationally through a public-private partnership. That way, markets and states that provide support won't have to pay for new equipment and technology and access to fresh foods will be less likely to be interrupted.

Improving access to fresh food has long been a goal of the Food and Nutrition Service. It champions farmers markets as an important way to provide people with nutritious food while also supporting farmers. And SNAP has boosted sales at the markets. SNAP benefit redemptions by farmers and markets grew by more than a third from 2012 to 2017, to a total of $22.4 million, according to USDA.

The markets are growing popular with SNAP recipients because they are "important touchstones and places for people to access their food the way other consumers do," says Ellen Vollinger, legal director at the Food Research & Action Center, an advocacy group that works to reduce hunger among the poor. She is concerned a change will jeopardize their access.

Novo Dia's Mobile Market+ app works with a smartphone to enable farmers markets to process SNAP benefits. It enhances markets' ability to track sales and receive technology updates, Eggert says. And it's compatible with Apple and Android phones.

The equipment provided by the new contractor is a standard wireless point-of-sale device that uses older, outdated technology, critics say — not a mobile phone.

For its part, Financial Transaction Management is moving forward. It is processing applications from farmers markets for its equipment. As of Sept. 24, 140 applications were in the review-and-approval process, and 46 pieces of equipment had shipped, according to USDA officials.

USDA's Food and Nutrition Service says it is interested in modernizing its approach. It wants to employ a "bring your own device" model for the market operators who want to begin processing SNAP in which "markets and farmers would use a smartphone and FNS would facilitate provision of [an] app," officials said. To that end, the USDA is testing a mobile application and encryption device that could be used with a smartphone to accept SNAP benefits.

The new app, which will require a separate PIN-encryption device, is "not as streamlined" as the Novo Dia app, according to USDA officials. Still, "this is an option that could provide additional flexibility for farmers and markets while also reducing cost to the federal government."

That option may be available by year's end.

But the current upheaval has sown uncertainty among many farmers markets about their ability to handle SNAP transactions next year.

Last year, the Rochester Public Market alone processed more than $800,000 in SNAP benefits and $300,000 in additional incentives for SNAP recipients, says Margaret O'Neill, program director for Friends of the Rochester Public Market, a nonprofit that runs the market's SNAP program. She says she has tried to reassure her vendors and customers that a solution will be found: "It's a huge market for us."

Kaiser Health News (KHN) is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation that is not affiliated with Kaiser Permanente.