On Saturday morning, Ludy Arnold arrived at the H Street farmers market in Northeast Washington just minutes after it opened. Arnold is 70 and lives in nearby public housing for seniors. She comes every week, and has for the past four years, to buy fruit, greens and summer tomatoes with benefits from the Supplemental Nutrition Assistance Program, formerly known as food stamps. That allowance is boosted by matching dollars, provided by a nonprofit group, so that Arnold has $20 to spend each week. “I only have my Social Security,” she said. “So this is how I get my food. I depend on it.”
But technical difficulties may put an end to Arnold’s weekly shopping here. The Novo Dia Group, an Austin-based company that processes some 40 percent of SNAP transactions at farmers markets nationwide, said it will end its service by July 31, leaving about 1,700 of the more than 7,000 markets that offer SNAP (including the H Street market) with no way to serve low-income customers.
The shutdown also will compromise a range of incentive programs that have emerged over the past decade to improve low-income shoppers’ access to healthful food. Nonprofit groups, such as Wholesome Wave and the Fair Food Network, and a $100 million U.S. Department of Agriculture program, the Food Insecurity Nutrition Incentive, match or supplement SNAP benefits at farmers markets.
“It’s devastating,” said Michel Nischan, CEO of Wholesome Wave, which offers matching dollars for SNAP spending at about 1,200 farmers markets. “There are markets in areas considered food deserts that are the only places to buy fresh food, and they only exist because patrons can use SNAP or incentives.”
Electronic Benefits Transfer cards were introduced in 1997 to make it easier to use SNAP. At grocery stores, recipients swipe their cards, just like a credit card, and information is sent over secure data lines directly to state SNAP processing agencies. But farmers markets must offer mobile transactions; there are no landlines in a parking lot or in a field.
To help solve the problem, the USDA in 2012 set up the Free SNAP Wireless Equipment Program to provide mobile devices to farmers markets. Since then, more than 2,500 markets have received card readers, tablets or smartphones. But markets still needed software to process the federal benefits. That’s where Novo Dia and others came in. With their various platforms in place, SNAP benefits redeemed at farmers markets increased by 35 percent, to $22.4 million in 2017 from $16.5 million in 2012, meaning more fresh produce for low-income people in both rural areas and cities.
In the divisive debate over food assistance, the success of SNAP at farmers markets has been one of the few issues that Washington lawmakers agree on. House Republicans recently voted to include stricter work requirements for SNAP recipients in their version of the farm bill making its way through Capitol Hill. (The Senate has not followed suit.) The Trump administration has floated a proposal to partially replace SNAP with pre-packed boxes of canned goods, though so far this “Harvest Box” has gotten nowhere.
Channeling SNAP dollars to farmers markets, however, appeals to progressives, who support promoting healthier diets, and conservatives, who prefer market-based incentives that benefit farmers and encourage customers’ food choices.
In its first year, the USDA’s FINI program generated almost $8 million in SNAP and incentive purchases of fruits and vegetables — more than 16 million additional servings of fresh produce for SNAP households. Its beneficiaries also reported lower levels of food insecurity. Indeed, FINI has proved so popular that both the House and Senate versions of the farm bill more than double its funding.
But without Novo Dia, many SNAP recipients will no longer be able to redeem their benefits at farmers markets. Markets can’t simply choose a new app, like Lyft instead of Uber. Novo Dia’s Mobile Market Plus software is the only one that works on Apple products and that also processes SNAP incentives. (Markets that do not use Mobile Market Plus must use two separate software systems.)
Josh Wiles, Novo Dia’s founder and president, cited several reasons for the company’s shutdown. The marketplace for SNAP transactions is highly regulated and requires extra (read: expensive) security measures beyond what is required for credit cards or debit cards. The profits are small because markets and individual farmers process micro-payments, often as little as a few dollars.
The “tipping point,” though, Wiles said, was the decision by the new administrator of the SNAP equipment program to work with electronic-payment giant First Data, rather than Novo Dia and its Mobile Market app.
Without continuing to gain new customers and economies of scale, Wiles said, Novo Dia could not remain financially viable: “Once it became clear that we were not going to be part of it, we knew we would not be able to scale in a manner that allowed us to be profitable or even sustainable.”
The takeover of the new equipment program by Financial Transaction Management of Reston, Va., has caused other headaches, most significant a six-month delay in getting equipment to markets. In total, about 360 markets are on a USDA waitlist for SNAP processing equipment.
Without free equipment, processing SNAP at markets is price prohibitive, according to many market managers across the country. In Rhode Island, several markets on the waitlist have tried, and failed, to raise money to cover the costs of equipment and processing fees, and have decided not to accept SNAP, according to Farm Fresh Rhode Island. Nick Stavely, general operations manager at Community Foodworks in the District, estimates that participation in the program has saved his nonprofit organization between $12,000 and $15,000 over the past three years.
FTM, a newly formed company that was awarded the USDA contract two months ago, has said it will begin accepting applications for new equipment on July 14. But it will take at least several weeks for applications to be approved and the equipment to be distributed. Some markets may be up and running by August. But that is more than halfway through the market season in most areas of the United States.
In an email interview, FTM CEO Angela Sparrow said, “I am aware of the current deficiencies in the farmers market merchant world and fully intend to work with my partners with a maniacal focus on executing in a manner that will quickly resolve this long overdue problem.”
A USDA spokesman said the agency has been alerted of Novo Dia’s pending shutdown and is “analyzing the impact this decision will have on our program participants as well as farmers and producers.”
But the current system may only get more complicated. The USDA’s Women, Infants and Children Program, which provides about $6 billion in food assistance annually to new mothers and children up to the age of 5, is mandated to make its transition to electronic processing by 2020, and it too will need a mobile solution for farmers markets.
“The loss of the Novo Dia’s platform is a huge step back for our industry,” said Ben Feldman, policy director for the Farmers Market Coalition. “Farmers markets have been at the forefront of innovative efforts to support healthy food access among low-income shoppers while increasing farmer prosperity. This situation highlights the need for a long term, reliable, affordable solution for the redemption of SNAP and other forms of electronic payments at farmers markets.”
Or as shopper Ludy Arnold put it: “Please fix this. Some people can afford food. But we need this.”
This piece was produced in collaboration with the Food & Environment Reporting Network, a nonprofit journalism organization.