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APPENDIX

MATERIAL SUBMITTED BY INDIVIDUALS AND

ORGANIZATIONS

ITEM 1. THRIFTY FOOD PLAN INADEQUACIES; SUBMITTED BY RONALD POLLACK,* DIRECTOR, FOOD RESEARCH AND ACTION CENTER, NEW YORK, N.Y.

USDA'S THRIFTY FOOD PLAN IS INADEQUATE AND SHOULD NOT BE THE BASIS FOR FOOD STAMP COUPON ALLOTMENTS

All three proposals for modifying current food stamp allotments to comply with the Rodway decision are based on the cost of USDA's new thrifty food plan, the cheapest of four food plans developed by the Consumer and Food Economies Institute of the Agriculture Research Service. In other words, USDA claims that food stamp coupon allotments, based on the thrifty food plan, will realistically allow recipients to buy the "nutritionally adequate diet" guaranteed them by the Food Stamp Act. USDA has adopted the recommended dietary allowances (RDA) for basic nutrients most recently set in 1974 by the National Academy of SciencesNational Research Council as the standard for nutritional adequacy. If the thrifty food plan does not provide recipients with a realistic opportunity to purchase the RDA, that is a nutritionally adequate diet, then the use of any of the three proposals is violative of the Food Stamp Act and out of compliance with the Rodway decision. A brief review of the thrifty food plan is necessary, therefore, in order to comment on USDA's proposed new coupon allotments. This review will demonstrate that the thrifty food plan is inadequate and should not be used as the basis for food stamp coupon allotments.

A. HOW USDA DEVELOPED THE THRIFTY FOOD PLAN

USDA developed the thrifty food plan in four basic steps. First, it took data on food purchasing habits of urban households from USDA's 1965-66 nationwide food consumption survey, updating the prices to 1974 levels. For purposes of studying the actual food consumption of certain low-income households, USDA isolated a subsample of urban households that were in the 10th through 25th percentiles of food expenditures per person per week. This subsample group, which had a median income of $5,190 a year after taxes, and an average household size of 3.79 persons, was spending $5 to $7 per person per week for food. As might be suspected, the diets of this subsample of urban households did not satisfy the RDA, that is, these households were not receiving nutritionally adequate diets. Consequently, as a second step in developing the thrifty food plan, USDA constructed hypothetical diets that would satisfy the RDA if households in the subsample were to consume a mixture of foods different than the mixture which they actually consumed. Because RDA depend on a person's age and sex, the content of these hypothetical diets had to vary with the age-sex composition of subsample households.

In seeking diets upon which food stamp allotments would be based, USDA was working with a self-imposed cost restriction. The final food plan could not cost more than USDA's economy food plan. The economy food plan is USDA's cheapest food plan and is presently used as the basis for food stamp coupon allotments. The economy food plan is equal to 80 percent of the cost of USDA's next to lowest food plan, the low cost food plan. (Other USDA food plans include the moderate cost food plan and the liberal food plan.) Thus, as a third step in

*See statement, p. 5.

developing the thrifty food plan, USDA eliminated hypothetical diets that cost more than the economy food plan and selected only hypothetical diets that would cost no more than the average food expenditure of households at the 10th percentile of food costs per person per week. Thus USDA developed a thrifty food plan which would cost a family of four $168.30 a month (in July, 1975)-the economy food plan for the same family would cost $168.50 per month. It is important to remember that Congress and the Rodway court did not impose the cost restriction on USDA that led to establishing cheaper hypothetical diets. This restriction was self-imposed.

The fourth and final step in developing the thrifty food plan was to establish the current cost of the plan for households of different size. Based on the observation that costs per unit of food consumed declines as household size increases-a process called economies of scale the total cost of the thrifty food plan for households of each sex-age composition was revised downward for households of 5 or more persons, and revised upwards for households with less than four persons as follows: If the household contains only 1 person, a 20-percent increase is added to the cost of the thrifty food plan; a 10-percent cost increase is added for a two-person household; 5 percent for a three-person household; 5 percent of the cost of the thrifty food plan is subtracted for five- and six-person households, and 10 percent is subtracted for households containing seven or more persons.

B. THE FLAWS IN THE THRIFTY FOOD PLAN

There are many flaws in USDA's thrifty food plan. Some are obvious even from the brief description of the plan provided above, and others become apparent upon closer study of the plan and USDA's reports on the plan. These flaws make it imperative that the thrifty food plan not be adapted by USDA as the basis for establishing food stamp coupon allotments. Listed below are some of the problems with the plan. Some of these problems are difficult to understand, however, it is important to be acquainted with these issues if you are going to file comments with USDA:

1. USDA's consumption data does not reflect poor people's actual incomes

USDA took its initial data in establishing the thrifty food plan from a subsample of urban households in its household consumption survey of 1965-66. Those households had a median annual income of $5,190 after taxes. Households with that kind of annual income in 1965-66 could hardly be considered poor. Indeed, most food stamp households today have an annual income below the median income of that subsample. Consequently, the food consumption patterns of the subsample used by USDA could not have been reflective of the food consumption patterns of poor people, that is, food stamp recipients.

2. USDA's consumption data is outdated

Even if the subsample of the household consumption survey of 1965-66 contained poor households, that survey is almost 10 years old. Because there have been drastic changes in the relative prices of different food items since 1965-66, it is obvious that the food consumption pattern of today's low-income households are not similar to those observed for a subsample of low-income households 10 years ago. Commonsense and economic theory require a conclusion that households will now consume less food where prices have substantially increased. Thus, even small hypothetical changes from the 1965-66 actual consumption patterns incorporated in the thrifty food plan may imply large changes from the actual consumption patterns of the present. Finally, the use of the dated 1965–66 household food consumption survey was unnecessary. Far more current data might have been utilized and was available to USDA, such as: "The Low Income Food Consump tion Survey, Spring, 1975" conducted by the National Consumers Congress; the "Health and Nutrition Examination Survey (H.A.N.E.S.) (1971)" conducted by the National Center for Health Statistics, U.S. Department of Health, Education and Welfare (HEW); the "Ten-State Nutrition Survey (1971)," conducted by the Health Services and Mental Health Administration of the Center for Disease Control, HEW: the paper presented by Sylvia Lane, an agricultural economist at the University of California at Davis, before the American Agricultural Economics Association Annual Meeting at College Station, Texas, in August, 1974, entitled "Food Aid Program Effects on Food Expenditures and Levels of Nutritional Achievement of Low Income Households."

3. USDA's methodology for constructing the thrifty food plan is three-times removed from reality

As noted above, the hypothetical diets built into the thrifty food plan are based on the foods purchased by households whose expenditures for food fell in the 10th-25th percentile, adjusted to constitute a nutritionally adequate diet. But the diets for each sex-age category in the plan are based on the amounts of particular groups of foods consumed by people in the sex-age categories of the entire sample, rather than people just in the 10th-25th percentile. USDA, therefore, estimated the diets for each sex-age category in the thrifty food plan, though it should have used data showing the amounts of foods consumed by people of different sex and age within the 10th-25th percentile. Finally, USDA substituted for the foods they assumed people were eating even cheaper foods in order to lower the cost of the thrifty food plan. The thrifty food plan therefore "costs out" at the 10th percentile, it is not nutritionally adequate.

The hypothetical diets that are built into the thrifty food plan are thus thrice removed from reality. First, by rearranging the foods purchased by households in the subsample; second, by using estimates for the amounts of food eaten by people of different sex and age; and third, by selecting the least expensive foods within each food category. It is thus clear that the amounts and combinations of foods used in the thrifty food plan have little relationship to the real world, and may be highly inappropriate for the low-income households that use the food stamp program-especially the very poorest households, whose food expenditures fall below the 10th percentile.

4. The economies of scale in the thrifty food plan fail to consider important factors relevant to many needy food stamp recipients

When the total cost of the thrifty food plan for age-sex groups was adjusted for economies of scale according to household size, those adjustments were based on a study of urban and rural nonfarm households. Because the availability of foods, food prices, and even food packaging, probably differs between urban and rural areas, and since these factors can be expected to influence the size of consumption economies, adjustments based on data for both urban and rural households may be inappropriate. In addition, the data for these adjustments was not restricted to the range of households in the 10th through 25th percentile of food costs. Finally, economies of scale considerations presume that the poor households have enough refrigeration space, accessible food stores, and available funds for buying in bulk. These assumptions should not have been made.

5. The thrifty food plan fails to account for regional and local price differentials Nothing about the thrifty food plan takes account of divergencies in current food price levels among and within regions of the United States, a consideration recognized as significant by the court of appeals in Rodway. Thus, food stamp recipients living in localities where food is expensive relative to the price level for the entire Nation would certainly have to pay more for a diet like the thrifty food plan than the estimated cost of that plan. For example, a preliminary study by a home economist reveals that if thrifty food plan purchases cost $100 nationwide, those same purchases would cost $106.80 in New York City, $104 in Atlanta, and $102.10 in Philadelphia. Regional differences in food price levels are available from the Bureau of Labor Statistics; USDA could have used that data to compute regionally-based food stamp allotments. 6. The thrifty food plan assumes that poor people have the greatest ability to avoid waste and spoilage of foods

The thrifty food plan provides for a 5-percent waste factor, that is, it assumes that 5 percent of the edible food purchased will not be consumed. This is an unrealistic level. The cheaper the food the more inedible material it will contain. Cheaper cuts of meat, spoiled fruit, vegetables, and other "bargain foods" result in more waste and spoilage. USDA has constructed a thrifty food plan based on purchasing cheap foods and at the same time has assumed that poor people will have the ability to contain the amount of spoilage to a smaller percentage than USDA allows for its more expensive food plans.

7. Some of the food categories in the thrifty food plan are questionable

The thrifty food plan places certain foods in what may be the wrong food categories. For example, the plan puts bacon and salt pork in the meat category, but these foods are high in fat or salt content so that their place in the meat category is questionable.

8. RDA assumes good health and average activities

The thrifty food plan does not take into consideration that low-income people may have higher RDA needs than other economic groups, since low-income people are often in bad health or under unusual stress. For example, the "Ten-State Nutrition Survey (1971)" conducted by HEW revealed that poor people have 2 times more chronic diseases and infectious diseases than the general population. Also, low-income people tend to be more active than the general population, working at manual labor jobs, and doing more physical labor at home because of a lack of labor-saving appliances such as washing machines, dishwashers, vacuum cleaners, etc.

9. Essential nutrients are not provided sufficiently by the thrifty food plan

The thrifty food plan is iron deficient for women of child-bearing age, for teenage girls and for young children. This deficiency results from USDA's assumption that breads and flours would contain the higher iron enrichment level proposed by the Food and Drug Administration in 1973. These higher levels have not been adapted. USDA has also assumed that this iron deficiency could be repaired through the purchase of iron-fortified cereals. However, iron-fortified cereals are the most expensive cereals. Once again, USDA has constructed a food plan inconsistently assuming that poor people will choose cheaper foods in general, but will purchase the more expensive iron-fortified cereals. Finally, an additional problem with the plan's actual nutrient content is the possibility that it may not meet RDA requirements for zinc and folic acid, and the fact that it provides only 80 percent of the RDA for magnesium and vitamin B6.

10. The thrifty food plan costs the same as the economy food plan and is therefore unrealistically low

The cost of the economy food plan for a family of four in July, 1975 was $168.50 per month. The cost of the thrifty food plan for that same family was $168.30. According to USDA's "1965-66 Household Consumption Survey," less than 10 percent of the persons eating at the cost of the economy food plan obtained the RDA, and less than 50 percent obtained even two-thirds of the RDA. It is inconceivable that persons eating at the cost of the thrifty food plan, therefore, could fare any better since that plan cost the same as the economy food plan.

ITEM 2. LETTER AND ENCLOSURE FROM NEAL S. DUDOVITZ, STAFF ATTORNEY, NATIONAL SENIOR CITIZENS LAW CENTER, LOS

ANGELES, CALIF.; TO SENATOR FRANK CHURCH, DATED OCTO. BER 30, 1975

DEAR SENATOR CHURCH: Enclosed for your reference is a copy of the National Senior Citizens Law Center comments on the food stamp proposals for new maximum monthly allowable income standards and basis of coupon issuance as published in the Federal Register, Vol. 40, No. 183, Friday, September 19, 1975. Thank you for your consideration of the matters raised herein. Sincerely,

NEAL S. DUDOVITZ, Staff Attorney.

[Enclosure.]

NATIONAL SENIOR CITIZENS LAW CENTER,
Los Angeles, Calif., October 30, 1975.

Re Comments on food stamp program proposals for new maximum monthly allowable income standards and basis of coupon issuance as published in the Federal Register, Vol. 40, No. 183, Friday, September 19, 1975.

JACK O. NICHOLS,

Acting Director, Food Stamp Division, Food and Nutrition Service, U.S. Depart ment of Agriculture, Washington, D.C.

DEAR MR. NICHOLS: The National Senior Citizens Law Center is a federally funded legal services program concerned with the problems of elderly poor per sons. We provide research, litigative, technical and legislative assistance to legal services programs across the country serving the elderly poor. Since adequate nutrition is of great importance to our clients we are concerned with the operation of various federal food assistance programs, including the food stamp pro gram, and how those programs affect the nutrition of senior citizens.

We have read the USDA's proposals on altering the food stamp program and wish to present to you our comments and criticisms of your suggested changes. First, we would like to commend you for your attempt to abide by the court's decision in Rodway v. USDA, 514 F. 2d 809 (D.C. Cir. 1975), in publishing these proposals for comment. Further, your providing alternative plans is also a step in the right direction and gives interested persons and groups an opportunity to make more constructive criticisms of your proposals. We hope your initial attempt to follow the proper administrative procedures as outlined in Rodway will continue and that you will fully consider both our comments and those of other interested persons when making your final decision.

Despite these surface attempts to follow the necessary procedures, we are distressed by the substance of the three proposals offered by USDA. In our judgment none of these suggestions will provide our clients, the nation's senior citizens, with the nutritionally adequate diet required by law in the food stamp program.

PROPOSALS 1 AND 2 RESULT IN LOST BENEFITS

Perhaps the most harmful effects on senior citizens come from the use of USDA's new thrifty food plan. Although the Rodway decision clearly indicates that USDA must consider a number of factors in determining appropriate food stamp allotment that will provide a recipient with a nutritionally adequate diet, you have failed to give consideration to facts other than age and sex. With respect to senior citizens, this failure is particularly devastating and results in their losing extensive food stamp benefits under your first and second proposals.

We strongly urge USDA to consider other statistically proven facts about our nation's elderly in determining their nutritional needs and resulting food stamp allotment. We suggest the following are some of the more obvious factors that must be considered.

1. Mobility. It is widely known that lack of mobility is one of the most severe handicaps of senior citizens. Due to their immobility many seniors are unable to purchase food at the lowest available price and in fact are forced to buy food at the much higher priced small neighborhood stores. Thus, some of the assumptions inherent in the thrifty food plan with regard to a recipient's ability to "shop around" for the lowest priced foods cannot be applied to senior citizens. 2. Physical illness.-Recent statistics show that over 75 percent of our elderly suffer from some kind of chronic health condition. Many of these elderly require special diets to combat their illness. Special diets may require the purchase of unique foods, higher quality foods, or greater numbers of some nutrients than are provided in the thrifty food plan. In general, as all persons who have been on highly regulated diets know, it costs more money to eat the food on special diets. The elderly also are forced to pay a greater proportion of their income for medical costs; thus, having less money available for food than other persons. In fiscal year 1974, the per capita health care costs for older persons was 3.7 times higher than that of persons under 65.

3. Shopping abilities.-Seniors will also have difficulty in purchasing the best foods for the dollar, as required under the thrifty food plan, because of the smaller quantities they purchase as well as their lack of education. It is a clearly recognized rule in our economy that smaller quantities of food usually cost more per serving than larger quantities. Therefore, seniors, because large numbers live alone (more than one-third of all elderly women live alone) and they do not cook as much as other persons, will pay more money for food than other adults. In addition, the average senior citizen's lack of education clearly hampers his ability to "shop around" and get the best buy available. The latest statistics show that 50 percent of all older Americans have not completed 8 years of elementary education.

These factors as well as variances for region of the country and urban/rural dichotomy must be considered in determining the proper food stamp allotment. We realize that USDA cannot be expected to produce an individualized allotment plan for every recipient, but it can take into consideration clearly recognized statistical data which relate to the nutrition of senior citizens. We suggest that USDA can compensate seniors for the problems noted above by granting adequate extra bonus stamps for each senior citizen every month. Such a program would clearly go a long way towards alleviating the inequities of the thrifty food plan, if USDA insists upon using the plan as a basis for the food stamp allotment.

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