Bye-bye $15 milk

The federal government hopes retailers charging $10 for cereal in Sacramento will no longer cash in on a special program designed to help feed low-income mothers and children.

In May, the U.S. Department of Agriculture capped the amount vendors can be reimbursed for foods sold through the Special Supplemental Nutrition Program for Women, Infants & Children, more commonly known as WIC.

“Concerns were raised over the deliberate overpricing of certain WIC foods, particularly in smaller stores,” said Ronald Owens, a spokesman for the California Department of Public Health.

Under the WIC program, mothers can buy healthier items such as carrots, milk and whole-grain bread using vouchers. Retailers then submit these redeemed vouchers for reimbursement at a market price—but many retailers have been scamming the system, charging sometimes three times as much, such as $25 for baby formula, and making a profit off of women and children.

Now, smaller retailers and stores that generate 50 percent of their food sales from WIC will only receive lowered amounts in exchange for vouchers. California will also stop adding stores to the program until it develops an effective cost-containment strategy.

The USDA, which funds WIC, has estimated that overpricing has cost the government millions of dollars. But some WIC vendors have countered that the high prices are necessary, because they end up throwing away unsold items.

In Sacramento, there are 87 WIC-authorized stores, seven of which only sell WIC items. Roughly 60,000 Sacramentans receive nutritional support from WIC, according to the CDPH.

Meanwhile, food costs for California’s WIC program have risen more sharply in the past three years than in any other state. In California, prices for WIC items rose by nearly 5 percent, while in other states they declined by 8 percent, according to the USDA.

During this same period, California added 1,700 retailers to the program, more than half of them stores with only one or two cash registers.

USDA Food and Nutrition Service numbers also show that small stores with one or two registers had prices for WIC foods that were up to 50 percent higher than other larger vendors. Additionally, stores with one to five registers charged roughly 10 percent more than larger WIC stores.

“The new reimbursement rates for smaller vendors will close loopholes in WIC that have been exploited by some of these stores to increase their profits,” Zoë Neuberger, senior policy analyst for the Center on Budget and Policy Priorities in Washington, D.C., explained.

In particular, Neuberger pointed to stores that lure customers through incentives such as free strollers or diapers. These stores are also the ones likely to have higher than average prices for WIC foods such as cereal and milk.

Neuberger said that the California WIC program needs to reassess criteria for authorizing stores to be part of the program. Overall, California has nearly 1.5 million WIC participants, and 60 percent of infants born in the state are enrolled.

Still, the federal government remains committed to WIC. “It is vital to the health and nutrition of our nation’s low-income pregnant women, new mothers, infants and young children,” said Kevin Concannon, USDA’s undersecretary for Food, Nutrition and Consumer Services. “[The reimbursement cap] is a critical first step … to ensure that taxpayer dollars are spent wisely.”