The SNAP Crisis at Farmers Markets Across the Country

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Edwin Remsberg / VWPics via AP Images

It's a sunny Friday afternoon in the North Side neighborhood of Pittsburgh, where the North Side farmers market sets up each week. As shoppers mill about to music that's wafting over from a nearby festival, a long line has formed at the tent operated by Just Harvest, a local anti-hunger nonprofit. Surrounded by a couple dozen vendors selling fresh produce, baked goods, cheeses, jams, and jellies, Just Harvest staff assist recipients of the Supplemental Nutrition Assistance Program (SNAP, previously called food stamps) so that they'll be able to use their SNAP benefits to buy any fresh food item at the market.

But farmers' business at the North Side market and other such markets across Pittsburgh—and the thousands of SNAP participants that buy from them—are currently threatened by an Agriculture Department contracting decision. Because of a change in government contracting, a tech company whose software is used to process more than a third of SNAP benefit transactions at farmers markets across the country is going out of business. As reported in The Washington Post last week, Novo Dia Group’s service is slated to end on July 31, after which more than 1,700 markets, of the more than 7,000 that accept SNAP, won’t be able to process SNAP benefits with their existing equipment.

“The timing couldn't be worse,” says Averyl Hall, who coordinates the Fresh Access Program at Just Harvest, which allows farmers to accept SNAP EBT (electronic benefit transfers) at markets. It's currently the height of the summer produce season, when farmers markets are busiest.

“We're talking about tens of thousands of farmers and probably hundreds of thousands of SNAP shoppers who won't be able to sell or buy their food,” explains Ben Feldman, policy director at the Farmers Market Coalition, a nonprofit group that advocates for farmers markets and farmers. “It's literally food on the table for SNAP shoppers, and for farmers, it's food on the table insomuch as it's how they earn their living.”

According to Feldman, the situation is “the biggest SNAP crisis at farmers markets since food stamps converted to the electronic form of EBT.”

The software problem, esoteric in its technical complexity, will directly affect the lives of farmers and low-income people across the country. “There's been years of great work to make sure that farmers markets are a place where SNAP shoppers can shop,” says Feldman. That work has raised public awareness about using SNAP at markets in the first place, but has also helped introduce incentive programs that can increase the value of SNAP dollars at markets. These advances have encouraged families to use SNAP at farmers markets, increasing the amount of fresh produce they can buy. And the use of SNAP at markets is now so established that many small farmers today rely on revenue from customers who use SNAP benefits.

The federal SNAP EBT equipment program provides funding for farmers and farmers markets to access wireless equipment and software to process SNAP benefits. Instead of running the program itself, the Department of Agriculture's Food and Nutrition Service contracts the job out to the organization with the winning bid.

Since 2015, the contractor that's run this program has been the Farmers Market Coalition itself. The coalition worked with tech vendors to supply the equipment and software necessary to process SNAP benefits. One of the vendors was Novo Dia, with its MarketLink system and Mobile Market+ software that processes transactions using SNAP benefits. Novo Dia's software is wireless, a must for farmers markets that often operate in empty parking lots or green spaces. Mobile Market+ is also an application, and is the only processing software that works on Apple devices.

But the federal government's contract ended with the coalition last November—which means the equipment program ended last November. And instead of working with the coalition once again, this spring, the Agriculture Department chose to contract with Financial Transaction Management (FTM), a newly-formed small business in Reston, Virginia, that, according to its GovTribe listing, consists of precisely one—that’s one—person. Because there’s a new contractor, and perhaps because that contractor is just one person, the program has taken time to get started again. It was not until this week that FTM began accepting applications from farmers and markets for the equipment to use at markets. This timeline, set by the government, suggests that such a gap—in the middle of the main market season—in service was foreseeable.

As the new contractor, FTM has discretion to choose the tech companies—and thus the software—that it will work with. “Our assumption was that we would be able to, for lack of a better word, bid on [the government contract], or at least be contacted [about our services],” Josh Wiles, president of Novo Dia, told Modern Farmer. They were not; FTM did not choose Novo Dia as one of its vendors.

As a result, Novo Dia says that they can no longer operate its software without suffering losses, so the company is going out of business. Novo Dia will not be completing services that it was contracted to do, and the farmers who were relying on this service will not be able to process SNAP benefits with Novo Dia’s software beginning July 31. Some markets even bought Novo Dia software licenses just a few months ago, licenses that weren’t set to expire until mid-2019.

According to the Post, it’s likely to take several weeks to set markets up with new software from the vendors that FTM has authorized. There’s a waiting list of hundreds of markets that are awaiting the software. But worse yet, those are markets that haven't received equipment from a previous contract—the website for the new program states that eligible markets "have not previously received EBT equipment through this program"—meaning that markets affected by the Novo Dia shutdown, since they received their equipment from the previous program contract, can't receive new equipment funded by the federal program.

Last month, the Food and Nutrition Service released a document for their SNAP at Farmers Markets Workgroup with the apparent intent of providing pre-emptive excuses for the looming software dearth. “The SNAP EBT Equipment Program has experienced service interruptions in the past, mostly due to funding lapses,” the document pointed out. While it’s true that funding lapses have occurred (due in part to delays in congressional appropriations), the current situation threatens a gap in service of a vastly more severe magnitude. And it seems markets that were using Novo Dia under the previous contract won't be served at all.

Pittsburgh's markets are hardly the only ones reliant on Novo Dia's software. Numerous markets in New York City use Novo Dia, as do the majority of markets in Massachusetts, Maryland, and Washington, D.C. So do several markets in Michigan, Wisconsin, North Carolina, and many more across the nation.

If the markets that have depended on Novo Dia's system want to keep accepting SNAP, many of them will need to pay for new, expensive equipment themselves. They have just two weeks to do so, before Novo Dia service ends. Hall at Just Harvest says they are researching other equipment options, but that the nonprofit will likely bear the brunt of the unforeseen equipment expense themselves. Just Harvest has already been fielding questions from SNAP recipients who have heard the unsettling news.

Some areas will be hurt even worse by the loss of Novo Dia's technology. Many markets across the country operate incentive programs for SNAP recipients, where the markets double the amount of benefits that a SNAP recipient can use at the market, with state and federal dollars covering the cost. In Pittsburgh, this process is pretty low-tech—Just Harvest hands out paper coupons to SNAP recipients that farmers accept as payment, and the farmers are then reimbursed. But in markets across New York City and Massachusetts, these programs operate through the Novo Dia application—and can't currently operate without it.

Not surprisingly, many people in anti-hunger organizations have wondered why the Agriculture Department decided to contract with a new company, with a staff of one, to do work that the Farmers Market Coalition had successfully been doing for years. According to GovTribe, FTM formed only in October of last year, one month before the Food and Nutrition Service started accepting proposals for the new contract. The company’s address is listed as the location of Intelligent Office in Reston, which rents out shared office space and provides “virtual office services.” Federal officials accepted FTM’s bid in March of this year.

Responding to the flurry of news accounts of the impending SNAP-farmers market disconnect, the Agriculture Department released a statement on July 14 noting that the decision to contract with FTM complied with federal contracting law, and that the company’s proposal was chosen because it was “both technically acceptable and the best value.” As listed on GovTribe, FTM’s winning bid was for $1.3 million.

The Food and Nutrition Service also had a new stipulation in its official “request for proposals” (its bid stipulation); nonprofits were no longer eligible to apply. Instead, the contract would only be open to businesses that meet the federal definition of a small business. (The nonprofit Farmers Market Coalition applied with one of its small business partners, Farmspread.) The new contractor had no trouble qualifying as a small business.

The federal government has a statutory goal to contract with small businesses for 23 percent of government contract money. But the Farmers Market Coalition isn’t exactly a giant enterprise.

There's more:

It appears that the federal government is changing the very nature of the SNAP EBT equipment program.

Using the Internet Archive, one can see what the government's program was like when it was operated by the Farmers Market Coalition. On the FNS website for the EBT equipment program last December, the program was called the Free SNAP EBT Equipment Program. The page highlighted the federal program (and includes information about state programs), noting that “to encourage participation in SNAP, markets and farmers may be eligible to receive FREE equipment capable of processing SNAP transactions and debit/credit transactions.”

On the website currently, the word “free” is nowhere to be found. It’s been replaced with “low-cost.” (There is no encouragement of SNAP participation, either.) And the program is now called the FNS EBT Equipment Program.

This change may comport with the July 14 statement from the Agriculture Department, which says, “Moving forward, FNS will continue to work with interested mobile payments providers, while seeking to modernize the approach by employing a bring-your-own-device model for accepting SNAP EBT transactions. … Under this approach, business operators would purchase their own-point-of sale-equipment such as mobile phones and/or transaction terminals.”

It's not totally clear what this means—the language is both bureaucratic and euphemistic—but it doesn't appear as if, going forward, the program will continue to be free. Perhaps this won't occur until the one-year contract with FTM is up, since the government website says the equipment program does indeed pay for equipment and service fees for farmers and markets. To be sure,once the new contractorbegins operations, we will learn more about whether and how the program will change. But currently, the ability of nearly 2,000 markets to accept SNAP is in jeopardy.

Some states are protected from the instability that's arisen from the loss of the Novo Dia software. Instead of being subject to the whims of for-profit government contractors, states have the option to operate their ownprograms. That’s the case in California, which included wireless equipment for farmers markets as part of the processing agreement with their state benefit processor (each state partners with a specific company to process that state’s SNAP EBT). In Michigan, the state budget recently included funding for wireless EBT processors for farmers; according to the Michigan Farmers Market Association, farmers and markets should apply as soon as possible, because applications will take a few weeks to process.

Responding to the threat to SNAP at farmers markets, Democratic Representatives Sanford Bishop of Georgia and Rosa DeLauro of Connecticut have sent a letter to Agriculture Secretary Sonny Perdue in which they “stress the importance of identifying a timely solution to this impending problem,” since “any loss of access to SNAP benefits at farmers markets would result in increased hunger and food insecurity for low-income people and decreased revenues for America’s small farmers and ranchers.”

In its statement last week, the Food and Nutrition Service said it is “exploring all available options in an attempt to avoid a service disruption,” but it is unclear what options they are exploring or which would actually address the problem, short of another company buying out Novo Dia and its Mobile Market+ software. Novo Dia, advocates, and the Farmers Market Coalition, too, are actively working to find a solution. In the meantime, the Farmers Market Coalition has started a crowdfunding campaign to raise funds for affected markets to buy new equipment.

One solution could be for the Agriculture Department to reimburse the markets that are forced to purchase their own equipment due to Novo Dia's service shutdown. (More than 100 farmers markets and food justice organizations have signed a letter to the department encouraging it to do just that.) In the June 12 document it sent to the Farmers Markets Workgroup, however, the government rejected that option, justifying its answer by citing previous lapses in service in which “markets have had to make the difficult choice of whether to move forward in securing their own equipment without the option of receiving reimbursement should the Program resume operations at a later date. … Our policy will remain the same in this instance as well.”

Given the greater threat that this service lapse poses to SNAP recipients' access to food and farmers' access to income, and given the media attention this lapse is receiving, it's still possible that the Agriculture Department could change its answer.

After all, even though the administration is fighting a war on SNAP, Republicans say they value farmers. We'll see if that's the case.

Update: After this story originally ran, a nonprofit, the National Association of Farmers Market Nutrition Programs, announced that they will fund the tech vendor facing a shutdown, Novo Dia Group, for an additional 30 days, meaning that SNAP will be accepted at farmers markets until at least the end of August. While this is only a temporary solution, it does give farmers and markets more time to purchase new equipment (that they will likely be required to fund themselves.)