Many rural Alabamians lack access to grocery stores, resulting in “food deserts” with limited access to fresh, affordable and nutritious food. In 2024, state leaders hosted two conferences addressing the issue – the National Rural Grocery Initiative and the Feeding Change Conference.
Ellie Taylor, president and CEO of the Alabama Grocers Association, presented at both. Taylor noted that these gatherings explored ways to connect stakeholders and develop effective models for strong rural food systems.
“Food insecurity is a significant issue in Alabama. Our state ranks as the fifth-poorest in the nation,” she said.
Taylor cited data from the Alabama Department of Public Health, which indicates that 17 percent of adults and 23 percent of children in the state experience food insecurity. In addition, more than 391,000 households in the state received $2.1 billion in food assistance during 2023.
Food tax
The AGA has long advocated for the elimination of the state sales tax on food. While a 1 percent decrease was achieved two years ago, Taylor said the full reduction has not yet materialized.
“In 2023, we successfully passed Act 2023-554, which removed 1 percent from the existing 4 percent state tax on food. This allowed for an additional reduction if the Education Trust Fund grew by 3.5 percent,” she said. “Unfortunately, that growth has not occurred, and the state’s grocery tax in Alabama remains at 3 percent.”
Taylor is hopeful that discussions regarding the regressive tax will continue. Addressing the issue will require a multifaceted approach, she said, adding that the AGA will continue to back grocery tax reductions, healthy food financing and programs such as Double Up Food Bucks Alabama.
Rising costs, labor shortages
Grocers across the country, including those in Alabama, are facing rising costs for labor, transportation and food, which is impacting profit margins.
Noting the current economic situation and rising inflation, Taylor said it’s crucial for retailers and their association counterparts to convey accurate pricing and supply chain information to consumers.
“With a net profit margin of approximately 1.5 percent, grocery stores must pass on these increased costs to consumers, but clear communication can make a significant difference,” Taylor said.
“Consumers can take comfort in knowing that price increases are not a result of higher profits but rather stem from escalating expenses such as labor, reduced production capacity, commodity prices, energy costs, transportation demands and even potential tariff increases.”
Labor shortages also pose a significant challenge. Taylor pointed to a 2024 Alabama bill exempting overtime compensation from state income tax for full-time hourly employees. While this helped employers retain experienced personnel, it is set to expire in 2025 and its future is uncertain.
“This program is projected to cost the state over $150 million, drawn from the Education Trust Fund, which far exceeds the initial estimates of $25-34 million annually,” she said.
According to Taylor, Alabama’s labor force participation rate rose slightly in 2024, but the long-term impact of the overtime exemption remains to be seen.
Government regulations, policies
Counted among the significant regulations shaping the grocery industry in recent years is the passage of Alabama Act 2023-531, which addressed organized retail theft. This law defined the crime and established penalties for offenders.
Taylor reported that the law has led to arrests across Alabama for thefts from both major chains and independent grocers.
A recent case in Hoover resulted in two brothers receiving federal prison sentences for operating an online fencing scheme that sold more than $1 million in stolen merchandise.
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