Lawmakers are urging Secretary of Defense Lloyd Austin to take steps to curb rising prices in military commissaries, as military families deal with inflationary grocery costs.
“Families across the country — including those at our military bases — are struggling with the rising costs of basic everyday needs,” said Rep. Marc Veasey, D-Texas, in a May 19 announcement of a letter sent to Austin. He and Rep. Steven Horsford, D-Nevada, spearheaded the effort, and the letter was signed by six additional Democratic colleagues.
The lawmakers asked Austin to remove the requirement for commissaries to make a profit.
Removing that requirement would have an “immediate, direct impact for families, lowering their grocery bills and extending their pay as a non-pay compensation benefit, and reducing food insecurity and inflationary effects,” the lawmakers wrote.
In essence, this would allow the Defense Commissary Agency to provide an additional cost saving of 3% to 5% over what customers currently enjoy, said Tom Gordy, president of the Armed Forces Marketing Council, an organization of more than 400 manufacturers that supply products to commissaries, exchanges and other military resale activities. In fiscal 2021, overall commissary savings were 22.7% compared to stores outside the gate, which is below the 23.7% commissary savings mandated by law.
Until 2017, commissary products were priced at the cost from the supplier, and the stores relied solely on taxpayer dollars to operate. A 5% surcharge on customers’ purchases was — and still is — used primarily to fund construction and renovation of commissary stores.
The cost of store operations, such as employees’ salaries, are funded primarily by taxpayer dollars, typically around $1.2 billion a year. But there was decades-long pressure within DoD to reduce or eliminate the amount of taxpayer dollars used to fund the commissary benefit. So DoD asked Congress to change the law to allow commissaries to start “variable pricing,” which gave them the ability to mark up prices on some products and mark down prices on others.
The goal has been to decrease the amount of taxpayer dollars required to operate stores, with profits generated by marking up the prices of items under variable pricing.
The lawmakers are asking Austin to remove that DoD requirement for commissaries to make an overall profit. The commissaries generated a profit of $108 million in fiscal 2021 with the higher prices, they stated, and “that is $108 million out of our military families’ pockets.”
In fiscal 2022, the commissary agency is expected to generate about $119 million in profits, and the budget request for fiscal 2023 includes $128 million in profits to offset the taxpayer funding.
The action requested wouldn’t require any new program to be implemented, lawmakers said.
While the variable pricing method would still be used, the stores could mark down the prices of some products — even below the cost from the supplier, Gordy said. The commissary agency makes some profit from its private label, i.e., store brands, and these brands generally cost less than national brands. That could offset any prices that are lower than what the supplier charges the commissary agency for national brands.
The commissary agency has launched a variety of efforts to try to provide more deals for customers, including a “Commissary Store Brands Price Shield Event” in May, offering at least a 20% price break on more than 900 commissary store brands.
Commissary officials have also been dealing with shortages of products for a variety of reasons, including the nationwide supply chain issues.
Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book "A Battle Plan for Supporting Military Families." She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.
