Higher Prices Won’t Offset Cuts in Commissary Subsidies, RAND Concludes

The administration’s plan to offset cuts in subsidies to military grocery stores through higher prices likely won’t be successful, according to a new RAND study.

Raising prices at commissaries can be expected to result in a drop in unit sales and total revenue as shoppers are likely to be relatively responsive to changes in price. As a result, the authors conclude that “raising overall price levels will likely not be a successful strategy to cover shortfalls in costs caused by the elimination of the annual U.S. Department of Defense appropriation.”

And while military families who shop at commissaries would see their grocery bills increase, their extra expenses likely would be offset somewhat as they shopped elsewhere for some groceries and other items.

The study’s conclusions, though, might not apply to commissaries at remote locations in the United States or overseas, reported Stars and Stripes.

DOD’s fiscal 2016 budget request would slash the subsidy for commissaries by about 25 percent. The department also proposed scaling back operating hours and employees to trim spending on military grocery stores. The Defense Commissary Agency now sells items at its supplier cost plus a 5 percent surcharge that is dedicated to capital development and maintenance. The agency estimates the typical customers saves an average of 30 percent by shopping at a commissary.  

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