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First Lady challenges grocers to offer fresh produce in underserved neighborhoods

Michelle Obama CBC News

Michelle Obama urges grocers to move into food deserts.

A number of big retailers are trumpeting plans to ease the lack of fresh produce and other healthy options in the nation’s “food deserts” following an announcement by Mrs. Obama at the White House on Wednesday.

Wal-Mart and other chains have pledged to open outlets in urban and rural areas where low-income people have little access to nutritious selections and generally must shop for processed packaged goods at convenience/liquor type stores, or eat take-out from restaurants.

I think a story like this, while it sounds great on the surface, is best judged by results.  I’m writing this column a few miles from one of the most sprawling and under-served food deserts in the nation — the city of Detroit — which boasts nary a single branch of a national chain grocery store in its 143 square miles.  Some have tried and pulled out — I covered the ballyhooed advent of two Super Kmart grocery/general merchandise big boxes which fizzled after a few short years, plagued by staffing problems, security problems and other issues that made the stores unprofitable.  Every six months or so, headlines scream about the coming of one or another chain to Detroit, but so far no cash registers are ringing.

EXTENSION OF ‘LET’S MOVE’ CAMPAIGN

So your first take on this announcement (and reading between the lines some chains seem to be taking credit for nothing more than their normal real estate planning as they move on after saturating current markets) might be a sanity check with marketing experts, site selection companies and others who can explain why no retailer currently does business in your area’s underserved markets, along with a look at what parcels might be available and likely choices for new retail entrants.

Wednesday’s announcement is also a timely peg for looking for results from previously announced programs aimed at funding or spurring the expansion of food-shopping options in underserved areas.  Lots of money is being thrown at the problem, with layers of federal and state programs at work — leading one to wonder if it wouldn’t be cheaper to merely open government-run markets in food deserts rather than finance all of the middlemen and programs that still can’t seem to solve the problem.

First, what areas near you are eligible for assistance?  The U.S. Department of Agriculture offers a really interesting food desert locator map; it’s based on census tracts and clicking on one of the food desert areas brings up interesting factoids like the number of underserved individuals in the area.  The data upon which the map is based is readily available on a downloadable spreadsheet, too, if you want to create localized maps or graphics, and the portal also contains background like the USDA definition of food desert.

TAX CREDITS MAY HELP

Two other programs already exist (I believe the push in Wednesday’s announcement taps both of them) and have been around long enough that it’s worth digging for results.  First, the New Markets Tax Credit program, which is more than a decade old, is designed to spur business development in disadvantaged areas; it offers a 39 percent tax credit payable over a few years.  The New Markets Tax Credit program (NMTC) is administered by the Community Development Financial Institutions Fund (CDFI) of the U.S. Department of Treasury, which says it has approved 594 applications under the plan since 2000.  Deadline for new applications is next week; there is a searchable awards database which can help you narrow down past recipients in your state and find out what they’ve used the tax break to accomplish.  I’m not sure if pending applications are readily made public but given this announcement about grocery retailers, who no doubt will be tapping the NMTC fund, it’s worth a call to Treasury to ask.

produce display

Michelle Obama's campaign aims to bring fresh produce to underserved communities.

There’s also a New Markets Tax Credits Coalition — financial services firms, public agencies, etc. — that has published a 10-year report on the tax credit; you might get some leads about future projects by contacting local members.

The second program worth investigating for local impact on both consumers and small- or medium-sized businesses is the Healthy Food Financing Initiative (HFFI)  that has allocated $400 million for 2011 in grants, loan guarantees and credits to get healthier food to some 23 million people without access.  Here’s the (PDF) implementation plan from the USDA website — again, it’s layer upon layer of bureaucracy, with plans for the money to be funneled through channels like the “Rural Microenterprise Assistance Program” and the “Intermediary Relending Program” — but presumably with assistance from the USDA, the CDFI  (which has its own HFFI unit) and your state agriculture department or health and human services department, you can dig down and find the companies that actually are benefitting from this financial assistance, and what they are doing to provide food to underserved areas.

One wonders what a start-up, for-profit retailer could accomplish with $400 million in seed money  if the layers of bureaucracy were stripped away.  Another question to ask experts and public-sector leaders: Are bricks and mortar stores, which still seem to be the end goal of these programs, really the way to go?  Could low-income people with limited transportation perhaps be better served by a mail-order model or a roving food-truck retail model?

After all, specialty retailers routinely send perishable flowers and produce to our doorsteps with no quality issues, and online outfits like Amazon.com are trying grocery-delivery services.  If the aim is to get wholesome food to people’s homes, why keep throwing money at models which have failed repeatedly in the marketplace?  That would be a great question for retail executive interviews and panel discussions.

In Basics, Beats, Investing | Banking, Retail | Lifestyle, Small | Private | Non-profit, Story ideas.

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