Analyst: Look to Wal-Mart to Turn Food Deserts Into Oases
By George Anderson
Farmers markets
are not the answer to bringing nutritious food to poor towns and neighborhoods
in the U.S., according to an agricultural policy analyst at a libertarian
think tank. No, if communities and government are serious about converting
food deserts into oases then it’s time to stop fighting Wal-Mart and invite
the chain to open stores in underserved areas.
Sallie James,
an analyst with the Cato Institute, told NPR that local
sources are not enough to feed Americans in many places. She pointed
out that 75 percent of all agricultural production in the U.S. comes
from less than four percent of farmers. The concentration of production
in so few farms is due, Ms. James maintains, to the subsidy system
in place in the U.S.
“It may well
be that if we did away with production subsidies that we may see a different
breakout of production patterns in America,” she told NPR. “But
certainly that suggests that, for efficiency reasons, agriculture depends
on economies of scale.”
The answer
to achieving the economic efficiencies
that will enable poorer consumers to get good food at low prices is Wal-Mart,
according to Ms. James.
“The reality
is they have a very good distribution network. They can get fresh produce
into rural and exurban areas very well,” she told NPR.
The challenge
as seen in Chicago and other citites, however, is getting approval for
Wal-Mart to build.
Discussion
Questions: Do you believe Ms. James’ assessment of what it will take
to bring economical food choices to cities is realistic? If not, what solution(s)
do you have for eliminating food deserts in the U.S.?
I’m wondering whether we are putting the cart before the horse. There are lots of urban food retailers in existence–is the Cato Institute suggesting that they are not capable of bringing in nutritious food at a good price? I’m thinking it may be a demand issue rather than a supply issue. Perhaps there is not a sufficient demand for nutritious food at good prices, such that nobody has filled this supposed vacuum because the business opportunity is not there.
Walmart is definitely an alternative. They have a very flexible and agile supply chain and will no doubt out perform expectations. There may be a couple of other areas that should be looked at, such as farmers’ coops which are making some noise in larger cities. Also, we should look at the overall problem too; if we continue to lose farmers at the rate we are currently losing dairy, pig, and large crop farmers, we will have a food shortage and be totally dependent on foreign countries to supply our food. Is this acceptable?
Today, dairy farmers are losing incredible dollars per cow. Why? Milk prices are what they were 15 years ago and cost of feed, care, and labor have gone up dramatically. This should be the big-picture concern. Farming is an American heritage that is shrinking quickly.
The answer to food choices in under-served areas is more retail locations. There are many cities in the United States who are dramatically under-served or not served at all. The reasons for this are numerous and the solutions are difficult. Security for employees and suppliers, high levels of shrink, and difficulty in obtaining real estate all come to mind. If cities were truly interested in solving this problem, then they would partner with retailers to create opportunity. It takes creativity, strong commitment, and a willingness to truly partner to solve this issue.
Local farmers markets and buying local are great concepts but the reality is that the problem is much larger than these solutions.
I would say involving Walmart is like throwing a big blue monkey wrench into a an already big problem. The article asks for ‘good quality, cheap food’. Walmart can only fulfill the latter part of that requirement and don’t think that they would have a preference for local supply. If they could bring in produce from China that would last at least 6 hours on the shelf, they would.
The list of urban supermarket operators is endless.
Great A&P has been an urban player for 150 years. It is currently working to open stores in underserved urban areas, as part of PA, NJ and NY programs that help provide financial incentives to lure supermarket operators into urban food deserts.
Wal-mart needs such a huge footprint, and has a history of only wanting to built on pristine agricultural land. Their kind of big box is not viable in every urban market. City planners who work with brownfields need lots of money to redevelop these larger tracts of urban land.
Meijer is coming to inner-city Detroit, Aldi’s is coming to Brooklyn and others are finding urban areas attractive. It will be these operators, and not Wal-mart, that will eventually fill the void.
Walmart can (and is) providing a large and growing program in this area. They could do a better job of visually reinforcing their efforts in their stores.
Not even Wal-Mart wants to go to some of these areas. So don’t expect Wal-Mart to get too excited. With the crime, low incomes, and blight, it’s just too hard to find qualified employees willing to venture into these areas to work.
There are some things that can be done. One is to allow supermarket operators to keep the sales tax they collect as an incentive to remain open. Another is to eliminate all those free breakfast and lunch programs from the schools. While well meaning, they eliminate the need for parents to feed their children and this hurts local grocers.
Chain stores are not a good fit for these areas. You need independent operators, some real cowboys who can make up their own rules instead of following corporate policy.
Still, a lot has to do with culture. The inner city culture is its “cool” be fat. The McDonald’s dollar menu is in, and fresh food is out. Who are we on the outside to dictate to other cultures what is right and wrong? If they wanted fresh foods, you would not see all those skeletal remains of old supermarkets. So is it really a problem?
Sallie James sees a great deal of “politics” in the equation, and she is accurate on that score when it comes to the food chain in the U.S.
The concentration of American farms have been guided by the marketplace AND government agencies. Efficiency, ability to feed a family, the shift to an industrial society in urban areas, and consolidation of the 160 acre “plots” that helped populate the Nation’s breadbasket in the late 1800s, and then carried forward to Western lands, have had a role in that concentration.
Farm subsidies have been on the American scene for decades. The “political hand”–consumers want lower prices, politicians want to avoid the “bread riots of France” or the “milk protests of Belgium.”
Building permits/urban planning issues that keep Walmart, Target and others out of urban areas has a tie to urban politics, as well–in some cases, it’s called SOP to unions who have not been able to organize those chains.
Ms. James is correct in viewing opening up urban locations for effective distribution of food as an important method of getting better nutrition to consumers. What is needed is more free-market thinking to bring this reality.
Ms James and I have two points of agreement here and one of strong disagreement. First is that local producers cannot adequately supply every community, much as I wish it were otherwise. Secondly, an excellent distribution network is essential to getting a good range of high quality food to all communities. Where we disagree is that Wal-Mart is the answer.
There are many other ways of doing this, using networks of suppliers working together (Oh dear, am I implying that they should cooperate???!!! How very liberal/socialist of me–please make allowances.) and/or locally/regionally based retailers. The entire country does not, and should not, come to depend on a single retailer is my vehement viewpoint. Just apart from anything else, I think Wal-Mart has shown itself more than able to look after its own business interests. I cannot see any reason why officialdom should help them, particularly if taxpayer dollars are involved or principles deliberately scattered to the four winds.
Here in central Ohio, it’s Local Foods Week, produced by Local Matters (www.Local-Matters.org). I sit on their steering committee mostly because I believe in their mission of promoting equal access to local, nutritious food for all.
While the localvore movement provides engaging consumer experiences at farmers markets and trendy restaurants featuring locally sourced ingredients, the complexity the food industry is sometimes mind boggling.
Government subsidies have led us to the point that facts like this can be eye-opening: less than 1% of food grown in Ohio is consumed in Ohio. On the economics side, it’s ideal to export goods and services and import dollars. On the consumption, nutrition and health side, simple access to the food that is best for us is difficult. Knowledge of why those foods are better is even more elusive, especially to those who don’t have dependable transportation and an “always on” internet connection.
Sophisticated community efforts like Local Matters are the beginning of significant change.
Does Walmart (and every other food retailer) have a role in improving our “foodshed”? Absolutely.
Walmart’s distribution prowess is well documented. Their ability to operate small-scale retail has not been so successful. They, like many others, are deconstructing their business models to discover ways to enter and operate in emerging markets around the world. I say we figure out ways to aim these innovations at local markets, too.
Ultimately we must meet in the middle: localvores must embrace economic realities and large companies must understand consumers where they are. I believe we must take an “open source” approach to opportunities like these–opportunities to improve the health and economic well being of our communities–people and companies alike.
You can lead a horse to water but you can not make him drink it.
Sorry, this is not a problem Wal-Mart can fix. Just look at some of the variables.
1. Will the people change their lifestyle and buy healthy food?
2. Does it make economic sense to come into the market place?
3. Where is the labor force and management to manage the locations? Would you be willing to work in the area or have your wife, son, daughter or husband go to work there everyday?
4. In today’s competitive market place, if companies can find an underserved market that they can serve profitably, they will serve it.
It sounds like the healthcare debate in retailing. Just as one side of the argument opines that the government is the only option that can save healthcare, is the Wal-Mart option the only option to deliver food to the urban market? If it were not an honest opinion, which I believe it is, it would seem ludicrous. It could be argued, however, that Wal-Mart is stronger than the government, and certainly more efficient.
Can the same efficiencies be delivered towards the urban market as successfully as WM has done in the rural and suburban markets? That’s debatable–though certainly possible. Are we really at the point where Wal-Mart has achieved that type of dominance where the thought is now that there is no other alternative but to accept it?
If food retailing in the core inner cities was so easy, they’d have gone in a long time ago. It may be one logistical, merchandising, and operational challenge that WM just may not be able to get their hands around any better than many other retailers. Yet, to think servicing this market is a solution that even WM is up to is naive at best.
The issue of the cost of food in urban areas is not one that can be solved by Wal-Mart. Urban prices are generally higher than suburban prices in the same chains. This is an issue of the cost of real estate, smaller stores and cost of delivery, among other things. It will be more costly for Wal-Mart as well.
The issue of bringing in nutritious food is something else. It is one of demand. It is one of education. And, it is one of what the retailer chooses to carry. In New York City, fresh fruits and vegetables are plentiful. One can find them on most corners of residential areas. With much fanfare, several years ago a major supermarket chain built a large modern supermarket in Harlem. As it turned out, this large modern supermarket’s selection of fruits and vegetables was less fresh and more expensive than the corner carts. Yet, unfortunately, the shoppers abandoned the corner carts for the new supermarket. The several vendors of fruits and vegetables in the neighborhood relocated their carts to other parts of the city.
The “New Ways of Working Together” and “Value Chain 2018” reports propose more efficient ways of distributing ALL products to urban and rural areas. The report does not suggest that Walmart is the answer. There is no ONE answer.
Local farmers cannot provide all the product for a solution, but they can provide some product. One company will not provide THE answer, either. Trying to find one company to solve the problem and trying to find one answer to the problem is naive. Using the results of one study conducted by one group to determine THE answer is also naive.
Casting a wider net for possible solutions and collaboration among a variety of players in the supply chain will provide a more realistic, sustainable, and effective solution.
There’s a large area of Washington DC that does not have a single chain grocery store. Residents either have to take the bus to a different area, or buy food from expensive independent c-stores that don’t carry fresh produce. Neighborhoods like this in cities across the country would love to have a smaller format Walmart. Send a note to Bentonville!
The Cato Institute, a libertarian think-tank, wants to apply the same economies of scale that now rule over agri-business to the distribution of grocery goods. Forgive me if I’m wrong, but isn’t this just advocating a corporate monopoly of food distribution? How precisely would this differ from a government food distribution system, other than the fact that the profits go to the Walton family? Cato’s motto is “Individual Liberty, Free Markets, and Peace,” but how free can those markets really be if one company is relied upon to meet the needs of the public?
Furthermore, the statement by Ms. James does not address the fact that expanding in urban areas would cost more for Wal-Mart than expanding in suburban areas. In order to address that barrier, Wal-Mart would presumably seek government assistance, either by subsides for expansion or by removing regulatory roadblocks. Presumably, the existing merchants within the market might not receive the same consideration. Free Markets…or a hand up for big business?
Let’s not forget that the Cato Institute is not a CPG firm in any way, it is a political advocacy group. Free Markets or not, anything they say should be handled with a grain of salt when applied to the real world outside their ivory tower. In fact, Ms. James is probably less of an analyst and more likely a person NPR was able to find to quickly provide a counter-point to their main story about farmers’ markets. Mr. Anderson is, after all, taking what is basically an addendum to a primary story and turning into a point of discussion.
Finally, I think Mr. Needel raises an excellent point. If we assume that the underclass does not generally eat in a healthy manner, is the issue actually access to fresh produce, or could it be that the underclass is not sufficiently motivated to prepare and eat healthy meals? If it is the latter, I would guess that bringing more Wal-Marts into underserved urban areas would only aggravate the issue.
Are there probably multiple reasons why Wal-Mart isn’t storing urban areas, in this day of consumer need in such environments? One might reasonably guess what those reasons might be. And if those reasons could be reduced, Wal-Mart would probably expand its coverage.
Actually, urban areas like NYC and Chicago have tons of little produce and grocery stores that offer a wide selection of great fresh foods. And talk about localization! Most of these stores are mom and pop operations that cater to the neighborhood where they are located. Along with staples, they often carry hard-to-get ethnic items that you would never find in Walmart.
And here’s a question; in blighted areas where even the local mom and pops have failed, does Walmart have the will to do what is necessary to succeed? I’m not so sure. I believe these communities must be revitalized by the people who live there, and only then will any business thrive.
That’s what the Grocerant Niche is all about! Wall-Mart gets it! Others will, after they lose more share!
What? Are our only options to address this dilemma farmers’ markets or Walmart? Massive scale economies or pushcarts?
I may be feeling a bit cranky or paranoid this morning, but this feels like a contrived debate topic floating atop a hidden sea of politics and social prejudice.
So-called economies of scale have great costs and risks too. Did anybody read the New York Times front page news feature on ground beef last Sunday? How a single patty may contain parts of animals from numerous parts of the world and can therefore contribute to the rapid, wide spread of E. coli? What about the continued rise of diabetes incidence among disadvantaged population groups who consume high levels of refined food ingredients?
Yes, inexpensive and dependable supplies of milk, wheat, corn and sugar are important to our nutritional security. But we can do much, much better at bringing varied and healthy food products to the inner cities. If large automobile-oriented box stores don’t fit the urban environment, then we need more smaller box stores, bodegas and corner greengrocers who appropriately serve the pedestrian culture. Chains can build and operate these too.
Force-fitting a suburban large store concept into a city block is simply a ridiculous idea. No wonder it seldom works. If we care about improving this pervasive social ill, let’s begin by framing the debate along realistic lines.