Tuesday, April 13, 2010

Fresh or Stale?

Crain's is reporting that aspiring Senator Gillibrand is looking to expand the city's Fresh Initiative with beaucoup federal dollars: " Sen. Kirsten Gillibrand proposed $1 billion in loans and grants Monday to help build 2,100 grocery stores in areas around the nation that lack access to fresh food. Ms. Gillibrand said the measure would help about four million New York residents living in so-called “food deserts” by providing the funding for more than 350 stores statewide, many in low-income areas."

You know, it sounds so simple, doesn't it? Devise a billion dollar government program to build new supermarkets in, "underserved areas, and everybody wins. Or do they? What about the existing store owners who have labored-sans any public money-all these years in the so-called food deserts? Is it fair to subsidize newcomers to come in and compete with the real food pioneers of the desert?

In our view-and we have said it on a number of different occasions in regard to the city's own program-there needs to be a prioritizing with this kind of initiative; and if money is to be made available than first dibs should go to the existing store owners. And than there are the wild estimates of the new stores that could be built.

The RWDSU also weighs in on this caveat, even while its president Stuart Appelbaum did stand with the senator in support of the initiative yesterday. As he said in the union's press release: "The fund provided for in the Healthy Food Financing Initiative will be an important help for grocery stores that want to locate in these underserved neighborhoods, but for one reason or another are facing financial hurdles. I would also emphasize that as localities look to administer these funds that they also consider a way to assist stores that are already located in these neighborhoods but need a way to finance renovations and updates to their facilities. These operators have stuck by neighborhoods in tough times and we need to help those existing stores as well as new ones."

We certainly agree. According to Crain's, hundreds of new stores are envisioned in this program: "Among the 2,100 new supermarkets that would be created under Ms. Gillibrand’s proposal, an estimated 273 could be built in New York City. The legislation could create up to 200,000 jobs nationally, including as many as 26,000 in the city."

We wonder as to whose methodology arrived at this figure? The same folks perhaps who estimated all of the jobs that would be created or saved by the federal stimulus package. How's that working out?

But let's examine the Gillibrand hypothesis. Does anyone have any idea if the city has the space to build 273 new supermarkets? And, even if it did, does anyone think that 273 new stores could be built without impacting-and rather significantly-the life expectancy of existing markets operating without any public subsidy?

The assumptions here-shaky at best-is that there is a voracious unmet demand for supermarkets, a demand that would mitigate any zero sum game with new stores replacing the old. This is simply an unsupportable concept-and, like the number 273, is probably arrived at through the use of astrology. Or a dart board, perhaps.

But in the age of ObamaCare, anything can be justified in the name of health: "Ms. Gillibrand said the measure would help fight obesity by making more fresh, healthy food available."By building new grocery stores in underserved areas across the state we can give people the opportunity to live longer, healthier lives, save billions in health care costs, and create tens of thousands of good-paying jobs," she said."

Sound familiar? If it does you're probably remembering the hoopla over the proposal to cite "green carts" in the underserved food deserts-an experiment that has proven to be a rotten failure-along with its field of dreams premise. As we said last month, when the evidence started to come in on this silliness: "We were right in the middle of the debate over a dubious idea to put veggie peddlers in so called underserved neighborhoods-arguing that the city's field of dream theories would get spoiled pretty quickly. Now, as the evidence starts to come in, our prognosticating looks to be prescient. The clarion call for peddler licenses has yielded meager fruit."

Why? Because it overestimated demand. But the same fallaciousness could have even more damaging results if huge outlays of public money are directed towards new supermarkets. Competing with a peddler in front of your store is bad enough, but it pales in comparison to a 50,000 sq. ft. store down the block.

One last point of clarification. Crain's-relying on the AP story, misleads about the initial money laid out for stores in the Bronx: "The city’s FRESH initiative has already resulted in two new supermarkets opening in previously underserved areas of the Bronx."

Not so. The money went-appropriately in our view-to rebuild an existing Foodtown that had been burnt to the ground; and to an existing Western Beef looking to expand. This is where public money should be directed-towards store owners in the deserts who may need capital to expand or build new units. Do this first before looking to have new markets metastasizing all over the low income areas of this city.

This kind of program, if not handled properly, could be harmful to the health of neighborhood economies. As we commented earlier on the initial Fresh grants which went to existing store owners-an example of prudent policy making: "This makes a lot of sense-and we have highlighted the Foodtown situation already. If the city concentrates on the expansion of existing neighborhood stores, the fresh program will truly be welcome...both Foodtown and Western Beef are companies that have made a commitment to inner city food retailing. Their Fresh awards are well deserved."