Food desert fiasco

The existence of hunger in America and the concept of food deserts are hard for most Americans to grasp. Simple observations suggests that the majority of us are not missing many meals and grocery stores are so prevalent that profitably operating a food store is a perpetual challenge because of intense competition and the resulting pricing pressure.

My view of the situation is shaped by the fact that, like most Americans, I have never known hunger – there have been times when I thought I was hungry and may have inappropriately used the word “starving” to describe my perceived need for sustenance after not eating for five or six hours.

As a child, my parents provided an abundance of food and when between-meal cravings arose I was able to satisfy them at the small coffee shop in rural Iowa my grandparents owned as long as I occasionally washed dishes or folded laundry. I never wanted for food in college either thanks to a waiter job at a sorority house where compensation came in the form of free lunch and dinner.

The abundance continues today. A little more than a mile from my house sits a Walmart supercenter and Super Target. These stores are less than half a mile apart. Publix Supermarkets operates four, yes four, stores within five miles, of where I live and there is a well run regional supermarket chain called Sweetbay as well as multiple Walgreens and CVS stores. Other food options include countless quick-serve restaurants, fast casual chains and mom-and-pop places.

The food choices for me, and millions of others, can seem limitless in this land of plenty. America is home of the all-you-can-eat buffet and competitive eating contests have reached the point where an organizing body called Major League Eating is needed to oversee 80 annual events including the Nathan’s Famous Fourth of July Hot Dog Eating Contest, which drew record viewership on ESPN this year. We have multiple cable channels devoted to food churning out D-list celebrities who degrade the meaning of the word chef.

How is it then that America is in the midst of such a hunger crisis? One out of six Americans are hungry, according to the nation’s top relief organization, Feeding America, which provides emergency assistance to 37 million people annually. The United States Department of Agriculture contends more than 50 million Americans are not getting enough food because they live in food insecure households, characterized as such because they lack dependable access to enough food to sustain a healthy life.

It’s not because the federal government doesn’t throw gobs of money at the issue. Last year alone, the equivalent of the Kroger supermarket chain’s annual sales of roughly $82 billion was spent on the federal government’s three main food programs for the needy. There was $64.4 billion in benefits provided under the Supplemental Nutrition Assistance Program, or SNAP, according to the 2010 annual report of the Benefit Redemption division of United States Department of Agriculture’s Food and Nutrition Service. The stunning thing about that number, it is a 29% increase from the prior year and a 430% increase since 2000. In addition to funding for food stamps as the SNAP program was formerly known, the federal government spent another $4.6 billion on benefits to those eligible for the Special Supplemental Nutrition Program for Women, Infants, and Children, also known as WIC, which provides assistance to roughly 9.2 million people. Another $9.7 billion was paid to state agencies to serve 5.3 billion school lunches and another $2.9 billion was paid to serve nearly 2 billion breakfasts.

According to the government, the figures should be even higher because not everyone who qualifies realizes they are eligible or pursues the benefit so the USDA has various outreach programs in place to help people who qualify sign up.

And yet the hunger problem persists, with a new explanation offered that has created new growth opportunities for retailers. The nation’s seemingly contradictory challenges of obesity and hunger stem from the existence of nutritional wastelands known as food deserts where people lack access to food and more specifically healthy food.

The Food, Conservation, and Energy Act of 2008 directed USDA to conduct a one year study to assess the issue of limited access. Spoiler alert: retailers need to make a profit, which means they tend to open stores in areas where residents have sufficient disposable income to generate a reasonable return on investments. USDA’s Economic Research Service in 2009 published the report, “Access to Affordable and Nutritious Food: Measuring and Understand Food Deserts and Their Consequences. “ To develop a definition of food deserts required the efforts of an interagency working group comprised of representatives from the Treasury Department, Health and Human Services the USDA and staff from the Economic Research Service. 

And we wonder why there is a federal budget deficit? This is the kind of stuff that makes you want to cry as a taxpayer.

We’re told there are a lot of food deserts and USDA has a slick interactive map to identify them all. Click here to see if you live in one: http://www.ers.usda.gov/Data/FoodDesert/.

The vastness of this wasteland has more to do with the broad definition used by the government, which focused on income and proximity to conventional grocery stores as the key criteria. For example, to be designated a food desert a census tract must be a low-income area, which means it has either a 20% or higher poverty rate and at least 500 people, or 33% of the census tract’s population, reside more than a mile from a supermarket or large grocery store.

Broadly defining the food desert landscape is actually a good thing for some of the nation’s leading retailers such as Walmart, Walgreens and Supervalu. They were in the headlines recently for committing to open stores in food deserts, or in the case of Walgreens expanding fresh food offerings in existing stores. The retailers looked like good guys because they are aligned with First Lady Michelle Obama’s “Let’s Move” initiative to combat a societal ill. However, at the end of the day nothing has really changed because food deserts are defined so broadly that most of the locations the retailers committed to were in neighborhoods where they planned to open stores or operate already because real estate departments had done their homework and determined it would be possible to profitability operate.

True food deserts will always exist because shareholder returns don’t come from operating stores that sell low margin food products to shoppers with little or no disposable incomes that live in blighted urban areas.

That’s how things work in a free market, but there are always those that think government programs and spending can overcome market forces and they never do. Five years from now, after Walmart and Supervalu have opened hundreds of stores in so-called food deserts and Walgreens has added fresh fruits and vegetables to the product mix at a thousand stores it will be interesting to look at the sales and promotional activity of these stores to see what items were featured and what sold.

There may be an element of truth to the argument that lack of access to healthy and nutritional foods is contributing to hunger and obesity, but ultimately people who live in food deserts are deciding what to put in their mouths and the unintended consequences of improved access to retailers who sell fresh fruits and vegetables is they also offer lower prices on a broader assortment of the stuff that made people fat to begin with.