35
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The US government spends millions to open grocery stores in food deserts. The real test is their survival.
Link information
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- Title
- Why Opening Grocery Stores Alone Doesn't Solve Food Deserts
- Authors
- Molly Parker, Julia Rendleman
- Word count
- 4079 words
It's important to note the landscape wasn't always this way:
I'll put my hand up and admit I don't often shop the local independent grocer 5 minutes from me. I drive 45 minutes to town. The difference is between two meals vs a whole week of groceries, per trip, on the same amount of money. It's ridiculous. At the local, milk is nearly twice as much at $9-something for 4L (1gallon), a head of lettuce is $6, butter is $10, loaf of bread is $6. I could go on.
There's supporting the local economy, sure, but there's also bearing the brunt of decades of government inaction about consolidation and anticompetitive behavior, on the backs of my family. I'm here to support my local community and my family, I cannot be here to hold up a failing government and multinational interests. I'm well aware that I'm making the problem worse, but the alternative is asking me, on a salary that hasn't kept up with inflation, ever, to throw a teacup of water onto a blazing fire.
At the food bank, where I volunteer, the number of families receiving fresh produce and shelf staples don't go down over the summer, unlike other municipalities. These are elderly individuals who are taking a program designed to subsidize food prices with a little, and using it to basically feed themselves for the entire week.
I don’t blame you and no one should feel bad for making similar decisions. I support my local business as much as I can within reason. But “voting with your wallet” is often unrealistic when you’re just a working class family with limited “votes” to go around. I’d rather vote with actual votes, and I’d like my votes to put folks into office who will pressure and fund regulators to do what they’re supposed to.
Healthy diverse markets that serve the people more than they do the wealthy require government supervision. I’d like big brother Uncle Sam to get out of my wife’s medical decisions and back into my economics.
Elderly people are the second most vulnerable group with regards to food insecurity, right behind children. I'm in and around a senior housing community regularly, and there are residents who absolutely depend on the food bank that comes every two weeks. On a fixed income and with minimal ability to make more money when things get more expensive, our elders are often in dire straits. There's plenty of rich boomers among our elders, but there's also lots of poor ones, and poor members of the Silent Generation. I believe you when you say that these old people live entirely off of what the food bank offers; I'm suggesting that perhaps they don't have many other options.
Exactly. It's a double whammy of fixed income not keeping up with inflation, plus the diminished ability/inability to drive long distances to conglomerate shops. They really have no other choice than to live off foodbank deliveries because they can only afford to buy so many loaves of $6 bread a week with $10 butter with the same amount of money
I feel like the government should just operate grocery stores in food deserts. They operate the commissary on military bases, so couldn’t they expand the commissary to operate off base in food deserts for non-military families?
They absolutely could, and could negotiate better prices than any smaller buyer. We could agree that accessible, good quality food was a human right that we wanted to ensure, and say that the US government would make it so that there was a basic supermarket within X minutes of walking from any point where more than Y people lived. What would it cost? No idea. Would people fight over whether this is the proper solution? Absolutely.
I would love to see the government providing a competitive option in any market where the product is necessary for human thriving. Food? Housing? Education? Healthcare? We need to fund these as a society to ensure that the free market actually needs to compete. I have no issues with private health care or grocery stores, but at the same time the priorities of the business owners will never be to ensure the wellbeing of the populace. Why shouldn't the government provide a competitive offering?
Sometimes the US government tries to make prices higher rather than lower, because producers have more political pull than consumers. Consider sugar tariffs and the Jones Act. It seems doubtful that they would negotiate as hard with farmers as Walmart if it means losing votes in Iowa? We can’t even cut agricultural subsidies or stop making ethanol.
The US military can do many impressive things, but not at low cost, or at the volume needed to feed the country.
You're right that the government is not always going to be an impartial actor, and there's no reason to think that it prioritizes the common well-being of the citizenry in all cases. But practically the famers in Iowa already are subsidized by the government; would it be that different to guarantee purchase of everything they grow to ensure supply of government veggies instead of the current funding model?
And yes, I wouldn't choose the military to do this, but there's no inherent reason the government couldn't do it. If Walmart could, why can't the government?
I can imagine rural post offices adding convenience stores like gas stations have. It's not like it breaks the laws of physics or anything!
However, I don't think imagining it going well warrants the level of confidence in a statement like "they absolutely could." When we imagine things like this, we skip over all the challenges that might come up. It's a rosy scenario, not a realistic prediction. Just getting it through Congress would be an enormous challenge.
You could just as well ask "if Walmart can do it, why not any other business?" It's just a matter of funding, right?
I have complete confidence that the US could do it. Profitably? Who knows. Efficiently? Maybe, but is that the priority? This isn't a rosy scenario, but I do have complete confidence it's possible. You're absolutely right that the legislative hurdles would be immense.
The reason why the US government could do it when few others could is scale and pocketbook. Most other organizations wouldn't want to take that fight, but the US government could lose money selling groceries to citizens eternally without breaking a sweat because it takes in tax revenue. So yeah, it's a matter of funding sources.
That is a load-bearing could. Right now, without acting as a convenience store or a bank, post offices across the country are in shambles. They can barely keep stock on simple boxes and pens, let alone perishable goods, and their staff is usually between 1/2 and 1/3rd of optimal.
Beyond that, the USPS is technically a private entity so drastic changes like this would require reams of paper to hold all the new regulations they would need to build this. I can tell you there’s at least one entire political party that will be wholesale against this so it is a non-starter.
Yeah, absolutely in agreement. Is it within our capabilities as a nation? Yes. Is it likely given the many, many challenges? No way. But I find it sad to write off dreams that would be difficult to implement. It's not impossible, just very, very hard. And I feel like it's important to maintain that distinction. It's not impossible to make sure that everyone is taken care of, it's just a very difficult political, logistical, and moral problem.
From the article:
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Grocery is such a complicated industry for this type of thing. At your large grocers, the model is similar to Walmart where margins are razor thin (typically around 2% net) and the money is made from volume. These food deserts exist because they can't be price competitive with larger grocers, and people seem to be willing to drive long distances to do their full-cart grocery shopping. It's nice that the government is helping with some of the up-front capital costs, but grocery stores still have high operating costs once they're built.
I think a lot of city people think daily shopping is a necessity and don’t really get that other people live differently.
There’s a different kind of shopping in rural areas where you have a big pantry and freezer and plan ahead for occasional shopping trips. Yeah, you need a car due to the distance and how much you buy at once. But then driving a bit further to get lower prices isn’t a big deal. (Another reason to stock up is that maybe you don’t want to go out in bad weather.)
We live in the inner suburbs and my wife is used to deciding what to cook and then shopping for a meal. But we had a taste of this during the pandemic when we tried to only go grocery shopping once a week.
I wish I could do this. I would need a grocer within walking distance for me to consider this feasible though. Living in various parts of suburbia all my life I've always done my grocery shopping once a week (some times every other week).
I'm with you on this. I've lived in suburbs all my life, and I don't find 10-15 minute drives to the grocery store to be all that convenient, at least not enough to make the trip daily to segment shopping like that. Of course on a weekly basis or so, that drive time isn't much of anything, but daily, that can add up to a decent amount of gas, wear and tear on the vehicle etc. Driving is also just annoying sometimes, traffic lights, other drivers etc.
Obviously if you have to drive every day for work then the tolerance is slightly different because you're getting paid, so 10-15 minute drive to work every day would be great for most people. It's also been the case that up until recently, driving to work didn't really have alternatives, working from home was far less common, so you couldn't choose an alternative generally. Going to the store you can choose to go daily, or you have the alternative of going more infrequently, so it allows you to be more critical of the flaws when you have options.
I'd think it would be quite nice to do daily trips if there was something closer with proper walking/biking paths, 10-15 minutes of walking or biking to get to a local place would be far more acceptable for daily trips.
In the city you're far more likely to be constrained by space in a way you absolutely aren't in suburban or rural areas, though. Stocking up for long periods in the same way just isn't possible a lot of the time.
Yep. Different situations. Also compare parking.
Yeah tbh or car ownership more generally. Though for grocery trips my wife's cargo bike more than suffices for us, it wouldn't be able to handle my mom's Costco trips back in the States.
If you have a bike with good low gears and a bike trailer with a cargo net to hold everything in, Costco is doable. My wife and I shopped that way when we still bothered with a Costco membership.
Though that sort of situation is absolutely predicated on being an adult in good health with a proper bicycle and trailer setup. It's not universally applicable.
I think some amount of Costco is doable, but my mom always buys a large quantity even for Costco in a way I wouldn't if I were shopping there alone... but ofc the bigger factor is we don't live in a country that has Costco. My wife has proposed using her cargo bike for some Ikea pickups though.
Ikea is totally doable, though the flatpacks may need a long trailer to make it easy. My wife's claim to fame was bringing home a full couch on her trailer. She was riding by and saw it on the side of the road and just popped home to get the trailer and went back for it. It was a bit of a fiddly load, but she got it home.
ooh I don't think we're brave enough for a full couch... but we're at least glad we don't have to pay for them to ship our shelves to us anymore.
It sounds intimidating, but with a trailer like this it's surprising doable.
It seems like that’s for the city, and in a pretty flat area too. How good is a cargo bike on hills?
My wife's is electric and has a pretty powerful motor unit, so she says it's a non-issue on hills. Hers is big enough (and thus heavy enough) that it'd be hard to pedal on flat terrain if it weren't electric, though. There are smaller non-electric cargo bikes out there, but my impression is that they're more similar to normal bikes in terms of their pros and cons, perhaps a bit sturdier.
It depends on your gearing; cargo bikes in general have better low gears (so as to haul cargo) and as such are better on hills than many other bikes.
Im not so sure that their profit margins are razor thin any longer. That was phase 1: earn just enough to choke out competition. See article for what the landscape looks like.
Phase 2: consolidate and collude with remaining players while simultaneously punching the kidneys of anticompetitive law enforcement.
We're now firmly in phase 3: reap and tear - Walmart’s quarterly profit, of $5.1 billion, was triple the result a year earlier. - profits will continue to rise as they squeeze both consumers and suppliers.
Walmart's net margins were still only in the 2-3% range, though. Their profit increased because their revenue increased. In fact, their margins today are lower than 10 years ago.
Kroger is in the same boat with profit margins in the 1-2% range but with steadily increasing revenue (and therefore dollar profit) driven by price increases and acquisitions/mergers with other grocery chains over the years.
I can believe that, thanks for the the links. A very small percentage of a very large number is still a big number, so that makes sense.
The mergers and consolidation and domination of the landscape is a problem, though, as illustrated by the article
Totally agree. Less competition is never a good thing. I'm hopeful that the FTC is successful in the block of the Kroger / Albertsons merger. When Kroger merged with Harris Teeter, the results were terrible here. I don't wish that on people elsewhere.
It doesn’t really fit with their grocery prices being too low for other stores to compete with, though?
Walmart is a very large business that does many things, not just groceries. Averages can mislead. Maybe they’ve expanded into some higher-profit kinds of business? The article hints at this: apparently they sell advertising now and cater to upscale shoppers somehow?
The linkes article already mentioned that they can buy things cheaper than an independent can even purchase at wholesale value.
Say you're a chicken farmer and you sell $10 a bird, and it costs you $4.80 to raise them. Walmart offers to buy your chickens at $5 a bird take it or leave it they have other suppliers lined up. But the deal says you can't also sell to independents, not even for $20. You do some math and figure out if you take a $0.20 margin on your birds, you don't make hardly any money, but the contract says they'll for sure buy a million birds from you every year rain or shine. You're guaranteed a certain amount come what may. They have a whole fleet of ice trucks taking your prepped birds. You take the deal. You out earn your neighbor selling $10 birds to just one local independent chain grocer. Next year your neighbor wants in on the deal and they're feeding their birds garbage but they can sell to Walmart for $4.50 a bird.
Meanwhile your local independent just lost two suppliers and have to go further in search for $10 birds that no one can afford to buy instead of driving to Walmart for, what is it, 3% margin? A $5.15 bird. I'm intentionally ignoring fuel and supply chain costs because Walmart will always have indepts beat at those things as well.
Yes, and the result of all that is low profit margins and low prices for consumers.
Sure, inflation was higher last year. But why? Has Walmart has stopped squeezing suppliers or raised their profit margins? I don’t think it can be settled without going out and looking for more detailed reporting.
The stories in the news seem to be about supply chain shortages rather than cartels. If you look at why the price of eggs is higher, there are stories about bird flu.
I live in Canada, where they have in fact been able to demonstrate in court that there was a bread price fixing scheme coordinated by the biggest grocery owners.
$1.50 a loaf for 15 years across the entire country. And heaven knows what else they've colluded on and don't have enough evidence to charge yet, to say nothing of legal but terrible anticompetitive advantages. I'm not going to be easily convinced that their margins are razor thin and they're hit hard by shortages and bird flu.
Yeah I wonder if that problem is one that should be addressed by subsidizing, and if so, how much the actual cost of that is when you factor in the complete picture of what needs to be subsidized, not just the infrastructure being built but the price of the items which is an ongoing cost, or if there's another solution, or if the solution is a little further around the corner with more technology advancements.
Is bulk pricing to smaller shops not financially sound because of shipping costs? If you had tons of small local shops, collectively their orders would be as much as the big stores, so the cost of production or manufacturing should still round out about the same, but seemingly where the costs grow is the distribution. Maybe it really is that much cheaper to have a larger refrigerated truck drop off tons of milk, cheese, yogurt etc. to the local Walmart, than it is to run a bunch of smaller refrigerated trucks on varied routes, or the larger truck run longer routes to multiple places.
There's probably also the matter of staffing the smaller locations, where perhaps Walmart can get away with fewer employees per 1000 items stocked but to have a location open at all requires a minimum amount of staff, so the amount of employees to the amount of items being sold (or whatever metric you want to go with) could be much greater for the smaller shop, which would naturally be factored into the cost of the items. It's been a topic of discussion, including I believe maybe a segment on John Oliver's Last Week Tonight about dollar stores and how mismanaged and consistently understaffed they are, among other problems, and those stores are sort of a smaller 'convenience' store when compared to Walmart at least.
Perhaps when trucks don't need drivers, and stores don't need employees (or as many), then the costs of distributing and selling goods in smaller quantities over greater geographical areas will come down enough to make small neighborhood markets more cost competitive with large supermarkets?
Truck.
The Frito Lays truck drive right PAST the store in the article. They're not allowed to efficiently deliver to food deserts for lower costs to consumers because of anticompetitive contracts.
I'm a bit skeptical that the issue is that X company isn't allowed to efficiently deliver. The linked article just says that companies "don't bother" with a small independent business.
I’m wondering if something sort of like a weekly farmer’s market would make more sense?
A few thoughts from a former vegetable grower:
One issue with farmer's markets is getting enough people to make it worth the time of the farmer. I worked a couple years on an organic farm, growing ~50 different things on just 1 acre, and there were only two of us--we were constantly busy (behind) on tasks. We cycled through a number of markets, because there usually weren't enough customers to justify all the costs and time spent prepping goods, plus all the waste. Some days we would have been better off just getting caught up at the farm rather than sell the small amount we did. There is a lot of interest in setting up a farmers market in every little town or area, but it's just not feasible. The central, larger markets get enough traffic where it can be viable, which attracts more variety, and so on...
A model that has some potential is a community supported agriculture (CSA) to bundle set items together and have them picked up or delivered.
The issue is that these models only work with organic/chemical free growing; there isn't enough profit on conventially-grown crops in a market-style garden (little bit of lots of different things). And not everyone wants or can afford organic produce
I think encouraging or finding ways to grow fresh produce in food deserts is a way to help alleviate some of the pains, but that's not for everyone, nor is it year- round, nor is it all food products you likely need.
I'm not sure if I'm picturing the same thing you were when mentioning that, but that seems like it could be inconvenient or just not feasible for some since they need to be available at the time the weekly farmer's market is happening, rather than going at a time when it is convenient for them. If it's just a matter of inconvenience, perhaps that's a lesser inconvenience than having to drive some amount of time away to get to a bigger store, but there's always going to be some people that will have obligations that prevent them from going on a fixed time slot. I suppose it's still better to serve some people even if you can't make it better for everyone, I guess it just depends on weighing the factors of cost and estimated gain for those it has improved circumstances for.
Yes, convenience is a big deal and that’s why stores are normally open for long hours. Just pointing out that there are other ways.
I’m also wondering about the assumption of individualism, that people are on their own and don’t cooperate. That is in practice what people do, but does it have to be that way? Maybe people have family or friends who could help with shopping?
This is assuming a society that’s structured differently than it actually is, but one can at least imagine a small community that’s a bit more organized and social, at the cost of some inconvenience.