Walmart's Food Deserts: Greening the Bottom Line

Recently, First Lady Michelle Obama announced that SUPERVALU, Walgreens and Walmart committed to open or expand 1,500 supermarkets across America's food deserts -- low-income areas without easy access to a supermarket. But while improving food access is a noble goal, the announcement merits a closer look.

Critics of the program note that health disparities are more strongly related to poverty than location of grocery stores. In fact, a recently published study in a top medical journal found that "greater supermarket availability was generally unrelated to diet quality..." Responding to the announcement, Joe Hansen, of the United Food and Commercial Workers Union (UFCW), pointed out that "Walmart is more responsible than any other private employer in our country for creating poverty-level jobs that leave workers unable to purchase healthy food."

For Walmart, urban expansion has nothing to do with food deserts. Walmart desperately needs a fix to its sagging bottom line.

The company is under pressure to expand after eight quarters in a row of falling sales. Walmart has historically been kept out of major urban areas by a combination of high real estate prices and resistance from organized labor. With post-recession real estate prices low, Walmart and other retail chains are swiftly moving in to capture the urban market.

Success would boost the company's profits by some $80 billion a year.

The corporate 'greening' of America's food deserts was not the first option put forth by the Obama administration. In February of 2010 the administration announced a national Healthy Food Financing Initiative (HFFI) modeled on a successful program in Pennsylvania. The Pennsylvania Fresh Food Financing Initiative (FFFI) used $194 million to offer loans and grants to 93 fresh food retailers in the state. As a result, FFFI increased access to healthy food for more than 400,000 residents, created more than 5,000 local jobs, and boosted local tax revenues. Furthermore, all the funded projects were independent businesses. The FFFI had a special emphasis on job quality. Though not expressly part of the eligibility criteria, the program prioritized community development and turned down applicants due to low-wage, dead-end and unstable job prospects.

Like the FFFI in Pennsylvania, the federal HFFI is poised to attract and benefit independent retailers. However, the $400 million program failed to secure funding during the FY2011 budget negotiations. While the departments in charge of HFFI (Treasury, USDA and Health and Human Services) are implementing some programs with existing resources, the combined $20 million is a drop in the bucket compared to corporate cash flows. As the FY2012 budget negotiations unfold, HFFI's ambitious programs may never come to fruition.

Walmart however, has no need to access federal funds, and certainly no desire to commit to provisions on job quality. In October 2010, Walmart issued a $5 billion bond offering and tied Microsoft for the lowest interest rates on record -- startlingly close to the rates on the bonds issued by the U.S. Treasury. By December the company was sitting on $10 billion in liquidity.

On the same day that Michelle Obama announced the corporate commitments, she also unveiled the California FreshWorks Fund, a $200-million program modeled after the Pennsylvania FFFI. Whether this new fund will be able to replicate Pennsylvania's success in boosting local businesses in California is yet to be seen, but activists are hopeful.

Whether or not retailers like Walmart can make a meaningful contribution to greening urban food deserts may turn on the quality of the jobs on offer. Responding to the entry of corporate retailers, long time Oakland food justice advocate Brahm Ahmadi said:

We all know the model under which these large corporations operate, and there is no reason why they won't replicate the same essential business model in neighborhoods that need not just any jobs, but need good, living-wage jobs that pay meaningful earnings and teach meaningful skill sets.

Campaigns across the country are underway to pressure the promised 1,500 Walmarts, SUPERVALUs and Walgreens to hire full-time employees from the neighborhoods they serve, sign labor peace agreements, and pay living wages. Those who care about health disparities in low-income neighborhoods should join them.

It is clear that if greening the food deserts are a policy priority, then we need more than just new supermarkets. We need programs that reduce record high income inequality and create jobs with decent living wages.

(Thanks to Luis Lei and Annie Shattuck of Food First)

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