Growing Network: Fresh Food Financing Initiative

Innovators can engage with relevant stakeholders and resources in new ways to create a good greater than any individual actor could create on its own.
by , | July 11, 2011 AT 9:00 AM

In 2008, Harvard University recognized the Pennsylvania Fresh Food Financing Initiative (FFFI) as one of the “Top 15 Innovations in American Government.” The initiative is a grant and loan program designed to encourage supermarket development in underserved neighborhoods. To date, the initiative has supported 88 fresh food retail projects, ensuring that more than 400,000 Pennsylvanians have better access to healthy, affordable food.

Spurred by the program’s recognition and measureable successes, policymakers, hunger and healthy food advocates, and economic development officials have come to Philadelphia to see where the idea for the initiative started and to learn how a network of stakeholders worked together to increase access to fresh, healthy food in underserved areas across the state.

Perhaps the most notable visit was by First Lady Michelle Obama, who has made increased food access an important component of her Let’s Move! campaign.

Soon after the First Lady’s visit, the national Healthy Food Financing Initiative (a unique collaboration between the U.S. Departments of Agriculture, Health and Human Services and the Treasury modeled after the Pennsylvania initiative) made its way into President Obama’s budget.

The Pennsylvania Fresh Food Financing Initiative has also served as a model for numerous cities and states. For instance, New York established the Healthy Food & Healthy Communities initiative; New Orleans developed the Fresh Food Retailer Initiative.

The Beginning of the Pennsylvania Fresh Food Retailing Initiative

Just a decade ago, a national study showed that Philadelphia had the second lowest number of supermarkets per capita of major cities in the United States. Lack of food access was particularly severe in low-income neighborhoods and was linked to high rates of diet-related diseases such as obesity and diabetes.

The Food Trust, a Philadelphia-based nonprofit working to ensure that everyone has access to affordable, nutritious food, called upon state and local governments to take the lead in developing a response to this problem and convened a group of leaders from the supermarket industry, government and civic sector. This group of experts examined the barriers to supermarket development in underserved communities and identified recommendations to address the issue.

Making the case

Quantitative research and analysis was an early driver of interest among stakeholders. The Food Trust mapped the significant overlap between communities with the fewest grocery stores and those with the highest rates of diet-related diseases like diabetes and heart disease.

Soon after, the Pennsylvania House Committee on Health and Human Services and the Philadelphia City Council conducted their own studies and hearings to investigate the scope of the food desert problem. Additional expertise came from The Reinvestment Fund, a community development finance institution. TRF was critical in understanding the local markets -- including financial, employment and, of course, food retail.

Establishing financing

At the state level, Rep. Dwight Evans, who has represented northwest Philadelphia for over 30 years, was a champion of the cause. The groundwork laid by compelling data and a diverse network of supporters, Evans was able to leverage his role as chair of the Appropriations Committee to secure $30 million over three years to address this issue. TRF matched the state dollars by pulling together additional funding to create a $120 million public-private partnership, managed by TRF and The Food Trust, in partnership with the Greater Philadelphia Urban Affairs Coalition.

TRF then created financial packages -- combinations of grants, low-interest loans and New Markets Tax Credits -- for grocers to open or expand supermarkets in underserved areas. TRF’s expertise was most felt in understanding the financials and putting together these packages for grocers, who operate in a very competitive industry.

Taking the first risk

FFFI was designed help launch stores that would then operate on their own. It is important to note that FFFI did not subsidize the stores’ success. Success was up to the operator. FFFI simply triggered private investment by showing that grocers were underestimating the purchasing power of low-income rural and urban neighborhoods, and that supermarkets were viable in these underserved neighborhoods. The success rate of the supermarkets participating in FFFI has far exceed industry averages and their presence has sparked additional development in many communities.

In effect FFFI underwrote the risk of grocers moving into these underserved markets and helped to prove to other retailers that the demand for healthy, affordable food exists.

The Growth of a Network

In many ways the Fresh Food Financing Initiative is a network, growing around a common purpose. The lesson which can be learned from the development of the Pennsylvania program and similar initiatives in other states is not simply the replication of a successful model. The lesson is in how innovators can engage with relevant stakeholders and resources in new ways to create a good greater than any individual actor could create on its own.

The creation of FFFI brought together people whose work would otherwise not intersect, from policymakers, business owners and bankers to extensions agents, health department officials and hunger advocates. Bringing these stakeholders together was the first step in developing policy solutions to increasing food access. Importantly, the task force which was the catalyst for FFFI included supermarket operators, who provided necessary real-world perspective on the potential challenges of operating in lower-income neighborhoods and what types of support were necessary to overcome those challenges.

The informal network that developed to create Fresh Food Financing Initiative did not die with the launch of the program. Instead, the network of stakeholders has grown, addressing other food and nutrition issues throughout the state, from groups offering community supported agriculture opportunities to those hosting cooking classes to reinforce healthy eating habits. In Pennsylvania and throughout the country, similar networks are bringing together diverse groups who are tackling the often-disparate challenges of health, job creation, regional food systems and community transformation.

The time is right to join the network for fresh food in your community.