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Federal initiative brings healthy fare to food deserts

A collaborative initiative by three federal agencies aims to increase the supply of nutritious foods in urban and rural areas where access to healthy food is low.

April 1, 2013


Jacob Wascalus Community Development Project Manager
Federal initiative brings healthy fare to food deserts

For Tawney Brunsch, a troubling aspect of life for the people who live on the Pine Ridge Indian Reservation is the great distance that many have to travel to access healthy foods.

“This is a very prominent problem,” says the executive director of Lakota Funds, a community development financial institution (CDFI)1/ that promotes socioeconomic sustainability on the southwestern South Dakota reservation. At 3,468 square miles, Pine Ridge is larger than the state of Delaware, and according to Brunsch, “some people have to travel more than an hour just to get to a grocery store.”

To help address the access issue, Brunsch and her Lakota Funds colleague Tonia Young have organized farmers markets for the past two years that sell locally grown produce on the reservation. Sales have been growing, yet the markets still aren’t reaching everyone. More than 18,000 people live on Pine Ridge,2/ and the four farmers market sites, as well as the reservation’s three grocery stores, are still difficult to access for thousands of people.

But last year Brunsch and Young had a brainstorm: What if we brought healthy food to the people by driving around the reservation and holding temporary markets in different locations?

“That way, we could reach more people in more areas,” Young explains. “If we were to set up only in Kyle, which is the geographic center of the reservation, we’d be missing thousands of people. But having a mobile market would allow us to access many corners of the reservation.”

To help turn the idea into a reality, Lakota Funds sought and received a $71,000 grant that the United States Department of Agriculture (USDA) made in support of the federal government’s Healthy Food Financing Initiative (HFFI). Announced in 2010, the HFFI is a collaborative endeavor of three federal agencies—the Treasury Department, the Department of Health and Human Services (HHS), and the USDA—to increase the supply of and demand for nutritious foods in urban and rural areas where access to healthy food is low. For urban settings, the USDA defines “low access” as someone living more than one mile from a supermarket or large grocery store. For rural census tracts, the threshold is more than ten miles. Low-access areas, commonly called “food deserts,” are home to an estimated 23.5 million people nationwide, more than half of whom—13.5 million—are low-income.3/

The change envisioned by the HFFI is comprehensive. By directing tax credits, grants, and low-cost loans to a range of projects, the three federal partner agencies aim to strengthen the nation’s healthy food infrastructure in order to bring nutritious fare to food deserts, reduce childhood obesity, expand the number of quality jobs, spur “livable communities” and business growth, and create new opportunities for agricultural producers. Notably, the initiative primes public-private collaborations and attracts financial capital from banks and other investors.4/

Endless possibilities

To date, the Treasury Department has granted nearly $48 million in HFFI financial assistance to 19 organizations and the HHS has granted $20 million to 28 organizations. The USDA does not have congressional authorization to specifically direct funding toward HFFI-labeled projects, but it continues to fund healthy food initiatives through its Rural Business Enterprise Grants, Farmers Market Promotion Program (FMPP), and other grant and loan opportunities.

A key aspect of the USDA’s FMPP is its ability to enable farmers markets to accept food stamps, formally called Supplemental Nutrition Assistance Program (SNAP) benefits. The Lakota Funds’ mobile farmers market project, which is funded through the FMPP, is incorporating this innovation into its mobile markets payment system.

According to Brunsch, this added capability opens up the mobile market to many of the 1,400 families on the reservation that receive SNAP benefits.5/ She explains: “They can use their EBT cards [electronic benefits transfer cards, on which SNAP benefits are stored] to purchase all types of fruits and vegetables—from staples like corn, potatoes, and tomatoes, to more obscure vegetables like kohlrabi and leeks.” Other vegetables available at these markets include squash, cucumbers, peas, carrots, radishes, and eggplants.

Brunsch and Young are working with about ten producers, all of whom live and farm on the reservation, to grow produce for the roughly 12-week selling season. And to help the growers learn about the different aspects of local food entrepreneurship, Lakota Funds has partnered with South Dakota State University-Extension to conduct training sessions on creating and running farmers markets, marketing food and food products, handling food safely, using commercial kitchens, and building a community-supported agriculture6/ program.

“The possibilities with this project are really endless,” says Brunsch, noting that Shannon County, which lies entirely in the reservation, has a per capita annual income that is among the lowest in the nation, at $7,887.7/ “These mobile markets are going to be beneficial not just to the individual growers, who can develop this into a serious income stream, but also to the consumers, who will have much easier access to healthy food grown right here on the reservation.”

Grocery oasis opens in food desert

While the HFFI supports projects that combat food-access issues in rural food deserts, it also invests in projects that promote food access in urban areas. The C Fresh Market, located immediately north of downtown Des Moines, is the first full-service food retailer to operate in this area of Iowa’s capital city since 2004. The 20,687-square-foot store, which opened for business in January 2013, sells a mix of conventional and ethnic food, including fresh meat and produce, in order to meet the dietary needs and preferences of the area’s diverse population, which is made up of African American, White, Asian, and Latino residents.

“This is the first HFFI-funded grocery store in the state of Iowa,” says Marc Brailov, vice president of public policy and communications at IFF, a Chicago-based CDFI that serves Illinois, Indiana, Iowa, Missouri, and Wisconsin. IFF provided a $712,000 loan to help finance the C Fresh Market’s $2.3 million price tag.

The area where the store opened typifies the food-scarce environments for which HFFI interventions are intended. Before the store’s debut, all 4,043 people living in its census tract—37 percent of whom are low-income—experienced low access to a grocery store. Now, since the store’s arrival, the area’s former appellation—food desert—is obsolete.

Since 2011, IFF has received $6 million from the Treasury Department to make loans to bricks-and-mortar healthy food projects in the Midwest, leveraging investment capital from private organizations to support projects such as the C Fresh Market. Moreover, while IFF uses the HFFI funding to boost the availability of healthy food in food-scarce areas, it also uses it to increase the demand for healthy food.

To that end, IFF requires funding recipients to devise detailed community-engagement strategies that promote healthy eating habits. According to Brailov, these strategies must be comprehensive and include educational efforts both in the stores themselves and out in the community.

“We need to see an outreach strategy that’s viral, that’s spread throughout the community,” he says. “We’re trying to provide not just the means to purchase healthy food but the desire to adopt a healthy diet.”

Expanding to strengthen the community and add jobs

As the unofficial epicenter of Minneapolis’s Latino community, the Lake Street corridor in South Minneapolis is home to thousands of Latino immigrants and scores of Latino-owned businesses. The area’s commercial landscape is dominated by mom-and-pop enterprises—taquerías, mercados, clothing stores—and while this area isn’t a food desert, it is nevertheless in need of economic investment and more quality jobs, a goal of the HFFI campaign.

El Chinelo, a wholesale and retail grocery store specializing in Latino foods, is one business that seeks to fulfill those needs. Operating in South Minneapolis for more than a decade, the small business draws a robust number of customers and boasts sales receipts upwards of $3 million a year. But to reach the level of growth that the owners desire—and provide accompanying economic benefits to the area—the store needs to expand.

“This is the type of business that can anchor a community,” says John Flory, a special projects director at the Latino Economic Development Center (LEDC), a Minneapolis-based CDFI promoting economic opportunity for Latinos. The LEDC received a $788,000 HFFI grant from the HHS’s Community Economic Development program in 2012 and has dedicated a portion of the funding to expanding El Chinelo.

Recognizing the economic and employment opportunities associated with an expansion, Flory has been working with the business’s owners to move their retail operation to a 6000-square-foot building where they can set up a butcher shop, kitchen, and deli operation—a full-service retail grocery. Because El Chinelo’s owners would like to purchase the building, LEDC has drawn from its HFFI grant to make available a low-interest equity-matching loan of up $200,000 that the business can use to secure additional financing. According to Flory, the owners will be able to double their money with the equity-matching loan as they pursue funding for the total cost of the project, estimated to be between $800,000 and $1 million.

“This HFFI funding will allow us to offer subordinated debt on projects like the El Chinelo expansion that can be used to leverage conventional financing,” explains Flory, noting that LEDC’s loan would be paid off in three to five years. “Getting this deal done is still an uphill battle, but it’ll create good jobs and provide an economic boost to the area.”

Creating a critical mass

To borrow Flory’s wording, there are likely many uphill battles ahead in the effort to eliminate food deserts and replace them with healthy food environments. Accomplishing those goals would be a tall task for a single federal agency. Indeed, the likelihood that an individual department or program could catalyze the widespread change needed to create a truly healthy, truly comprehensive food environment is very small. But projects like the Lakota Funds mobile markets, C Fresh grocery store, and El Chinelo expansion suggest that when multiple federal programs with overlapping goals fund a multitude of projects, they may be able to create the critical mass necessary to make healthy food environments a reality for millions more Americans.

1/ CDFIs are specialized entities that provide lending, investments, and other financial services in economically distressed communities. For more information, visit the Minneapolis Fed’s CDFI Resources web page at

2/ This population figure is from the 2010 U.S. Census. Other estimates put the figure at closer to 28,000.

3/ Per the USDA, low income is defined here as “annual household income less than or equal to 200 percent of Federal poverty thresholds for family size.” See

4/ For more details about the initiative, see Healthy Food Financing Initiative: Implementation Plan, May 2010, at

5/ U.S. Census Bureau, 2011 American Community Survey Five-Year Estimate.

6/ Community-supported agriculture, or CSA, is a farming model in which consumers buy directly from a farm by purchasing shares of the farm’s seasonal yield. For more information on CSAs, visit

7/ See footnote 5.