Grocery Update Special Feature: Why It’s Time for Public Sector Grocery Stores In New York.

An Op-Ed On Building Diverse, Resilient and High Quality Food Supply Chains.

Why It’s Time for Public Sector Grocery Stores In New York.

By Errol Schweizer and Batul Hassan

Batul Hassan is the Labor Director of the Climate and Community Institute (CCI), a progressive climate and economy think tank. We work with movements and progressive policy makers to pass new policy, improve implementation, shift narratives, and deepen coalitions.

The United States has a grocery problem. The $1.1 trillion grocery industry is highly concentrated, with six chains controlling over 65% of sales nationally. Just two to three chains, usually Walmart, Kroger or Albertsons, dominate the market in dozens of metro areas across the US.

This market concentration depresses wages, limits consumer choice, narrows the market access of diverse suppliers and more sustainable products and makes price coordination, especially during inflation, much easier. New York City, where no grocer has more than 10% market share, is an exception. Still, many products on the shelves across dozens of categories, from cereal to toothpaste, are produced by a handful of processing, manufacturing and distribution conglomerates, like Pepsico, Nestle, and Kellogg’s.

This consolidation of supply chains has resulted in enormous profits for these companies, with much of the profit redistributed upwards to shareholders in the form of dividends and stock buybacks. The result has been food price spikes of over 32% since 2019, and even higher in many basic categories like meat and frozen foods, leading to a disconnect between the stated rate of inflation in recent years and the everyday effects on working peoples’ daily budgets.

Higher prices are contributing to higher food insecurity; even as the population grows, demand for food has flatlined, meaning nearly 50 million people in the US are skipping meals, eating less, trading down to lower quality items or using food banks to fill their pantry gaps.

This economic injustice hits home hard in New York City, where more than half of all families struggle to cover basic expenses. New polling from Climate and Community Institute and Data for Progress shows that 85% of New Yorkers are paying more for groceries and food now compared to last year and 91% of New Yorkers are concerned about how inflation impacts how much they pay to get food on the table.

Four out of five households in New York report finding it harder to afford groceries over the last year. And food-related health care expenses top $1.3 trillion annually, with the vast majority of food sold in grocery stores linked to diabetes, cancer, heart disease, air, soil and water pollution and greenhouse gas emissions that cause climate change. Big food companies maintain their market dominance through deep-pocketed advertising and promotions that limit the ability of more sustainable products to reach consumers, especially in low-income communities.

This is what food activists refer to as “food apartheid,” where there are two food systems with huge income and racial disparities. Food access therefore overlaps considerably with the needs of communities on the frontlines of the climate crisis, as our food supply exacerbates racial, economic, and quality of life/health disparities while creating enormous wealth for a small number of mega-corporations. These issues intersect with other problems communities face in accessing healthy, affordable food, like the fact that neighborhoods on the frontlines of the climate crisis are also often “food deserts”, making racial, economic, and health disparities worse.

But it doesn’t have to be this way. Building diverse, resilient and high quality food supply chains is a critical strategy to repair the environment, empower workers, address racial and economic injustice and ensure all people have access to good, healthy food.

A new proposal for New York City would establish a pilot program of municipal grocery stores to provide accessible, affordable groceries to New Yorkers—an alternative to price gouging that can help ensure the city has more control over food distribution while generating choice and economic power for communities. This pilot program of five grocery stores across boroughs would buy and sell wholesale and be exempt from property tax or rent to reduce costs. The resources needed to establish this program are infrastructure within the city’s control, and include recouped funds from the City FRESH program as well as new City revenue. Grocery store planning and rollout would be driven by communities, incorporating the food preferences of people in the neighborhood.

New polling from Climate and Community Institute and Data for Progress found that the idea resonates with New Yorkers.

Two-thirds of New York City voters (66%) support a proposal to create municipal grocery stores in New York City, including a strong majority of Democrats (72%), as well as a majority of Independents (64%) and Republicans (54%).

The concept is imminently feasible.

In fact, publicly owned grocery stores are quite common and already exist at scale—in the US military. Every branch of the military has its own exchange system that provides goods and services for enlistees, paid for by the public. These include groceries/commissaries, department stores, gas stations and convenience stores, and can also include ancillary services like barbers, laundries and lawn and garden shops. The exchanges provide tax-free shopping and discount goods and services. This PX commissary network generates over $4.6 billion in annual revenue across 236 commissaries worldwide. This size enables commissaries to leverage efficiencies in wholesale costs and logistics at the level of any national grocery chain.

Exchanges also keep their costs down by operating as cost (not profit) centers with a two to three percent markup, and budgeting labor and administrative expenses, rent/occupancy and utility costs centrally and not through each operating unit. Commissary prices are 25-30% lower than typical retail prices, saving military families and veterans over $1.6 billion in 2023.

It would not be too much of a stretch to municipalize this model, especially if there were a large scale, committed effort to build multiple locations quickly and leverage some of the other best practices in the grocery industry, such as the efficient and low cost warehouse format of Costco or the limited assortment and high volumes of discounters such as Aldi. Leveraging these operational practices alongside the PX commissary model could make municipal grocery stores the cheapest prices in the city. And public grocers could also include free delivery, further reducing food insecurity by bringing good food to anyone’s doorstep, without the high surcharges of delivery apps.

But that’s not all municipal grocery stores could accomplish. They would still be selling many of the same products from consolidated supply chains with their deeply concerning health, environmental, and predatory pricing impacts. One way to disrupt this would be to implement the “high-road” practices of values-based procurement. Values based procurement is a fast growing food policy trend that builds on the consumer demand for climate friendly, ethically grown and sustainably produced foods that currently make up less than 10% of all grocery sales.

Such procurement standards have already been proven viable in the private sector with multibillion dollar companies such as Whole Foods, Natural Grocers and Thrive Market using high standards across their much of their supply chains while many mass merchants, such as at Walmart, Kroger and Stop & Shop, even dabble in analogous standards with their fast growing store brand private labels, such as bettergoods, Simple Truth and Nature’s Promise, Respectively.

Values-based procurement has already been adopted by dozens of cities and institutions around the US with much success, including New York City. Purchases must follow guidelines around worker dignity and safety, animal welfare, community economic benefit and local sourcing, impacts to the environment, and health and nutrition, including emphasizing culturally appropriate, well-balanced and plant-based diets. Values based procurement prioritizes suppliers from marginalized backgrounds and non-corporate supply chains, including small, diversified family farms, immigrants and people of color, new and emerging consumer brands, and farmer and employee owned cooperatives.

The benefits of values-based procurement could be further amplified by linking purchasing for retail groceries with purchasing for institutional food service, with public schools and hospitals as two key examples. The Good Food Purchasing Program developed by Los Angeles Unified School District—the second largest school district in the US, after New York City—offers an example of using institutional food purchasing as a lever for improvement across five areas: local economy, nutrition, worker dignity, animal welfare, and environmental sustainability. The policy has led to LAUSD shifting to purchase more food from local farmers, with between 50-72% of its produce purchased from within 200 miles. Vendors like Gold Star Foods have adjusted their standards to align with GFPP, from changing recipes to ensure ingredients can be sourced from nearby farms to unionization of delivery drivers. Since implementation in 2012, the program has scaled up to serve 2.5 million students across 50 school districts.

In addition to getting better food onto peoples’ plates at lower costs, shifting to values-based purchasing systems offers an entry point for ensuring workers along the food supply chain are included in metrics for achieving better economic, health, and social outcomes from the food system.

High levels of consolidation and growing monopoly or oligopoly power has empowered the food industry to lobby the government for legislation that shifts private costs into public externalities, including lack of protections for workers. Food supply chain laborers—from farmer labor to food processing to delivery workers—are highly exploited, exposed to environmental hazards including vector-borne illnesses like bird flu, extreme heat, and wildfires, and other safety violations, experience high rates of wage theft, and subject to stark racial and gender inequities. More than half of farm laborers in the US are undocumented, meaning workers are not only on the frontlines of the climate crisis but particularly disempowered from advocating for themselves on the job. Visions of a healthy, affordable, and climate-safe food system must include workers’ rights.

And where there are bottlenecks in infrastructure to support such an ambitious strategy, there is one more potential solution via public investment. And that is to build a vertically integrated public sector food supply, from farm to pantry, ensuring that values-based procurement supports high-road products flowing into a public supply chain. This could mean publicly owned wholesale, processing and manufacturing that could aggregate demand for local, regional and ethically sourced products.

Public sector supply chains would be incremental to wholesale markets such as in Hunts Point, could fill gaps in “middle-market” infrastructure for producers too big for cottage industry but too small to compete for manufacturing line time with mass market brands and who could also sell into private sector grocery supply chains when there was a surplus. Public sector supply chains could be the secret sauce of food system regeneration.

There is precedent for this elsewhere in the world. In South Korea, public investment in “precautionary” supply chains ensures that public institutions have access to healthy, safe and sustainably grown products. A public grocery sector would meet consumer demands and supercharge the availability for ethically and sustainably grown ingredients and ready-to-eat products while de-risking farming and processing for values-based producers who would have a guaranteed market for their output, all while keeping these products affordable and accessible to all. Good food would be the most reasonably priced in the marketplace, taking the gentrified sheen off of healthy eating and operationalizing the right to good food.

Public sector grocery stores could therefore be a part of an expansive, holistic tool kit to repair and reorganize New York City’s food supply into one based on solidarity and sustainability that provides plenty for everyone. In the new Trump era, DOGE billionaires are gutting federal agencies and regulations while doing nothing to address the cost of living crisis; food prices are still climbing and yet administration officials are claiming people in the US no longer need cheap consumer goods. There couldn’t be a better time for public sector grocery stores.

For the full polling brief, click here.

Originally published here and here.

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