Thursday, August 3, 2017

Closing up shop in rural America (Part I)

The New York Times ran a story last week, dateline San Luis, Colorado, about a "mom and pop" grocery store--the oldest in Colorado (because San Luis is the oldest town in the state).  The long-time owners of the story are in their 70s and want to retire, but no one has stepped up to buy the store, to take over its operation.  Here's an excerpt from the story, "Who Wants to Run that Mom-and-Pop Market?  Almost No One" that puts it in national perspective.  
Across the country, mom-and-pop markets are among the most endangered of small-town businesses, with competition from corporations and the hurdles of timeworn infrastructure pricing owners out. In Minnesota, 14 percent of nonmetropolitan groceries have closed since 2000. In Kansas, more than 20 percent of rural markets have disappeared in the past decade. Iowa lost half of its groceries between 1995 and 2005.
* * *
The phenomenon is a “crisis” that is turning America’s breadbaskets into food deserts, said David E. Procter, a Kansas State University professor whose work has focused on rural food access, erasing a bedrock of local economies just as rural communities face a host of other problems.
* * * 
[I]n this ranch town, where the closest reliably stocked market is 40 miles away, the threat to R & R Market raises questions about the community’s very survival.
This matter of community survival is a topic of prior blog posts, some of which are here, here and here.  The Center for Rural Affairs wrote about the issue here, with links to earlier related entries and sources on their website.

Julie Turkewitz, the journalist who wrote the story, quotes Bob Rael, director of the county's economic development council, 
If that little store closes, it’s going to be catastrophic. Reality is going to set in. Who let this happen?
That's an interesting quote, not least because I'm not sure what any private individual has the power to do about the closure.  So who might/will be to blame if it does come to pass?

The population of Costilla County, the ninth least populous in Colorado, is 3,524, and it lies on the border with New Mexico. Turkewitz makes this poignant observation about the place:
To visit San Luis is to enter a world that has persisted despite, or perhaps because of, the most extreme of circumstances.
* * *  
In town, residents still speak the Spanish of their ancestors. And on the outskirts, fields of alfalfa sip from an irrigation ditch that those settlers dug by hand. 
This is high desert country, where a few inches of rain fall in a year, winters dip far below zero and the big city nearby is Alamosa, population 9,918. There is no bank, no gas line, and the electricity sometimes goes out for hours.
Turkewitz also explains that taking on a business like a grocery store is a high risk venture, especially with the Trump administration proposing major cuts to programs that support rural America, including SNAP (food stamps) and small-business loans.  Thirty percent of the county's residents receive SNAP.

This is a beautifully written story with lots of historical, economic and political context.  The photographs are exquisite, some quite poignant.  

I'm going to return soon to the topic of business closures--or at least businesses for sale--in rural America.  In that future post I'm going to draw on a recent drive through California's Gold Rush country (Hwy 49--named for the forty-niners--through the northern Sierra) and the many for-sale signs I saw there.  

1 comment:

RodFleck said...

I would love to have the chance to meet you and talk with you about examples I have seen across rural Washington these past two decades.

Financing the purchase of a business can be a signficant challenge - not just for the mom & pop store, but for the group that would like to start a business or restart a mill. The banking houses of Urban centers are uncertain about the sustainability of "those places in the next few years" and literally seem to utilize any bad news as a basis to affirm their perceived risks associated with lending. Some non-traditional lenders can help through the use of tax credit based lending tools, yet, you also need the buyers. In some situations, the owners wanted to retire - sell the business to their children - but the children, now in the thirties and forties have established lives and many times those are elsewhere.

The threat of loosing an essential service - grocery store, bank, hospital, etc., is that perverbial wolf at the edge of clearing for many of us in rural communities. This article truly caused me to cringe. I suspect that there are political leaders trying to find a solution - trying to see what tools they can bring to bear and I pray, just pray, those tools are there to help a prospective buyer.

If Congress wants to reform taxes, let's double tax credits for lenders who lend to small businesses in rural communities. Let's add to the SBA and the USDA so they can help with the financial guarantees needed to "calm the worries" of the lenders. Let's incentivize the investing in rural communities, while ensuring government invests in the infrastructre needed to match those private sector investments.