State, federal, and local governments are chipping in to buy a grocery store for Salemburg even though a consultant’s report concluded the project might not be successful.
The total cost, including site preparation, construction, and equipment for the 10,000-to-12,000-square-foot store, is estimated to be $835,000.
The Sampson County town of 469 people currently has no grocery store, but it does have a gas station-convenience store. The town of Roseboro, four miles south of Salemburg, has both Food Lion and Piggly Wiggly grocery stores, and Clinton, 15 miles to the east, has several stores.
North Carolina State University economist Mike Walden told CJ that before governments finance such a project, officials should ask, “Is there some indication that people are not able to get their groceries?” Salemburg residents apparently have ample access to food at the grocery stores in nearby towns, Dr. Walden said. Limited shopping choices in rural communities are typically offset by lower housing costs, he said.
The state government’s contribution came from the Golden LEAF Foundation, the nonprofit that administers half of North Carolina’s share of the national tobacco settlement. As part of its 2002 grant program in November, the foundation awarded $175,000 to “assist Salemburg with purchasing equipment needed to open a grocery store, which will be operated by a private entrepreneur.”
“The project will create 20 new jobs and result in a new market opportunity for area farmers,” the project description on the Golden LEAF’s 2002 awards summary said.
Winston-Salem-based R. J. Reynolds Tobacco Co. was one of the companies involved in the 1998 national tobacco settlement. CJ asked Reynolds spokesman Tommy Payne where the Golden LEAF money for the grocery store actually came from. “All the money is paid by smokers. In the first 16 months after the settlement, prices to smokers went up as much as they had in the previous 16 years,” he said.
In February 2002 the U.S. Department of Agriculture approved a $99,999 grant to Salemburg for the grocery store. The town has pledged $300,000 in cash for the project and planned to borrow $210,000. Salemburg’s total commitment exceeds its current annual budget of $458,000.
Salemburg Mayor Bobby Strickland told CJ, “We expect to get paid back through a lease. I do not feel the town’s investment is at risk. I think the store will benefit the town and surrounding community.”
A market analysis prepared by David Moore Research Services for Salemburg raised several concerns about the project. The report concluded that “the Salemburg delineated area has a relatively small potential trade area and a very small base population within the town’s city limits. Residents of the delineated area live in close proximity and have easy access to larger markets with greater retail offerings.”
The market analysis was included in the USDA grant application and the application to the Golden LEAF Foundation.
CJ furnished background information on the Salemburg grocery store project to both of North Carolina’s U.S. Senators, and then asked for their comments on federal funding for grocery stores.
Dole spokeswoman Mary Brown Brewer told CJ, “Senator Dole strongly believes in fiscal responsibility and setting spending priorities. As a new member of the Agriculture Committee, which has oversight of the USDA, she looks forward to making sure that taxpayer dollars are spent well and wisely.”
Carlos Monje a spokesman for Sen. John Edwards said, “I’m sorry we won’t be able to provide a comment at this time.”
Carrington is associate publisher of Carolina Journal.