Talk about a smooth deal.
The Commerce and Agriculture Departments recently awarded $1.3 million in federal aid to a local New York county to help start a new Greek yogurt factory in New York. No, the money didn’t go to help a mom-and-pop shop or a small business.
Instead, one of the biggest beneficiaries was soft-drink giant PepsiCo, a multi-billion dollar American giant with plenty of its own money to fund its entrance into the yogurt market dominated today by brands like Dannon and Yoplait.
The aid package to the county economic development group included $1.1 million in incentives, as well $200,000 to help build a road to its new factory. The first part of construction on the Muller Quaker Dairy plant is scheduled to be completed in 2013.
For its generosity that helps a corporate giant, the Commerce and Agriculture Departments win this week’s Golden Hammer, a distinction given by the Washington Guardian to the worst examples of government waste fraud and abuse.
The Commerce Department gave a $1 million Economic Development Administration grant to the Genesee Valley Agri-Business Park in western New York to help improve water infrastructure for several of the businesses. The money was so that Genesee County “can accommodate the growing needs of new and current business tenants.”
But with the government facing a fiscal cliff, it begs the question: why didn’t the companies just pay for it themselves?
“Pepsi’s a $66 billion company, they definitely have the money to make those improvements,” said John Hart, spokesman for Oklahoma Senator Tom Coburn. Coburn highlighted the grants to develop the agriculture park as part of his annual “Wastebook” that identifies problematic spending from the federal government.
Steven Hyde, president of the Genesee County Economic Development Center, said he was dismayed the program made it into Coburn’s Wastebook.
“We’ve been talking about those infrastructure improvements way before we even met PepsiCo,” he said.
The money was given specifically to Genesee County to promote economic development. Hyde said the agriculture park was one of several ideas the county came up with to spur economic growth.
“It’s funding to our county to continue building out our infrastructure,” he said. “We’ve been fortunate to see companies like PepsiCo and Alpina coming in and making considerable investment.”
The new yogurt plant is expected to add about 160 to 180 new jobs and the agriculture park total could add upwards of 1,500 new jobs. That could mean a five percent increase in employment for the county, Hyde said.
“We don’t consider that waste,” he said.