What Happened to the Food Surplus?

“Right now I’m getting by—but just barely,” she says with an unmistakable note of defiant pride in her voice after she visited Bread for the City, a food bank in the nation’s capital.

Pearson, who lives alone on a fixed income, depends on the prepared meals delivered by Meals on Wheels five days a week, and she’s grateful for them, even though the organization has had to cut back on soups and salads. “More and more I’m managing to make one meal stretch into two,” she says.

She also counts on food items she picks up at the food bank, but Bread for the City, too, has had to scrimp. In July “they didn’t have any meat,” Pearson says. “They had to cut out juice, and instead of two cans of vegetables there’s only one this time. Believe me, all those little cuts add up.”

Surging demand, soaring prices, shrinking surpluses the commodities crisis, experts say, is the result of a perfect storm of changing economic and social forces. Perhaps the most sweeping is the expansion of markets in , and other large developing nations, creating new and rapidly growing demand for food products from the . The rising demand has helped push up food prices here and around the world.

At the same time, climbing fuel prices have made it far more expensive for farmers to produce food, and not just because most farm equipment runs on gasoline. Many of the fertilizers and pesticides used in conventional arming are petroleum based. As the price of a barrel of oil climbs, those costs also rise. The spiraling costs of transporting food for distribution and sale have also pushed food prices higher.

In response to soaring oil prices, the federal government has aggressively stepped in to help ramp up the production of ethanol from corn as an alternative to gasoline. Unfortunately, the strategy may have inadvertently driven grocery prices even higher by taking up agricultural resources that might otherwise have been used to produce food. Daniel Sumner, director of the University of California Agricultural Issues Center, has suggested that biofuels may be responsible for up to 50 percent of recent food price hikes, depending on the crop.

Whatever the causes, high food prices affect everyone. But in an increasingly global marketplace, Americans are being hit particularly hard because of the weakness of the U.S. dollar against foreign currencies.

“Currency prices really determine the price of food on the international market,” says Tom Buis, president of the National Farmers Union in . “Today’s food prices may seem high to us, but with the dollar at historic lows against many world currencies, they’re a bargain to overseas buyers.”

Speculation in the commodities markets, meanwhile, may be driving food prices even higher. According to government figures, investments in index funds tied to commodities increased twentyfold from 2003 to 2008. “My own conclusion,” Sen. Joe Lieberman, I-Conn., recently told a congressional hearing, “is that index speculators are responsible for a big part of the commodity price increases.”

For his part, Buis believes that commodities speculation accounts for as much as a third of food price inflation. “Believe me, when hedge fund managers start buying up corn futures, they have no plan to deliver corn to their customers,” he says. “They’re simply looking for a way to make money. That money has to come from somewhere, which means higher prices.”

All of this is good news to farmers in the , who can sell their output to new and growing international markets at top prices. Unfortunately, food banks and soup kitchens have paid a price. “The surpluses we saw five years ago, which helped stock food banks around the country, just aren’t there any longer,” says Doug O’Brien, executive director of Vermont Foodbank, which acquires and distributes food to 270 partner organizations around the state.

Will the new farm bill help?

The Food, Conservation and Energy Act of 2008—the farm bill passed on June 19—may help get commodities flowing to food banks again soon. Among other things, it increases funding for the Emergency Food Assistance Program from $140 million in 2008 to $250 million in 2009. And thanks to a provision that releases $50 million in emergency funding even before the law goes into effect Oct. 1, food banks around the country are starting to see increasing variety in the surplus commodities they receive.

The Vermont Foodbank, for example, has recently been getting shipments of frozen chicken. “That’s something we haven’t seen in a long time, and it means a lot,” O’Brien says.

The new farm bill doesn’t go as far as many advocates for the hungry would like. On the plus side, it reauthorizes the Commodity Supplemental Food Program (CSFP), which provides monthly food boxes to millions of needy people, the majority of them older Americans. That’s especially welcome news because the program had been targeted for elimination by the Bush administration for three consecutive years.

But while the money allocated to the Emergency Food Assistance Program is guaranteed over the life of the bill, the CSFP budget will continue to come up for review every year. Supporters of the program hope that it will eventually be given a permanent budget and the resources it needs to meet the growing needs of low-income older Americans.

But that doesn’t change the underlying forces that are transforming the global food economy. With growing demand from emerging economies, analysts predict, pressure on supply will last well into the future, putting upward pressure on prices. Fuel and transportation costs are likely to remain high, and the nation’s economic woes portend a continuing weak dollar, at least in the near term.

“We’re really looking at a fundamentally changed food environment,” O’Brien says.

His counterparts at other food banks agree. As David Goodman of the Redwood Empire Food Bank in , puts it: “We’ve got a world of committed volunteers. We’ve got funding. The real issue is going to be getting food.”

As food banks, meal programs and other food assistance organizations look to the future, experts say, they will have to look for new and innovative ways to keep millions of Americans from going hungry.