A Better Strategy for Feeding America?

EconTalk Extra
by Amy Willis
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In this week's EconTalk episode, host Russ Roberts and Canice Prendergast of the University of Chicago talked about an innovative new allocation system for a nationwide network of food banks. But maybe there's an even better way to get food to the poor.

I'd heard rumors of this venture in the past, but today I came across this piece on a new store in Boston called Daily Table, started by a former president of Trader Joe's, Doug Rauch. The means by which Daily Table acquires its inventory bears some similarity to that of Feeding America.

But what most struck me was this:

Some are seeing this as an alternative to food banks. The benefit of cheap food, opposed to free food, is that it allows customers to buy with dignity.
groceries2.jpg
We asked you earlier this week how you thought Chris Blattman, an advocate of cash transfers as a better means of aid, so now I wonder what you think of the model used by the Daily Table. Would food banks better serve their constituents by converting to a non-for-profit store, like Daily Table? Does receiving food at no cost demean the recipient in some way that purchasing it does not?

According to the article, Daily Table allows anyone to shop there, but they must become a member so that Daily Table can better track demand. Daily Table also has an in-house kitchen that seems remarkably flexibly in its ability to prepare ready-to-eat meals with its always uncertain inventory. Does this offer any sort of advantage over food banks that distribute unprepared food? What would be some of the other impacts of having customers who pay prices rather than recipients who accept donations of food without charge? If you were running Daily Table how would you price one item relative to another or relative to prices in for-profit groceries? How might this low-price non-profit option affect the profitability of for-profit groceries?

Here's another alternative to think about. What about a grocery for the hungry that didn't rely on donations as Daily Table does but simply lowered prices below those of for-profit groceries and financed their losses from donations of cash? How would this differ from Daily Table?

Share your thoughts...As always, we love to hear from you.

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COMMENTS (6 to date)
Tim Mason writes:

I worked for a food bank just like this in 2003 as a result of a speeding ticket. The food was all donated and 'customers' would come in and shop just like a store. Technically it was all donations but there was a clerk that would ring up a total. If a customer really couldn't pay, we would give them free food immediately but this didn't happen very often.

Their goal was to just raise enough money from this to pay the rent and the freezer bill. The incentives are great all the way around. The customers get to keep their dignity and pay for their food, and also have to make choices about what they really need.

I think another point is that the food bank itself gets to keep it's dignity because it doesn't have to go around begging for money, just food which is often available just from inventory miss-etimates.

There was another food bank in town that gave it way for free but I think a lot more folks came to us. I'm glad to hear people still do this. I think it's a great.

John I writes:

If you have not heard of Top Box Foods, check out their program based in the Chicago area. Top Box buys and repackages food boxes (mostly if not all fresh items) and sells at significantly reduced prices. Distribution is done through a network of church and community organizations where the customers pre-order what they wish and then come to the organization of the appointed date to pick up their boxed order.
I'm not doing them justice, since I don't know a great deal about their model, but was very intrigued to hear about it. Please check them out. It sounds similar to Daily Table in that it has paying customers who exercise their choice and pay at a more affordable level.

http://www.topboxfoods.com/lake-county-northern-illinois/how-it-works

[Faulty HTML fixed--Econlib Ed.]

John Sallay writes:

I don't think that cash donations are the right answer in this case, not that they are inferior. There is obviously a large surplus of food that wouldn't be purchased by anyone. That is why these donations are occurring. My guess, though I don't know, is that the businesses value the tax deduction and good will from donating the extra food more than any other potential use of the food.

I think that the big advantage of Daily Table can be summed up as "beggars can't be choosers." When I am able to purchase from a wide variety of goods. I don't need to feel bad about taking too much or wanting particular goods (being a chooser).

With that said, I imagine that there are many situations where people could not afford to pay anything for food. Maybe a women who just left an abusive relationship with nothing.

Tara writes:

Planet Money recently did an interesting story on food banks:

http://www.npr.org/2015/11/27/457565052/food-banks-pickle-getting-food-to-the-right-place-at-the-right-time

Amy Willis writes:

@Tara, Thanks for posting that link...I'd heard that story (which is also about Feeding America) before this episode, and I meant to post the link!

R. Benitez writes:

FASCINATING! Thank you Russ for bringing Canice to the show. I had other things to do, but I cound not pause the Podcast. I only wish you had asked these questions: Have foodbank managers that were skeptical and may have favored top-down centralized systems changed their minds? Do they appreciate a market-based system more? Do they consider it "fairer" and more efficient at allocating resources than a centralized system? Does this make a lightbulb turn on in their minds and make them wonder if the concepts used to create the market-based foodbank system are the better way to organize an economy?

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