Flagstaff, AZ – Demand at food banks has never been higher. The Department of Agriculture released a recent report that showed one out of every seven households is having trouble putting food on the table. Large food banks are stocking up with the help of WalMart and other grocery chains. But smaller food banks are struggling to keep pace with the demand, at the same time their traditional sources of food are drying up.
At the Northern Arizona Food Bank in Flagstaff, two women fill large paper bags with bread and fresh vegetables to take home. Volunteer Lisa Arthur ushers them through the receiving process.
"Those go on the scales, ladies," says Arthur. "If you want a watermelon, you can get it out of the bin here."
Arthur grunts as she picks up a heavy box of canned food for them.
On the other side of the warehouse a group of high school students work in an assembly line packing and taping up more boxes.
"We're making more food boxes right now to replenish the line," says Kerry Ketchum, executive director of the food bank. "The food boxes have been going out the door just about as quick as we can make em. As you can see our racks are pretty bare right now."
Ketchum points to empty shelves that used to be well stocked.
One of the reasons they're bare can be found here, at a grocery store. Every time a cashier scans an item, that information is sent to its inventory spread sheet. That beep in the check out line eventually triggers production of another can of beans or another box of spaghetti. That's taken a lot of the guess work out of ordering more food.
Terry Shannon, CEO of Arizona-based Saint Mary's Food Bank Alliance, a member of the nation's largest network of food banks, explains how grocery stores track their supply.
"Before it used to be the individual sitting there with a computer report and guesstimating how much they're going to need," Shannon says. "More and more and more, the retailer is very concerned about what they refer to as shrink. Shrink is the food that comes in their back door that doesn't go out their front door that they end up not being able to sell."
That shrink used to be the surplus donated to food banks. But there's less and less of it.
"A few years back, food companies started cutting many of the costs out of their supply chains so they're producing product much more on demand meaning there were fewer products out there for them to be able to donate to food banks," says Brian Todd, president of the Food Institute, a trade association that follows food manufacturing trends.
Some food companies like Kraft, DelMonte and Hickman Eggs will produce an extra semi load of food specifically to donate.
But contributions to many food banks aren't keeping up with the demand. At Saint Mary's, monetary donations have made up for their lack of food. At Northern Arizona Food Bank they're down 40 percent. That's due in part to a new competitor that's thriving during this economic downturn dollar stores.
Those bargain basement close-out stores compete with food banks for mislabeled boxes and dented cans.
"There's actually a market for those foods so those organizations -- food manufacturers, retailers -- are using that to affect their bottom line rather than to donate," says Bob Evans of United Food Bank in Mesa.
This means they can actually sell their excess food rather than donate it. And that can make more business sense than an end of year tax write off.
"If they have the ability to get 20, 30, 40 cents on a dollar to sell it into a secondary market, it becomes a financial decision not a social responsibility decision," says Saint Mary's Terry Shannon
Saint Mary's is part of a much larger network so they're not hurting for food. Shannon says they spend $3 million a year buying food. But that only represents 5 percent of the food they distribute.
Smaller food banks, like Northern Arizona, purchase a much larger portion of their food.
"With these trends the way they are today and the food being sold off by manufacturers to 99 cent stores at some point in the future non profit food banks may become the 49 cent store," says Ketchum.
Small food bank directors say until there is a bigger tax incentive to donate, they will continue to struggle.
For NPR News I'm Laurel Morales in Flagstaff, Arizona.