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Illinois food banks pinched by rising commodity prices

by Claudia-Teresa Pou
April 16, 2008

Illinois food banks pinched by rising commodity prices

As the prices of commodities such as corn, wheat and soybeans continue to skyrocket, Illinois food pantries and their suppliers are feeling a many-sided pinch, because donations from the state are decreasing and the number of needy clients is increasing.

Non-profit organizations such as the Chicago Anti-Hunger Federation and the Northern Illinois Food Bank based in St. Charles have increased their food distributions by 20 percent.

“We’re getting a lot of calls,” said Dan Gibbons, executive director of the Chicago Anti-Hunger Federation.

The Federation distributes food to soup kitchens, food pantries and shelters in the metropolitan Chicago area, and has noticed that these facilities are running out of food, Gibbons said.

Samantha Haggerty, communications manager at the Northern Illinois Food Bank, has noticed a similar trend. The St. Charles-based food bank usually has about 3 million pounds of food in stock ready to distribute to 13 counties across the state, but now has only about 1.5 million pounds due to the sharp increase in client demand. 

Haggerty said donations from the state have decreased by about 10 percent.  Gibbons declared, "we can't rely on it because it's very volatile year to year."

A contributing factor feeding the demand for food banks is the rising prices of commodities, such as wheat, corn and oil, causing food prices to rise across the world.

Basic food items such as milk and eggs have increased by 5 percent since February 2007, according to the U.S. Department of Agriculture Web site.  The Bureau of Labor Statistics reported Wednesday that the Consumer Price Index (CPI) for all food has increased at an annual rate of 5.3 percent so far this year, as retailers pass on higher commodity prices and energy costs to consumers. 

“Food stamps used to last until the third week in a month, but now it’s down to two weeks,” Gibbons said.

Haggerty is concerned that the rising food prices coupled with a decline in weekly wages in Illinois, as reported Wednesday by the Mid-America Institute on Poverty of the Heartland Alliance, mean that more people across the state will be unable to afford basic foods.

Economists do not foresee food prices declining or leveling out any time soon. Eric Nijensohn, a partner at Marquette Partners LP, said that there are too many different variables affecting the rising price in corn, soybeans, wheat and other commodities.

Among the several factors contributing to the price explosion, Nijensohn explained, are the weak U.S. dollar, new investors trading commodities because they're disenchanted with stocks and bonds, and an increase in food demand from countries such as China and India, all pressing on a lagging supply.

The growing demand for bio-fuels, particularly corn-based ethanol, has also added to the rising price in corn, said Adolfo L. Laurenti, a senior economist at Mesirow Financial Holdings Inc.

“We are in a commodities super cycle, returning to the 1970s,” Nijensohn said, adding that it will take approximately five to ten years to see a real readjustment of commodity prices.

Meanwhile, Illinois food banks can expect to see more and more clients asking for help as they too adjust to the surge in food prices.