Unfortunately, the current financial crisis has not peaked and the implications are just now starting to be understood. As increasing numbers of middle class families continue to lose their jobs in Colorado and across the country, a problem is evolving in the food production side of the equation that will hurt a critical component of a social backup system – food banks.

Farmers and ranchers plan production quotas based on yearly forecast of consumer and retail buying. Surplus production goes to food banks. But current numbers are projecting a significant drop in “buyer demand” by consumers and retailers – which is a fair perception when considering rising unemployment rates. However the perception of dropping demand is an illusion based upon “facts and figures” that don’t work in today’s environment. Demand for food is actually constant but the economics have changed.

Forecasting food consumption isn't an exact science and all levels of the food supply chain (See Traditional Supply Chain Process – Appendix A) anticipate a few percentage points of waste, or surplus, which inevitably is a major resource for food banks. The illusion is in the numbers. Reliance on surplus is increasing while financial numbers show a decreasing purchasing demand.

If – as projected – farmers and ranchers plan production based upon the illusion of lower buyer demand – because the economics tell them how much product is sellable – then surplus will fall and food bank supplies will suffer – perhaps to a critical level.

The good news is that the demand forecast has not yet caught up with us. Ranchers still have large herds, but they are struggling to feed them. Farmers are planning based on last year’s numbers, but if the perception of demand falls, they will turn the produce under in the fields to lower their operating costs.

Today – right now – the supply side is facing a crisis of excess while the demand side is facing a crisis of shortage. To solve the problem, we need to redefine the economic model – at least during the scope of the crisis. There is a solution if we act now.

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