A past episode pf Planet Money chronicled the transformation of Feeding America, a US network of food banks that feeds 46 million people.
The hunger relief charity previously delivered whatever supplies it had available to its food banks, regardless of their needs. The Alaskan branch rarely received fresh produce due to the high shipping costs and fears the food would spoil en route.
After consulting with economists, Feeding America’s directors introduced a market system and issued internal currency to the food banks to allocate food more efficiently. Those serving larger hungry populations receive more fake money, and produce is put up for auction multiple times a day.
The prices vary considerably. Dairy products are cheap as they expire quickly, require refrigeration and are often donated by locals. Meanwhile, peanut butter is pricey as it’s easily stored, loved by children and is a good source of protein. And unpopular foods such as pickles carry negative prices – food banks are given the 'Monopoly money' to take them.
An interesting quirk of the new system: food banks have the option of selling their surplus to peers, but their directors prefer to share instead. That may not be altruism though; a good relationship with other food banks might encourage them to share any spare food, spill the beans on good fundraising strategies and help advertise positions.
Listen to the full podcast here.