Canice Prendergast
- Food manufacturers' waste and oversupply are important sources of provisions for food banks that nourish America's poor, such as those that form the Feeding America network.
- As food manufacturers get better at managing inventory, and more secondary food markets spring up thanks to the internet, economists and others working in the sector are not complacent about sustaining food supplies where needed.
- Canice Prendergast, professor at the University of Chicago Booth School of Business, was part of the team that modernized Feeding America's food-bank distribution system. Called the Choice System, it was a major shift to a market approach, which was not an easy transition for a nonprofit service organization.
- This story is part of our series Practical Economics.
Waste is the bane of food manufacturers but a boon for organizations that feed the nation's poor.
"Food banks benefit from mistakes made by food distributors and retailers," Canice Prendergast, a professor of economics at the University of Chicago Booth School of Business, said.
Prendergast was part of a team that modernized Feeding America's food-allocation system nearly 15 years ago, but there is more work ahead for the organization and its supporters.
As food manufacturers have improved their processes, there has been reduced waste, which can affect the supply to food banks. Secondary buyers have also proliferated, empowered by the internet, so that even homely vegetables will find a pot to be cooked in through online purveyors like Misfits Market.
"Feeding America deals with this problem every day and has done amazing work over the last decade to find alternative sources of food," Prendergast said.
Feeding America and the Choice System
The modern food bank has been around since about 1967, when John van Hengel established the St. Mary's Food Bank in his hometown of Phoenix. In 2008, the organization became known as Feeding America, and it now operates 200 outlets across the US, feeding 40 million people.
In 2005, the organization was facing problems with allocation of food across its network, relying on a queue system that distributed food to banks in rigid order, regardless of what food the lots contained, or local needs and preferences. Decisions about volume and selection were being made centrally, which left local managers frustrated.
"The local banks were unhappy being offered stuff they didn't want," Prendergast said. "The right food was not going to the right people." He was asked to join a 14-person committee, made up mostly of food-bank directors. "I was wheeled in as 'the economist.'"
It took the team a year to work out a better way, which became what is now known as the Choice System.
"What we proposed was to allow individual food banks to essentially choose what food they would like, the way it works in the world when we have money in our pockets and choose what to spend it on," Prendergast said.
Introducing a market-based system in a nonprofit supporting the poor was a cultural shift for the organization.
"People who run food banks aren't always the biggest fans of markets," Prendergast said, detailing the process of testing and tweaking that took place. "If one wants to implement economic ideas in the real world, the devil is in the details."
Food-bank operators learned to bid for the food lots they wanted, effectively competing with each other for the goods they wanted, using a kind of "Monopoly money" allocated according to need.
As a democratic organization, Feeding America put the system to a vote before it was implemented. "They didn't want to impose it on members," Prendergast said. "A lot of food-bank directors hadn't bid on anything in their lives before."
The Choice System remains in place today, even as Feeding America continues to innovate food sourcing. "My own small part in this," Prendergast said, "is to think about how we can rejig the Choice System to focus more on the food banks who seem to need the food most, and to encourage food banks to place their own foot onto our market."
Organizational design, cops, and art
Prendergast, who holds a doctorate in economics from Yale, spends most of his time on organizational design, particularly on what he calls "unusual occupations," such as police officers, bureaucracies where the goal is not to make money. He was part of the five-person committee that selected the art for the Booth School of Business' permanent collection.
When asked what drew him to the field of economics, Prendergast said, "Social science is at its best when it manages to impose some structure to help us better understand the mess of the world."
He added: "What economics does, when done right, is to take a piece of the world and usually offer a parsimonious way of better understanding it. My sense was that maybe I had a modicum of skill that could allow me to make sense of the world a bit better."