SOUTH CHINA — Pete Haskell sits behind his desk in his dimly lit office in the basement of his grocery store.

Upstairs, shoppers load their baskets with cans and boxes, many marked with a blaze orange sticker announcing DISCOUNT.

Haskell, a multi-generational farmer who also owns a trucking and fuel company, has watched the nation’s economic woes from different angles, and seen the fear up close on the faces of his customers.

As a farmer, Haskell has felt the pinch of rising fuel costs.

As a fuel dealer, he has carried homeowners until they were able to pay for their heating oil.

And as the new owner of Tobey’s Market, Haskell is trying to soften the blow inflicted by the soaring cost of food.

He has been going through lots of orange stickers.

“People are struggling with rising costs of everything,” Haskell said. “They’re looking to save any way they can.”

Recent price spike

While budgets have been blown out by oil spikes in recent years, consumers have at least been able to depend on reasonable food prices.

The U.S. Department of Agriculture reports the consumer price index for all food — that purchased at grocery stores and at restaurants — increased just 0.8 percent between 2009 and 2010, the lowest rate of food inflation since 1962.

But prices for commodities such as corn, wheat and energy, coupled with a weak U.S. dollar and droughts in the West, have recently made a trip to the grocery store as unnerving as pulling up to a gas pump.

The USDA reports overall food prices increased 0.4 percent from June to July this year, and 0.5 percent from July to August. By the end of August, food prices were up 4.6 percent from the same month in 2010.

The price of retail food at the grocery store rose 6 percent from August 2010 to August 2011, the government reported.

By item:

* BEEF prices are up 10.4 percent;

* EGG prices are up 14.5 percent;

* DAIRY products are up 9.1 percent;

* FRESH FRUIT is up 9.1 percent

* BREAD is up 8.6 percent;

* FISH and seafood is up 8.3 percent;

* CEREAL is up 4.5 percent.

“Maine people are pretty resilient,” said Tobey’s Manager Barry McCormick. “They’ll suffer through this and survive. They’ll feed their families, but it’s getting tougher and tougher every day.”

Maine near worst

Clara McConnell, spokeswoman for Good Shepherd Food Bank said 15.4 of Maine’s households — 200,000 people — currently struggle with “food insecurity,” defined as having difficulty providing enough food for their families at some point in the past year.

Maine ranks 13th in the nation — first in New England — in food insecurity and is sixth in the nation in terms of “very low food security” — households that must reduce the food intake of some members due to limited resources.

As a result, many families are looking in places they never did before: Namely, their local food pantries.

“Throughout the state, there’s at least a 20 percent increase in people needing assistance. In some places its 50 percent,” said Jason Hall, interim director for Maine Department of Agriculture’s emergency food assistance program. “We’re seeing people with three or four jobs. We’re seeing professionals. The economy is so bad that they’re seeking assistance now. It’s something they’ve never done before.”

For Hall, who has 15 years of experience in hunger relief in Maine, it’s uncharted territory.

“It’s the worst I’ve seen it,” he said. “We’re in a state where there’s a stigma going to a pantry, (but) you’re seeing people from all walks of life.”

‘It’s ridiculous’

Mary Dow, of Searsmont, has not had to visit a food pantry. But one look at prices on the shelves inside a local grocery store helps Dow understand why people do.

“They’re too damn high,” she said. “It’s ridiculous.”

Dow, 75, who lives alone on a fixed income, said the money she gets from her monthly pension is earmarked only for essentials.

“Your fuel runs out in the middle of the month, but you don’t get paid until the end of the month,” Dow said. “I don’t blame a lot of people for going to a food bank. They can’t make it.”

Augusta residents Joseph and Judy Grover, retired and also living on a fixed income, reacted to rising food prices by trying to trim heating and electric costs.

“I think every time I go grocery shopping, things have gone up,” Judy Grover said. “You make do. You go without something else to buy the food. I’m eating more macaroni and stuff now.”

Hanson said more and more people such as the Grovers are trying to decide what they need most from month to month:

Fuel, food or medicine.

“They need a place to live; they need a car to get to their jobs; they need heating oil; and they need their prescriptions,” Hanson said. “The one thing you can cut is food.

“A lot of people I see will feed their kids first and they’ll go without food.”

Charity strained

Faced with increasing demand, Good Shepherd President and Chief Executive Officer Rick Small recently met with food bank directors from across the East Coast.

All of them, Small reported, are struggling — including Good Shepherd, which provides food to pantries across Maine.

“It’s happening everywhere,” Small said. “It’s happening a little more here.”

Floor-to-ceiling shelves inside Good Shepherd’s 53,000-square-foot Auburn warehouse — often brimming — now are sometimes empty, save for small boxes of food that stand out like a tree in a desert.

“That’s not because we don’t have food. It’s because the demand is so high,” Small said. “It’s unbelievable what’s happening.”

Good Shepherd recently sent its foodmobile to Portland and had 700 people show up, Small said. Dozens more people showed up recently when the foodmobile stopped in Richmond.

“It sure reminded me of the Great Depression,” Small said. “Those people don’t want to be there. It’s a myth that people who go to food banks are freeloaders. Are there a few? Sure. But the vast majority don’t want to do this. It’s their last chance.”

Jon Paradise, spokesman for the Maine Credit Union League, said credit unions across the state raised more than $400,000 last year for food pantries across the state.

It hasn’t been enough.

“Unfortunately, even though we continue to set new fundraising records, food pantries are setting another kind of record, which is first-time visitors,” Paradise said. “They’re seeing people that have never that the need to go to the food pantry. That’s really been a phenomena we’ve seen grow over the last few years.”

Paradise said 35 percent of all Maine children live in low-income families and one of every four Maine children live below the poverty line.

“The likelihood of experiencing hunger or the risk of hunger is directly related to income,” Paradise said.

More than 40 percent of Maine children younger than 12 show some evidence of hunger.

That’s more than 19,000 children going hungry, Paradise said, and an additional 64,000 kids at risk of hunger.

But despite the enormity of the problem, it still lives largely in the shadows, Paradise said.

“Hunger is still a secret in a lot of communities,” he said. “People are embarrassed or have too much pride to go to the food pantry. People don’t realize how prevalent it is in so many communities.

“It’s not going to go away until people understand the gravity of the problem.” “

Grocery store managers say they have a clear picture of the problem and are trying to meet the demand of struggling shoppers by finding ways to keep prices in check.

Grocers pinched

McCormick said Tobey’s buys more sale items to keep its inventory free of full-price items. And he said the store tries to run frequent sales for staples, such as meats and canned vegetables.

“We have half again more sale items now than we did before,” McCormick said. “I don’t know that we do anything different than we did years ago, but have to be a little sharper.”

Producers also have tried to keep prices in check by providing smaller portions, McCormick said.

“A lot of the things you are buying are no longer the same size,” he said. “Instead of going up on (price), they’re going down on size.”

And, like all American businesses, grocers are finding efficiencies and eliminating waste.

Managers like McCormick say they have tried to soften the blow by reducing their markup: McCormick said most grocers now working with a profit margin of just 1 to 1.5 percent.

To illustrate grocers’ dilemma, imagine spending $100 to create a product you can only sell for $101.50.

“We know how to run the business, but the overhead sneaks up on you,” McCormick said.

Large retailers, too, have been forced to become more efficient to help keep prices in check.

Hannaford spokesman Eric Blom said his company has cut back on what it spends on marketing, made its trucking fleet more fuel effecient — a move he said saved 137,000 gallons in diesel fuel last year — and introduced more private-label products.

“That’s cost we’re wringing out of the system,” Blom said.

In the past year, Blom said Hannaford has seen a 130 percent increase in registered users at its website, which customers use to plan shopping trips, sort items by price and search for specials.

“We’ve seen our email subscribers more than double since last year,” Blom said.

All of that activity, he said, is being driven by customers seeking ways to save.

“Our business operates in the same environment as our customers,” Blom said. “It forces us to be creative to really try to help our customers.”

Hard to get

The effort to streamline at local grocery stores is good for businesses and their customers.

But it’s not so good for food banks.

When Small arrived at Good Shepherd five years ago, 94 percent of the food was donated to the facility. That dropped to 64 percent over the next two years, he said, as large grocery stores increased their efficiency and decreased the damaged goods to be donated.

Small said the average is back up to 70 percent.

“All this time, the demand is growing, which meant we had to buy what we couldn’t get given to us,” Small said.

“Our food is a lot harder to get.”

Meeting demand will take creativity and a groundswell of support from individual communities.

Maine is ripe with land, Small said, that can be used to grow its own food. Those programs have already started to crop up in the form of small greenhouses, neighbors teaching neighbors and even regional gleaning efforts.

“There are lots of programs all over the state,” Small said. “In addition to that are the needs of all those people who can’t do that. We have to think statewide.”

Smith’s ideas range from the mundane, like buying produce rejected by farmers — Good Shepherd is working with 20 farms this year — to the dreamy, like buying a peanut butter factory.

Ultimately, Smith sees Maine as a place where solutions to food insecurity are unique and largely untapped.

“We have darn good resources,” he said. “There are enough of these solutions around that nobody should be hungry.”

Craig Crosby–621-5642

ccrosby@centralmaine.com