The Social Services Minister has indicated a short-term lifeline may be thrown to a charity that provides 67 million meals for hungry Australians each year after Government moves to split food charity funding between three agencies.

Key points: Food relief charity Foodbank's federal funding will be cut from $750,000 to $427,000

Food relief charity Foodbank's federal funding will be cut from $750,000 to $427,000 Prime Minister Scott Morrison says food charity funding is being maintained, but will be split between three agencies rather than two

Prime Minister Scott Morrison says food charity funding is being maintained, but will be split between three agencies rather than two An additional organisation, OzHarvest, will share $4.5 million in funding alongside Foodbank and SecondBite

Foodbank will have its federal funding almost halved from January 1.

While it normally receives $750,000 in Government assistance, it has been told from January 1 its funding will be cut to $427,000.

On Monday, Prime Minister Scott Morrison defended the Federal Government's move to split food charity funding between three agencies.

He told Channel 10 the sector's funding had not been cut, rather it had been reallocated.

"We've actually maintained the funding for those services, it's gone to three charities instead of … [two]," he said.

"It means the overall level of services being provided for food support is exactly the same.

"We had a competitive process, a tender, on who could best deliver these services, and instead of … [two] organisations there are three.

Loading

"I'll have a chat to the Social Services Minister, if there's any need to review that decision, we'll take a look at that.

"It's not a closed shop, if there are other agencies that can do this job as well or better, then why wouldn't we want to enlist them in that task?"

This afternoon, a statement from Social Services Minister Paul Fletcher indicated new advice will be sought after discussions with Foodbank CEO Brianna Casey.

"Foodbank has particularly highlighted its concern that the competitive selection process resulted in it being notified of the decision only a few weeks before the busy Christmas season. I share that concern," Mr Fletcher said.

"I have sought urgent advice from my department as to why that happened and for options to provide additional funding to Foodbank to assist in managing the transition to the new arrangements.

"I expect to receive that advice shortly and will be working with Foodbank to resolve this issue."

Program at significant risk

The Prime Minister's response earlier in the day did not appease Ms Casey, who argued key programs are now at risk.

"We're feeding more than 710,000 people a month through Foodbank right now and more than a quarter of those are children," Ms Casey said.

"They're not the people you'd think, they're not just homeless people living on the streets. They are people living in your street.

"They are mums and dads, the elderly and retirees, university students, people going through a temporary crisis in their life and they need our help by way of food relief."

Ms Casey said the cut put at risk more than $8 million worth of food for families in need.

The Federal Member for Boothby, Nicolle Flint, tweeted that she had also contacted the Prime Minister about the significant drop in Foodbank's funding.

"Having visited the SA headquarters in Edwardstown, I know firsthand the important work they do to assist those who are struggling to make ends meet," she said.

Food hampers free up money for petrol

Diane, a grandmother who lives in Victoria's Latrobe Valley, has received Foodbank's charity for the past 18 months.

Latrobe Valley resident Diane says Foodbank donations enable her to pay her bills and buy petrol to take her grandchildren to the park. ( ABC Rural: Bridget Fitzgerald )

She said fortnightly food hampers — mostly made up of tinned foods, bread and occasionally fresh fruit — had meant she could pay her bills and keep a roof over her head.

"I get asked to go out to go places and I say, 'No, I'm sorry, I can't afford it'.

"I feel bad I can't buy my grandkids presents for Christmas or birthdays or take them out because I just don't have the money for it," Diane said.

"So the Foodbank is a great help, it helps me … even if it is just to take the kids down the park.

"At least because I've used Foodbank I've got money for petrol and I can take the grandkids down the park."

Charities also feeling crunch due to drought

Natalie Quince, who runs volunteer group Georgie's Pantry, said that there has been an increased demand for their services due to the drought. ( ABC Central West: Joanna Woodburn )

Ms Casey said the timing of Foodbank's funding cut could not have been worse, with 40 per cent of the food and groceries it provides going to regional areas, many of which are feeling the full effect of drought.

Natalie Quince runs the volunteer group, Georgie's Pantry, at Parkes in central western New South Wales.

It relies on Foodbank to provide discounted groceries to around 250 people each week.

Ms Quince said there had been greater demand for their service as a result of the drought and the rising cost of living.

"Very sadly, we have seen a three-fold increase in the number of people who are using this service over the last 12 months," Ms Quince said.

She said any cuts to Foodbank's funding would be felt in her community.

"I would really hate to have to say what could happen in these circumstances," Ms Quince said.

"I feel that the country is an incredibly resilient and caring community and I hope that we could find a solution but it would have a significant impact."

No cut in overall funding for emergency food relief

Earlier, Social Services Minister Paul Fletcher said the Government had committed $4.5 million to three organisations — Foodbank, SecondBite and OzHarvest — to distribute emergency food relief.

It is part of more than $200 million allocated by the Government to help Australians in financial crisis.

"The total amount of Government funding going into this space has been maintained," Mr Fletcher said.

Social Services Minister Paul Fletcher says the Government has maintained the total amount of funding going to the sector. ( ABC Rural: Nikolai Beilharz )

"A new funding period commences on the first of January and we've gone through a competitive selection process.

"My department, the Department of Social Services, has assessed proposals from six providers and chosen to go with three of them.

"The assessments were made by my department and the advice they've given me [is] that adding OzHarvest as one of the food relief providers had some particular capacities in terms of the range of food donors it has relationships [with] in regional and remote Australia.

"The choice was made to add them in, so we'll have three organisations rather than two."

'Major, not minor struggle' in the real world

Foodbank's Ms Casey said that food insecurity and rates of hungry people are increasing while Government funding for the sector reduced.

Foodbank chief Brianna Casey says Government funding for food relief hasn't kept pace with increasing demand. ( ABC News: Tony Hill )

"In 2014-15 we were getting $1.5 million a year to allow us to manufacture more than $10 million worth of food and groceries," Ms Casey said.

"We, unfortunately year on year, have received cut after cut.

"The funding envelope, which I'm sure the Government will defend and say has stayed the same, that is not the issue.

"The issue is the funding envelope is not big enough in the first place."

Diane said the Government should be increasing assistance for the food relief sector.

"I don't think the Government know how bad it really is out in the real world," she said.

"The struggle isn't minor, it's major."

Forty per cent of Foodbank's food and groceries go to regional areas, including drought-hit communities. ( ABC News: Chris McLoughlin )

Farmers stand behind Foodbank

President of the Bowen-Gumlu Growers Association, Carl Walker, said that local farmers have supported FoodBank for many years.

"We've been supporters of Foodbank for quite a few years, we [send away food] on a regular basis every week," he said.

"Just from me alone, we do 30 to 50 tonnes [and] I know one particular grower, he'd put in $90,000 worth [of produce] at a time.

Farmer Carl Walker, who supplies Foodbank with produce, said that he and other growers will continue to support the charity. ( ABC Rural: Tom Major )

"Anything that's not quite up to spec for market — nothing wrong with it, I eat it myself — we put it in crates and send off to FoodBank in Brisbane.

Crates full of capsicums which do not meet supermarket standards are donated to Foodbank by farmers like Carl Walker. ( ABC Rural: Tom Major )

"I always like the fact that after the floods in Brisbane a lot of families were doing it tough, struggling to feed their kids and survive and they help people like that as well."

Mr Walker said his experience with FoodBank was a positive one and he hoped the decision to reallocate funding had been made for the right reasons.

"I just hope they looked into the structure of all of them to see which one's administration costs are the lowest, and bang for the buck is the best — not just the one who lobbied the hardest," he said.

"In my dealings with FoodBank, I'm going to keep dealing with them, in my visits there I've seen that they're doing a good job."