A $20 million drop in food grants made to struggling families is because of hurdles introduced by the Government, community groups say.
The Social Development Ministry said the fall was because fewer people were applying for them.
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Figures released under the Official Information Act show special needs grants for food have gone from $56.5 million (548,802 grants) in the 2009 - 2010 year to $36.6 million (351,691) grants in the 2013 - 2014 year.
There has been a $20 million drop in special needs food grants. Photo: RNZ / Alexander Robertson
But community groups said people now had to show they had taken reasonable steps to manage their money after receiving two payments in any 12 month period, and that was discouraging those in need from applying.
The new requirement applies to Michael, a solo-father of three and beneficiary.
Michael, who did not want to use his full name, was forced to apply for food grants when unexpected expenses ate into his grocery budget.
He described the process as intimidating and intrusive.
"It's a bit hard when time is against you and you have a kid on one arm," he said.
"You are asking strangers for money and help and then you are sitting there. You just try to keep yourself up mentally."
Michael said he understood the reasoning behind the requirement, but argued Work and Income did not give him enough money to mis-manage as every dollar was accounted for.
"When you apply for the benefit you have to prove what you need it for and where it's going anyway. They're always doing monthly check-ups and the case officers are always on your case," he said.
"They don't give you any more than what you actually need."
The special needs grants are for people with no other way to pay for food and other essentials such as education and medical costs.
A Ministry of Social Development (MSD) spokesperson said the grants for food had dropped because fewer people were applying for them.
"It is important to note that of the grants applied for, a higher proportion are being approved - 91.7 percent of all hardship applications were approved in 2010/11.
"This has steadily increased to 93.6 percent for 2013/14," the spokesperson said.
But Kay Brereton, an independent benefit advocate, said the drop in applications was not because there was less need, but because people were discouraged by the fresh hurdles the Government introduced.
"It has become really confusing for people about when they need to have budgets and what activities to do," she said.
"I think people are choosing not to go down that route. They were desperate anyway when they were looking for food, but now there's an extra level to it."
Diane Robertson from Auckland City Mission said a year-long study of 100 families who were long-term users of food banks, found compliance with Work and Income's requirements was one of the most difficult things with which families dealt.
Diane Robertson Photo: Supplied
"I don't disagree that people should be moving towards work, but I think there is a group of people who are really inter-generationally entrenched in poverty," she said.
"Some of these sticks don't work and there needs to be some more thinking about benefits and how they are applied to this group."
Ms Robertson said more families were choosing not to seek special needs grants instead, she said, they may steal or use grocery trucks which charge high interest rates.
Social Development Minister Anne Tolley disputed claims that fewer grants were being paid because the Government had made the application process more difficult.
She said if people were applying for successive food grants it indicated that they were having problems managing their money, so the Government was offering them budgeting help.