TORONTO—Four days into the Toronto film festival, I’ve seen many fine features, and four that were excellent: Agnes Varda’s delightful, career-spanning memoir The Beaches of Agnes; Jonathan Demme’s vertiginous domestic drama Rachel Getting Married; Anna Boden and Ryan Fleck’s melancholy immigrant tale Sugar, and Joel and Ethan Coen’s cruelly funny farce Burn After Reading. But the only film so far that’s really turned me inside out is Kelly Reichardt’s minimalist, ultra-low-budget indie Wendy and Lucy.

Readers might remember Reichardt’s previous feature, Old Joy, which premiered in Chicago at the Gene Siskel Film Center in September 2006 and played for a week at the Music Box two months later. Part landscape film, part muted drama, it followed two old friends (Daniel London and Will Oldham) as they try to rekindle their relationship with a road trip to a natural spring out in the wilderness. Like many such reunions, their time together only confirms that they no longer really understand each other, and the sadness of their dead friendship is objectified by the passing of lush greenery into crummy industrial landscape as they drive home.

Wendy and Lucy is similarly low-key and landscape-oriented, taking place in a hick town in Oregon, but its simple story also delivers a profound social punch. Wendy, played with impressive restraint by Michelle Williams (Brokeback Mountain), is homeless and sleeping in her car, trying to make her way north so she can find work in a cannery. Her only companion is her beloved mutt, Lucy, who she makes the dire mistake of tying up outside a grocery store before she goes in to steal some food. Caught red-handed, Wendy spends 12 hours at the police station, and by the time she gets out, Lucy has long since disappeared.

Presenting her film at the AMC theater in Toronto, Reichardt explained that she and coscreenwriter Jonathan Raymond began working on the story after listening to the conservative backlash and “contempt for poverty” that immediately followed Hurricane Katrina in 2005. Some commentators, she recalled, couldn’t fathom the idea that you can’t escape a storm zone if you’re too poor to own a car. In her movie, Wendy has no safety net whatsoever—no job, no insurance, no assets except for her beater. She’s one mishap away from falling through the cracks forever, and in its haunting finale, Wendy and Lucy recalls no less than Mervyn LeRoy’s classic Depression-era drama I Am a Fugitive From a Chain Gang (1932).

Remarkably, when Wendy and Lucy opens in Chicago this December, it will be the second high-profile American indie this year to stare poverty in the face, after Courtney Hunt’s thriller Frozen River. This may be box-office suicide, but it’s also a hell of a dramatic device. Most movies do all sorts of huffing and puffing to raise the stakes for their characters, but when you don’t have a dime to your name, just pulling a meal together can be a matter of life and death.