If Yosef collected all the grain, what did everyone eat?
Ramban #1 (citing the Ibn Ezra): It means that he collected, not all the grain, but as much as he possibly could. 1
Ramban #2: It means literally, that he gathered all the grain, which he then distributed to the people each year according to their basic needs, to prevent them from squandering it. In fact, from the fact that the Pasuk mentions both 'grain' and 'food,' it is clear that he gathered everything that was edible, including all kinds of fruit such as figs and raisins - some of which he placed in the towns for current use, and some of which he stored away for the years of famine. 2
Ohr ha'Chayim #1: Yosef took the entire share of the king (according to his counsel), i.e. a fifth.
Ohr ha'Chayim #2: Yosef bought the entire excess of what the land produce more than in normal years. Since it is extra, people are willing to sell it.
Ha'amek Davar :They ate food other than grain. Refer to 41:35:152:2.
Just as, when the Torah writes "And all the land came to Egypt to purchase..." (41:57) (which is obviously not precise).
The Ramban adds that, in all likelihood, he bought all the food from them cheaply with money from the king's treasury (to prevent it from rotting) which he subsequently sold back to them in the days of famine (as the Torah writes in Bereishis 47:14).
Why did Yosef make a point of placing the produce in the town near where it grew?
Rashi: Because the location where crops grow preserves them. Moreover, he added earth from that location to the crops to prevent them from rotting.
Malbim: The people there would eat the perishable food. Yosef put the grain in the royal storehouses.
Ha'amek Davar: Ochel is what is usually eaten raw, even if it cannot be stored. He could not transport it far away, lest it rot.
