Kahlon vows to reduce food prices by reducing import restrictions

Israel has a relatively high level of tariffs and barriers to importing food relative to most OECD countries.

February 21, 2016 17:41
1 minute read.
Nefesh B Nefesh

food shooping 7588. (photo credit: NEFESH B'NEFESH)

Finance Minister Moshe Kahlon on Sunday vowed to reduce the cost of food in Israel by taking steps in the coming days to loosen import restrictions.

Israel has a relatively high level of tariffs and other barriers to importing food relative to most OECD countries, he said, and steps to increase competition in the food market would lower prices.

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“In principal we are planning on reducing import duties. At the moment, the thing that’s making fresh food in Israel expensive are high import duties, and import caps. We intend to dramatically open, in the coming days, imports on meats and other items such as vegetables, fruits and whatever is necessary in the food basket,” he said in an interview with Ynet.

Kahlon said that the Finance Ministry was only loosening restrictions on products where the savings would not be captured by big import companies. In other words, he said, it was a prerequisite that consumers would benefit from the lowered duties.

He also said the ministry would place restrictions on large importers to ensure competition. If Tnuva imports dairy products, it does not increase competition in the market, he said.

Kahlon said he would also address ways to compensate farmers, though he did not specify if that meant increasing subsidies, introducing broader agricultural reforms, or another approach.

“We’ll find a way to compensate the farmers, but writ large we have to protect the consumers,” he said.

The government has been working for several years to lower import tariffs and other restrictions on food imports, and has already significantly reduced tariffs on various dairy and meat products.

The OECD’s economic survey of Israel in January found that fruits and vegetables were actually cheaper than the OECD average, but that meat, fish, bread and cereals, beverages (both alcoholic and not), milk, cheese and eggs were in the realm of 20-55 percent higher.

All in all, the report said, “distortive interventions – quotas, price guarantees and customs tariffs – still account for over 80% of total agricultural support in Israel, compared to around 20% in the United States and the European Union.” It recommended that Israel simply adopt the EU’s import procedures on food and agricultural good and replace the distortive interventions with direct payments to farmers.

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