Economy Minister Naftali Bennett on Wednesday announced he plans to lower import taxes on a basket of dairy products including butter and yogurt by 80 percent.
“We are continuing to open up the economy and bring down prices,” Bennett said.
Currently, customs on some dairy imports stands at over 100%, he said.
The reduced tariffs will have quotas, which Bennett says will help small companies increase their share in the import market and increase competition.
“I expect the reduction in customs will be passed on to consumers,” he said.
The full list of reduced quotas, which will apply to retail-packaged butter, concentrated and non-concentrated milk and cream, buttermilk and yogurt, will be published in the coming days.
The policies are based on the Locker Guidelines, issued by the government’s committee on dairy reforms headed by Harel Locker, director-general of the Prime Minister’s Office.
The dairy market in Israel is a complex mix of protectionism and regulation. The government regulates the price of dairy products and outlines quotas for small dairy farms, which typically sell their product to one of three large manufacturers: Tnuva, Strauss and Tara.
Tnuva controls some 70% of the market and is considered a legal monopoly by the Israel Antitrust Authority, which has regulatory power to prevent it from price gouging.
Although Israeli agricultural technology has made its cows the most efficient dairy producers in the world, the combination of high tariffs, quotas, price regulation and Israel’s geographical isolation from other dairy producers has led to a situation in which prices are higher than in most OECD countries.
Dairy is a controversial issue for the public. In 2011, skyrocketing cottage cheese prices set off a wave of boycotts that helped build momentum for the summer protests over the cost of living.
On Tuesday, the Knesset Economic Affairs committee voiced opposition to the possible sale of Tnuva to China’s state-owned Bright Food Group Co., arguing that the fate of Israel’s dairy industry should not be in foreign hands.
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