(photo credit: Wikimedia Commons)
Finance Minister Yair Lapid presented a bill to reform the food market and bring
down prices on Monday to a joint meeting of the Knesset’s Finance and Economy
“We will not hold back on any efforts to bring down the cost
of living,” said Lapid, calling the proposal the “most important law for
increasing competition in the food market.”
Israel’s food prices have
soared in the past decade, from 10 percent below the OECD average in 2004 to 25%
above it this year, Economy Minister Naftali Bennett said in a video posted to
his Facebook page explaining and backing the law, on Sunday.
Lapid, the average household spends 16% of its income – NIS 2,250 – on
The bill, based on the findings of the “Kadmi Committee” in the
Economy and Trade Ministry, lays out three avenues of reform.
is increasing price transparency, requiring big chains to publicize their prices
in an online database that will allow consumers to search for the lowest
“There will be competition for all the products between all the
chains in Israel,” Bennett said.
The second component is increasing
geographic competition by mapping out what chains service particular communities
If a community has just one supermarket, for example, the
government would block that chain from opening another branch – which would
effectively lock out local competition – in the same community.
would be to impose limits on suppliers that have enough market power that they
push a set of products to sellers to the disadvantage of both the markets and
The focus on competition comes from data that demonstrates how
a very limited number of suppliers control large portions of the
The top three suppliers accounted for 93% of the carbonated
beverage market, 90% of the dairy product market, 83% of the coffee market, and
60% of the retail food market (e.g.
Knesset Members on the committee expressed disappointment in the
Yesh Atid MK Ofer Shelah said the bill didn’t go far enough, saying
that the actions to bring down food prices in two years were not
Likud MK Gila Gamliel said the issue of concentration among
the producers should be targeted.
Shas MK Yitzhak Vaknin, called for
reinstating price controls.
Amir Hayek, head of Israel Manufacturer’s
Association, warned that the reforms could be disastrous for the industry and
“Since the Trajtenberg committee, the food industry is
undergoing legal torture,” he said, referring to the committee for social change
that set out vast policy recommendations in the wake of the 2011 social
While not averse to competition, he said, the underlying causes
of the increasing food prices was unrelated.
Higher input prices were to
blame, he said, estimating that increased an average of 40% as a result of
increases in the minimum wage and price targets for supervised products, like
The price of water alone, he noted, has gone up 220%.
solution, he said, was reducing regulation and bureaucracy.