cottage cheese 311 R.
(photo credit: Marc Israel Sellem)
As concerns about the price of cottage cheese and other dairy products continue
to grow, a study published Wednesday by the Jerusalem Institute for Market
Studies (JIMS), a nonprofit economic policy think thank, argued that the three
largest Israeli cottage cheese producers - Tnuva, Strauss and Tara – are acting
as a cartel.
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The report by JIMS economist Keren Harel-Harari faulted
Israeli economic policies for allowing the companies to influence the market and
price of cottage cheese.
Harel-Harari wrote that the high prices of
cottage cheese and dairy products have persisted “mainly because the government
has sanctioned the cartelization of the sector.”
She also noted that
policies such as exceptions to anti-trust law and high import tariffs enable the
three dairy companies to set high prices for cottage cheese and other
Dairy producers can “coordinate their activities and exert market
power, and thus bring about higher prices for consumers,” according to the
Ministry of Agriculture’s proposed budget, as quoted in the
Harel-Harari called for this state sanction of an agricultural
cartel to be removed and for other tax benefits that currently only apply to
large companies be applied to small businesses as well.
analysis of cottage cheese prices also revealed that since January 2008,
consumer prices rose 10 times as fast as the price dairy producers paid farmers
for the milk. Tnuva, which controls 70 percent of the cottage cheese market,
also raised its prices by 45% percent since 2006, she found.
added that high tariffs, which are as high as 150-200% for dairy imports, create
obstacles for foreign dairy products to enter the Israeli market.
foreign dairy products in the Israeli market would lower the price of goods,
which prompted Harel-Harari to also advocate for a decrease in import
The JIMS study was released the same day a new inter-ministerial
government committee formed to investigate the regulatory and business barriers
that affect food prices convened its first hearing.
Yoash Ben-Yitzhak, spokesman for the Manufacturers Association,
the umbrella organization for Israeli manufacturers in which the three dairy
companies are members, would not comment on JIMS’s recommendations.
he said that the dairy producers are “part of the committee that is trying to find a solution.”
The committee, chaired by Sharon Kedmi, director general of the Ministry of Industry, Trade and Labor, will examine different
concerns about the food industry and market failures, including domestic supply,
tariffs and market barriers. It will also investigate the disparity between the
cost of consumer goods in Israel and other Western countries with similar
populations and economies.
The committee is expected to present its
interim findings in two months and its final report in four months.