Cabinet OKs Kedmi Report on food industry

Report outlines a series of measures aimed at increasing competition in the food industry and lower prices to consumers.

October 22, 2012 00:43
2 minute read.
Salad bar

Making salad bar vegetables food health 370. (photo credit: Marc Israel Sellem)

The cabinet provided the green light Sunday for implementation of the Kedmi Report, which outlined a series of measures aimed at increasing competition in the food industry and lower prices to consumers.

“We will do in the food sector what we did in the cellular communications market,” Prime Minister Binyamin Netanyahu said during the weekly cabinet meeting. “After food prices jumped in 2006 to 2008, we are bringing in competition on a major scale and with daring measures.”

Industry, Trade and Labor Ministry Director-General Sharon Kedmi and his team issued their final report in July, concluding that Israeli consumers paid 10 to 20% more for food in 2008-10 than their counterparts in the rest of the OECD group of developed economies. It said Israelis paid 10%-20% less than the OECD average in 2005, but prices have appreciated more rapidly here than elsewhere since then.

The report proposed regulating supplier- retailer relations though a number of measures, including prohibiting suppliers from purchasing shelf space or placing salespeople inside stores. It recommended dealing with over-concentration in the supply sector by removing barriers to market entry, increasing the number of retailers by reducing regulatory barriers to new supermarkets and restricting leading retailers from increasing their market share.

On the consumer front, the report recommended increasing the powers of the Consumer Protection Authority and strengthening enforcement of consumer laws. It also proposed imposing a 40%-100% reduction on import duties on food products for which no competition exists in Israel, lowering duties on agricultural products for which current rates are excessively high (such as fresh beef) and reducing duties on packaged goods such as tuna and fruit juice.

Finance Minister Yuval Steinitz and Industry, Trade and Labor Minister Shalom Simhon promised that the fruits of the report would be reaped in the coming years. They called on Knesset members to approve the legislation as soon as possible, “for the good of Israelis.”

Labor Chairwoman Shelly Yacimovich slammed the government, accusing it of approving only “worthless” parts of the Kedmi Report while ignoring recommendations made by Kedmi and the state comptroller on supervision of basic food products. She promised that if elected, she would deal responsibly with the cost of living through price supervision and encouragement of small- and medium-sized businesses.

Meanwhile, Steinitz and Agriculture Minister Orit Noked reached an agreement in principle with the Israel Dairy Board and agricultural representatives, which they said would pave the way for increased competition in the dairy industry and reduction of prices to consumers.

The agreement foresees a four-year streamlining process starting in 2013, in which the state will encourage owners of small dairy farms to shut down their operations and transfer their production quotas to larger farms.

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