Standing in one of Israel's largest chocolate factories, the Vered HaGalil factory in Safed, Roni Kowarsky, chairman of the Food Manufacturers Association of Israel, ironically described the industry's focus as being on developing healthier food. "Food manufacturers launched 2,700 'healthy' products last year, an increase of 20%," he said. Total food sales for 2006, he forecast, would increase by 2.9%, totaling NIS 45.5 billion. During the year, the industry will have added 400 new jobs, bringing the total number of people employed in the food business to 59,100. Kowarsky summarized the food industry's progress in 2006 in conjunction with a tour of the northern factories of Vered HaGaili and Neviot, Israel's third-largest bottler of water. Both of these northern factories have returned to pre-war level operations after being closed for parts of the conflict; the Vered HaGalil chocolate factory suffered a direct hit by a Katyusha on July 18, damaging production machinery but, more importantly, refrigeration devices. Repairs cost the company upwards of NIS 15 million. One of Neviot's storage areas was destroyed and has yet to be repaired. According to data published by the association, 88% of Israeli food manufacturers turned their attention to health, investing NIS 300 million in improving the health standards of their products during the year. Health improvement included the reduction of fat, cholesterol and sugar content combined with the addition of vitamin supplements and natural products. Data prepared by the group indicated that during 2006 food manufacturers invested NIS 250 million in research and development to improve the health of products, compared to NIS 230m. invested last year. This represents part of an initiative to increase total research and development funding to NIS 500m. in the next five years. In addition to improving the health standards of food products, 41% of Israeli food manufacturers have invested in lifestyle education, according to a review conducted by the association, and Kowarsky stressed the importance of lifestyle education in the fight against obesity. "Healthy lifestyles cannot be forced by popular and simplified legislation," he said. Turning to the topic of food imports and exports, Kowarsky said food imports have grown by 13.4% over last year to $1.18b., while food exports grew by 4.1% to $686m. "The trade deficit of food production has grown by 29% over last year to $494m.," he noted. Exports to the Palestinian Authority fell 3% compared to last year to NIS 390m., with Kowarsky noting that exports to the PA are still far from the pre-iIntifada levels of NIS 600m., annually. Another stress on local food manufacturers comes from a change in how the government distributes incentives for opening factories in the periphery of the country. But, in an effort to expand the Israeli manufacturing industry, the government grants to encourage development of the periphery are now limited to manufacturers who export at least 25% of their products. "Since the change of this law a year ago, no food factory has been established on the periphery of the country, and companies which were planning to move to the periphery did not move because of this law," Kowarsky said, adding that "this law has prevented the expansion of factories already operating in the periphery."