Gov’t seeks to lower dairy prices by opening market

Dairy Board "troubled" by decision open market to imports; PM promises changes will reduce costs, increase industry transparency.

By NADAV SHEMER
July 28, 2011 01:33
3 minute read.
Gov’t seeks to lower dairy prices by opening market

dairy section 224 88. (photo credit: Ariel Jerozolimski )

 
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The government decided on Wednesday to open the dairy market to imports, adopting the Kedmi Committee’s recommendations on how to bring down prices.

Prime Minister Binyamin Netanyahu made the decision after meeting with Finance Minister Yuval Steinitz, Industry, Trade and Labor Minister Shalom Simhon, and Agriculture Minister Orit Noked late on Wednesday – and promised the changes would lower prices and increase industry transparency.

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Under the new policy, dairy farmers and supermarkets will be required to report profits, unfilled dairy quotas will be opened up to competition, and the target price (the amount dairy farmers get for a liter of milk at the cowshed gate) will be lowered by five to six agorot.

In addition, the relationship between suppliers and supermarkets will be examined.

Supermarkets will also be required to mark their products clearly, and smaller dairy farms will be permitted to grow in size.

Imports will be introduced gradually over five years, beginning in 2012.

The Kedmi Committee, headed by Industry, Trade and Labor Ministry director-general Sharon Kedmi, was established in response to a mass-consumer revolt over the high cost of cottage cheese.



“The correct way to bring down prices is through real competition in the dairy market, and that can only be possible through enabling competing imports,” Steinitz said following Wednesday’s decision.

“Exposure of the dairy market to imports will obligate the dairy farmers to become more efficient, to lower prices and to improve their products, which will benefit the Israeli economy in the long term.”

Simhon said that everyone in the chain, from manufacturing to sales, will do his part – “each according to his profits and responsibilities... so the consumer can enjoy a significant price reduction. The damage done to farmers will be quite moderate, and that is a result of the fact that they are not the primary element responsible for the increase in the price of dairy products.”

The minister of industry, trade and labor added that these changes are just “the first chapter” in an expanded plan that will be presented by a special committee on food products three months from now.

In response, the Dairy Board said it was “troubled” by Netanyahu’s decision and named what it called two major flaws.

“The clumsy and complicated solution adopted by the prime minister will not help at all to lower the price of milk and dairy products for consumers,” the board said.

“Not only will family dairy farms in the outlying areas of the country not grow, but after the expected collapse of more than 300 dairy farms, the concentration of the means of dairy production will grow even further, strengthening the seasonal shortage of basic dairy products in summer,” the board continued. “Instead of the consumer benefiting, the whole process will serve only to increase the profits of a few tycoons and a few extra importers.”

The Dairy Board said it had warned the prime minister over and over that “the entire process of collecting data that preceded the decision was haphazard, did not rely on verified economic data, nor on recommendations by leading Israeli experts on agricultural economy.”

Earlier Wednesday, the board petitioned the High Court of Justice to issue a ruling that would prevent the government from changing its policy on the dairy market without first consulting it.

Submitted by attorney Shaul Peles, the petition requested that the court issue an immediate order preventing the government from finalizing a policy change or, alternatively, should the government already reach a decision, to issue an order nisi preventing the policy change from being finalized prior to a hearing.

“The board warns that faulty and hasty decision-making will mean that, at the end of the day, the public pays more for dairy products,” it said in a press statement.

Joanna Paraszczuk contributed to this report.

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