Finance Minister Moshe Kahlon.
(photo credit: MARC ISRAEL SELLEM)
Finance Minister Moshe Kahlon will postpone an agricultural reform that includes lowering protective import barriers for a week, according to the Farmer’s Federation.
Following a meeting with the group’s secretary-general, Meir Tzur, Kahlon agreed to allow the farmers to propose an alternative plan.
Knesset Finance Committee chairman MK Eitan Cabel voiced sharp criticism of a farming reform that Kahlon and Agriculture Minister Uri Ariel proposed Tuesday.
“In the past they already broke apart agriculture boards and the prices continued going up, and in the end there wasn’t a single problem solved through making headlines in newspapers, therefore I intend to call a meeting very soon to discuss the topic,” Cabel said.
The plans, which Prime Minister Benjamin Netanyahu enthusiastically approved Tuesday, follow OECD recommendations to eliminate a slew of agricultural boards that serve as intermediaries between farmers and the markets.
The boards, which enforce government-set quotas, become the sole source of the particular product in question, whether it be raw milk, eggs, nuts, or other products. Combined with price controls and prohibitive import tariffs, the boards are one reason most food prices in the country are significantly higher than in other OECD countries.
The proposal would instead offer direct compensation to farmers and lower import barriers.
The farmers came out strongly against the proposals before the meeting Monday.
Cabel also warned that taking action that could endanger the supply of food around the upcoming Passover season.
Uriel Lynn, president of the Federation of Israeli Chambers of Commerce, said reforms were long overdue and should go further, completely eliminating import tariffs on food.
Import tariffs on garlic, he said, stood at 340%, pears at 438%, dates at 560%, and potatoes (from May to June) at 634%.
“These unimaginable duties prevented imports, and when there is no competition from import there is no real competition,” he said. “The taxes should be gradually dropped and replaced with subsidies to the farmers.”
Ofer Klein, from Harel Financial, said the reforms may have an effect on monetary policy.
“Though it was too soon to tell,” he said, “strong reforms could further lower inflation, which is already in negative territory.
The Bank of Israel has swept aside negative inflation as the result of temporary shocks, and the reform would fall under that category as well.”