Steinitz may remove import barriers for dairy products

Netanyahu tells cabinet to find solutions; Knesset C'tee calls for regulation, investigation of dairy price hike.

By NADAV SHEMER
June 19, 2011 17:11
cottage cheese

cottage cheese 311 R. (photo credit: Marc Israel Sellem)

 
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Finance Minister Yuval Steinitz (Likud) announced on Sunday he is considering opening the Israeli market to imported dairy products, and Prime Minister Binyamin Netanyahu told cabinet members to find solutions to the rising price of dairy goods, after public outrage over price hikes led to a consumer campaign to boycott cottage cheese that began last week.

Steinitz said in a speech at the Caesarea Economic Policy Planning Forum in Rishon Lezion that he was sending out a warning on cheese products: “If it is indeed true that the cost of cheese in Israel – whether cottage or otherwise – is double that of equivalent products in Europe and the Western world, then it is clear that the situation is intolerable and we will have to rectify it.”

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Comparing the growing storm over cottage cheese prices to that over the high cost of gasoline, Steinitz said: “What is the connection between cheese and gas prices? The principle is identical.

We cannot allow the interests of the state or of its citizens to be trampled on by powerful [business] groups.

“If the situation does not rectify itself – which is possible given the consumer protest – all steps will be considered; including removing barriers to importation, and the creation of real competition, including restoring price supervision. These steps will be weighed [by the Finance Ministry] in conjunction with the Industry, Trade and Labor and Agriculture ministries,” he said, adding that he had discussed the issue with the prime minister earlier the same day.

Last week, Industry, Trade and Labor Minister Shalom Simhon (Independence) also suggested that his ministry may open the dairy market to imports in order to lower prices. On Sunday, Netanyahu instructed his ministers to find a solution.



“[Communications and Welfare Minister Moshe] Kahlon has done great things,” Netanyahu said. “Be like Kahlon and find solutions.”

Steinitz’s plan was not wellreceived by everyone, with Manufacturers Association president Shraga Brosh launching a stinging attack in which he said the finance minister had no business intervening, and that Israel would be better off importing a new finance minister than importing dairy products.

“The finance minister shouldn’t fan the flames.

This isn’t Tahrir Square [in Cairo]. To import cheese from overseas is to import unemployment. I have a better idea. Not long ago the prime minister was on the search for a new Bank of Israel governor, and the one he found [Stanley Fischer] was excellent. I suggest that he go and import a new finance minister. It would be cheaper, more economical and of great benefit for Israeli industry.”

Brosh went on to say that while he understands the public anger over high food prices, it is ignoring the facts with its planned boycott of cottage cheese, and should direct its anger at what he called “cheap populism” from the government.

“Last August when the budget was passed they [the government] imposed on us NIS 6 billion in extra taxes. I said then that it would fall in the end on the consumer. It makes products more expensive. When the fuel excise is raised, does anybody think that it won’t fall on the consumer?” Agricultural Minister Orit Noked (Independence) called at a Knesset Economics Committee meeting for the government to regulate cottage cheese prices, at least temporarily.

“Removing dairy products from regulation did not prove itself in recent years,” she said.

“Cottage cheese is a symbol for dairy products and basic food products. We need to ensure that every family can buy [these items] at fair prices.”

Noked added that she plans to meet with Steinitz and Simhon in order to discuss “lowering cottage cheese prices and restraining basic dairy product prices.”

At the meeting’s end, the Knesset Economics Committee called for renewed government regulation, as well as a parliamentary inquiry committee on price hikes and lack of competition in the food market.

“We’re not talking about cigars or caviar.

There’s no reason the public should pay exorbitant prices,” committee chairman MK Carmel Shama-Hacohen (Likud) said.

“Cottage cheese is a symbol for a socioeconomic storm, which requires an immediate and urgent response.”

“We all believe in a free market and competition, but we seem to be in a market free of competition,” Shama-Hacohen said, adding that the government, dairy product manufacturers and supermarket chains were all responsible for the rise in prices.

However, he added, “The public sees the dairy companies as the address for protests. I suggest that you practice self-regulation,” Shama-Hacohen told dairy manufacturers present at the meeting.

The committee chairman also warned against opening the dairy market to imports, saying that it may have an adverse effect on the Israeli market, and has potential to cause problems with Kashrut certifications.

In response, Tnuva director-general Eyal Malis said that his company will “cooperate with regulators. If we need to change prices or have regulation on our products, we’ll do it.”

Malis explained that prices have risen in the past few years due to rising prices in milk, water, energy and higher salaries for workers, and said that Tnuva’s earnings have been “reasonable compared to other countries.”

He also said that Israeli cottage cheese prices cannot be compared to those abroad “because it is a different product,” leading MK Amir Peretz (Labor) to interrupt and say: “So what if cottage cheese outside of Israel tastes bad? Don’t they also make it out of water and milk? Why should the cost be different? “I am opposed to privatization, which has brought catastrophes to Israel, and I oppose imports, which people seem to think is the solution to every problem,” Peretz said.

“I’m glad that cottage cheese is the straw that broke the camel’s back, and a protest broke out.

“This isn’t a free market, it’s a jungle,” Peretz exclaimed.

Rami Levi, owner of the eponymous supermarket chain, said that he reduced the price of cottage cheese in his stores to NIS 4.90 since a Facebook group called to boycott the product, and called for consumers to continue in their battle.

“I think we need a free, but competitive market,” Levi said, “but if you want a free market, it has to be free all the way, and then everything will be alright.” He called for the government to remove sales tax from food, and said dairy manufacturers are entirely to blame for a rise in prices.

Yaakov Bracha, representing the Cattle- Growers Union, said that capitalism “became a religion. It’s impossible to convince the Finance Ministry that they made a mistake by removing regulation.”

MK Yisrael Eichler (United Torah Judaism) also lamented the Finance Ministry’s “cruel capitalism, that accuses the poor of causing their own poverty,” and praised the consumer cottage cheese boycott and Peretz’s protests against the free market.

MK Faina Kirschenbaum (Israel Beiteinu) was the only committee member to speak out adamantly against regulation, saying that “regulators set the highest price for products, and the middle class suffers.”

“Opening the market will restrain centralization, and will bring [cheese] to the minimum price,” she said.

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