Lapid, Shamir sign order cutting cheese prices

Prices of two popular cheese products should go down about 20%; consumer group says Ministers’ move is like fighting cancer with aspirin

By JOHN BENZAQUEN, GIL STERN STERN HOFFMAN
Yair Lapid (photo credit: Reuters)
Yair Lapid
(photo credit: Reuters)
Finance Minister Yair Lapid and Agriculture Minister Yair Shamir signed an order yesterday placing price controls on 5 percent soft white cheese and 38% whipping cream. Following the move, the prices of the two products should go down by about 20%.
The recommended price of a 250-gram container of 5% soft white cheese to consumers is NIS 6.54. With the introduction of price controls, the price should fall to NIS 5.23. The recommended price to consumers of a 250 milliliter container of 38% whipping cream is NIS 8.23 and should fall to NIS 6.60.
At the same time, prices of dairy products under supervision, including milk in sacks and cartons, will fall by 1.1%.
The price of a one liter carton of milk will drop from NIS 6.11 to NIS 5.90. This is due to changes in production costs less a temporary price hike of 3.5% to consumers and 4% to dairies that was approved in October 2012.
“Price controls are not a solution in the long term,” Lapid said at a press conference, “but we will not hesitate to use price controls if we find that the lack of competition in the market is being exploited to make excessive profits at the consumer’s expense. All players in the market should know that if they try to raise profits to an unreasonable level and behave aggressively toward consumers, we in turn will use all tools at our disposal in order to bring the prices down to a level that consumers can afford. We will ensure that the cost of living in Israel comes down, because the public can no longer make ends meet.”
Shamir said he warned Tnuva several months ago to lower prices, but they did not agree. He said his decision was intended to show Tnuva and other companies that they would be held accountable.
“The move reflects the Agriculture Ministry’s commitment to reducing the cost of living in Israel,” said Shamir. “The companies have to know that we mean business.”
Cream and white cheese are in the dairy categories that have the fewest producers.
Tnuva has a 50% share of the white cheese market and, together with Strauss Group Ltd. and Tara, holds 90% of the market. Tnuva has 70% of sales in financial terms in the 38% cream market.
The decision follows an examination of the market by an external accountant appointed by the government, which found that the profits made by Tnuva on these two products was “exceptional and unreasonable.”
Tnuva issued a statement accepting the price reductions but saying that they would force the company to offer fewer discounts to supermarket chains and grocery stores.
Itzik Alrov, who led protests that led to cottage cheese prices falling three years ago, said adding a few items to the list of products with prices set by the government would not be very helpful.
“It’s like giving an aspirin to a cancer patient,” said Alrov, who currently heads a consumer lobby called “Hatzarchanim” (The Consumers in Hebrew). “It won’t stop food prices from going out of control.”
Labor MK Itzik Shmuli, who was one of the leaders of the socioeconomic protests of 2011, said much more needed to be done to lower the cost of living.
“I welcome the lower price for whipping cream, but I don’t think the Israeli middle class voted for Lapid just to get whipping cream prices lowered,” Shmuli said. “He has many more challenges, including the housing crisis, rehabilitating the welfare and health systems, and easing socioeconomic gaps. A year after the election, he has failed all those tests.”
Globes contributed to this report.