Cottage price rises for 1st time since protests

Steinitz blocks even larger price hike; fruit and vegetable prices also increase, while January inflation drops 0.2%.

tnuva cottage cheese_311 (photo credit: Reuters)
tnuva cottage cheese_311
(photo credit: Reuters)
The price of cottage cheese, the seemingly innocuous dairy product that set off consumer boycotts and laid the groundwork for the 2011 social protest, rose 3.5 percent on Sunday morning, from NIS 5.95 to NIS 6.16, in accordance with Finance Ministry price regulations.
Tnuva, the country’s leading dairy manufacturers, tread cautiously over the sensitive product’s price.
“In accordance with the government decision, the prices of Tnuva’s supervised products including milk, Emek deli cheese, butter, yogurt and cheese are rising an average of 3.5%,” Tnuva CEO Arik Shor said in a statement.
“We pledged to sensitively manage the balance of basic dairy product prices, and that’s what we’re doing.”
While other dairy prices have risen, this is the first time the price of cottage has increased since the social protests.
The price committee actually recommended raising dairy prices by 6.3%, but Finance Ministry Yuval Steinitz only allowed a 3.5% increase.
“Given the fact that we’re talking about a sharp price increase on a basic product, I found it necessary to moderate the committee’s recommendation,” Steinitz said.
The original decision on pricing was due several months ago, but at the request of Prime Minister Binyamin Netanyahu in the run-up to elections, the issue was set aside. Steinitz said the pricing committee was already in the advanced stages of reexamining its pricing procedures.
But that didn’t stop social activists from expressing their outrage.
“Instead of milking cows, at Tnuva they have decided to milk the Israeli consumer,” said Itzik Alrov, who initiated the cottage cheese protests in June 2011.
“In order to lower the cost of living and reduce prices, the regulators must order the immediate dismantling of Tnuva into several smaller companies that will compete with one another,” he continued, calling the lack of competition in the dairy market “shocking.”
A spokeswoman for the Agriculture Ministry noted that basic products under price supervision were sold below their market value as a result of government intervention, adding that competition is not the only problem in Israel’s dairy market.
“The biggest issue is the price of grain to feed the cows,” she said.
In Europe, greener pastures mean European dairies spend less on grains throughout much of the year. A lack of abundant edible greens in Israel ultimately makes milk more expensive, she said.
Tnuva pointed out that in October 2012, the price of raw milk rose 9.4%. However, the Agriculture Ministry noted, products like fruits and vegetables are generally cheaper in Israel than in Europe.
Unfortunately, those prices are on the upswing as well.
According to figures released by the Central Bureau of Statistics on Sunday, despite a general 0.2% fall in the consumer price index from December 2012 to January 2013, fruits and vegetable prices rose 5.7%.
According to the report, this increase hit poor communities harder than rich ones.
When adjusted to reflect the general “basket” of goods the various classes consume, fruit and vegetable prices jumped 7.4% for the weakest fifth of the population in the past month, while only rising an adjusted 4.7% for the economy’s strongest fifth.
The spike came mostly from fresh vegetable prices, which rose 12.6% in January, led by large price increases in the cost of eggplants (62.1%), tomatoes (23.6%), cucumbers and zucchinis (21.2% each).
Were January’s food prices not countered by a sharp 8.1% drop in clothing prices and a 2.4% dip in cellular prices, the overall inflation would have remained positive.
Since last January, inflation balanced out at a moderate 1.5%.
Apartment prices, which are not counted in the index, rose 6.7% in 2012.