Local dairy farmers journeyed to Jerusalem on Wednesday, demonstrating on highways and at the Knesset against the advancement of sweeping reforms to the dairy sector that have been proposed by Finance Minister Bezalel Smotrich.
The protest resulted in clashes outside the Knesset and the nearby Finance Ministry between police and demonstrators. A large statue of a cow was thrown across the ground at the entrance to the Finance Ministry. Police established a barrier at the entrance, which was subsequently breached, leading to altercations.
The demonstration initially began with the halting of traffic on Highway 1 at the entrance to Jerusalem in the morning. Footage showed protesters pouring milk onto the streets. Farmers arrived in Jerusalem by tractor and other agricultural vehicles.
Despite the protest, farmers resumed supplying milk to dairies on Wednesday morning after they had stopped the flow on Tuesday, causing milk shortages.
Agriculture and Raw Food Security Minister Avi Dichter (Likud) called on the farmers to end the strike late on Tuesday evening, despite being an outspoken critic of the reform.
Meanwhile, Smotrich pushed throughout the day for the advancement of the new policy.
“The days of threatening the public are over,” he said. “We care about Israeli agriculture, but at the same time, we care about your wallets and your economic and food security, citizens of Israel.”
The dairy reform is set to introduce sweeping changes to the sector, aiming to reduce the price of milk and cheese by breaking up monopolies that dominate the market.
The reform has raised concerns over shutdowns and harm to hundreds of local dairy farms. It proposes opening up the market to cheaper imports by abolishing protective tariffs.
The finance minister said that Israel’s three main dairy companies, Tnuva, Tara, and Strauss, control the market and charge prices that are more than 50% higher than those abroad.
“They had no incentive to compete or reduce prices,” Smotrich said about the companies.
“That is over. Opening the market to imports will force the big companies to sweat and, for the first time, confront competition from abroad,” he added.
Smotrich admitted that the reform would harm small local dairy producers but that they would receive a compensation package.
He added that dairies would receive statutory protection from the state. “And in addition, the state will be your partner in new investments, with a great deal of money,” Smotrich said.
Dairy reform included in Israel’s 2026 state budget
Rather than advancing the dairy reform as a standalone bill, it was included in a series of bills as part of the 2026 state budget, which passed its first Knesset reading last week.
By law, the state budget must be passed by the end of March in all three readings, or else the Knesset will automatically dissolve, and early elections will be called.
This gives the dairy reform a narrow window to pass and will require it to be deliberated within the lengthy state budget legislation which comprises hundreds of pages.
On Tuesday, the Knesset’s House Committee debated into the night whether to keep the dairy reform as part of the 2026 state budget bill. It ultimately voted against separating it from the Arrangements Bill that accompanies the budget. The vote passed by a narrow margin, with eight MKs voting in favor and seven against, following a heated debate.
The dairy reform will now be discussed by the Knesset’s Public Projects Committee as part of the state budget bill. This committee is headed by MK Ohad Tal, a member of Smotrich’s Religious Zionist Party.
Keeping the bill in the budget bill prevents it from being advanced in the Economic Affairs Committee, which is led by MK David Bitan (Likud), a vehement critic of the reform.
Bitan clashed with House Committee chairman Ofir Katz (Likud) who said that reform would still be thoroughly reviewed even if it remained part of the state budget.
“This reform will cause the collapse of the dairy farming sector,” Bitan told the panel.
“What is Smotrich threatening? We don’t work for him. Suddenly, he remembered to fight against the high cost of living,” he added.
The Knesset’s legal adviser, Attorney Sagit Afik, issued a letter on Monday recommending that the dairy reform be separated entirely from the state budget and advanced independently.
Afik noted that this year the Arrangements Bill comprises approximately 420 pages and that there has already been a significant delay in its submission.
“There is no such thing as a bill that arrives containing dozens upon dozens of subjects, because it is clear that this makes the legislative process extremely cumbersome, harms the work of the Knesset, and undermines the ability of MKs to participate in a meaningful and proper way in the legislative process,” she told the panel.