Prime Minister Benjamin Netanyahu on Wednesday adopted the recommendations of the sub-committee for the dairy market reform aiming to slash dairy prices by dozens of percentage points.
The recommendations adopted include opening the dairy market to competition in a graduated scheme, auditing feed mills, obligating dairies to report earnings, and annulling exemptions from binding contracts with produce distributers.
Additionally, food chains will be obligated to mark products, retail-supplier relationships will be examined, unused quotas will be opened up to competition, small dairies will be able to expand and the target price will be slashed by 5-6 agorot.
The sub-committee for the review of the dairy market under Ministry of Industry, Trade and Labor Director-General Sharon Kedmi was appointed by Industry Minister Shalom Simhon and Finance Minister Yuval Steinitz at the request of Prime Minister Netanyahu.
The committee examined the entire dairy market value chain with the aim of cutting prices for dairy consumers while maintaining equitable profitability throughout the value chain.
The dairy market will be gradually opened up to competition and quotas will increase with tax rates fixed at 20%. In 2016 the market will be opened to imports, sans quotas.
As regard the dairies sector, the committee determined that dairies will be obligated to report their earnings and production quotas will be set on the basis of 2011 quotas for a five-year period, beginning 2012. After three years, the government will be able to finalize quotas and unused allotments will be opened to competitive production not on the basis of the target price.
Furthermore, it was determined that small dairies will be allowed to expand during the arrangement period to a 700,000 liter quota.
The Antitrust Law will be amended to annul exemptions granted to produce distributors from binding agreements. The annulment will bring an end to produce distribution arrangements.
Retail chains will be obligated to report profitability each quarter, on the basis of which the government will determine whether to implement full supervision over products. Retailer-distributor relationships will be inspected and larger suppliers will be banned from importing end products.
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