High production costs. Dairy farmer
Photo: Yossi Malul

'Israeli milk most pricey in world'

Managers of Tara, Strauss dairies say new dairy industry law will hurt consumers

The Knesset's Economics Committee on Monday discussed a new governmental bill to replace the 1992 Dairy Industry Law and temporary emergency arrangement which are no longer valid.


Michel Ben-Weiss, CEO of the Strauss dairy, said at the start of the discussion that "the price of milk in Israel is the most expensive in the world, by 30% to 50%, and the only one hurt by this is the consumer."

Ben-Weiss added, "When it comes to prices we are between the devil and the deep blue sea, and there is nothing we can do about it. There are stronger forces in this industry."


Tara CEO Eren Elsner clarified that "on the one hand the Dairy Board dictates the price for dairy farmers, and on the other hand the State dictates the consumer price, and the market is controlled by two giants."


The two speakers expressed their objection to the proposed law, which according to Agriculture Minister Shalom Simhon, creates a basis for the existing arrangements in the dairy industry made in agreement between the parties.


Ben-Weiss said he was concerned that the new law would lead to "a politicization of the industry." Elsner said that the law was "a move backwards". In any event, they said, it is not in favor of the consumers.


Peretz: Free market anti-Zionist

Minister Simhon, who was asked by Committee Chairman Ofir Akonis (Likud) about the change the law would make for the average Israeli citizen, Mrs. Cohen of Hadera, responded optimistically: "She will receive dairy products for fair prices, which will not suffer from the radical fluctuations in prices which exist in the world."


Knesset Member Amir Peretz (Labor) did not disagree with the claim that Mrs. Cohen is already paying the highest price in the world. "Zionism costs money. A free market is anti-Zionist," he said.


The dairy industry generates NIS 8 billion (about $2 billion) a year. The dairies buy the raw milk for a "target price" determined by the Dairy Board. The board is not a statutory body, but a non-profit organization comprised of representatives of Israel's dairy farmers and dairies. The price is set according to production costs and is updated every three months.


According to the agriculture minister, the new law offers different parameters for the price which are in favor of the cattle growers. The board will also include a representation for the consumers.


Israeli exports unattractive

Dairy Board Chairman Yitzhak Ben Dov said that the new law was needed because the price was set based on agreements only, and there was a fear that the understandings would not be kept.


According to Ben Dov, 85% of the law's clauses have been accepted by all parties. The rest are still being debated. Minister Simhon noted that one of the bones of contention was the conflict of interest in the board, with the interested parties setting the prices.


One of the biggest disagreements is with the Finance Ministry, which has insisted that the new law would regulate not only the marketing of milk and dairy products from local production and imports of dairy products permitted by the industry and agriculture ministers, but also from import permitted "in accordance with any law".


The cattle growers and industrialists fear that the vague addition would lead to a breach which will disrupt the entire marketing lineup.


The current law permits the import of 20% of the volume of dairy products (mainly milk powder for ice cream production). Asked by MK Israel Hasson (Kadima) why the new law would not encourage the export of Israeli dairy products, Ben-Weiss responded that "with our expensive prices we are unattractive in the world."


The committee has begun preparing the new bill for its second and third readings. It is expected to be brought to the Knesset's final approval during the parliament's summer session, which will begin in late April.


פרסום ראשון: 03.23.10, 08:11
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