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Analyst: Farmers’ ‘Cartels’ Mean Israelis Pay More

Analyst: Israelis pay 25% more due to powerful agricultural lobbies. The solution is simple – but won’t be easy.
By Maayana Miskin
First Publish: 1/12/2014, 1:25 PM

Vegetables (illustrative)
Vegetables (illustrative)
Israel news photo: Flash 90

According to a recently published survey, Israelis pay 25% more on average for fruits and vegetables than the OECD average. The price of produce has risen by 16% in Israel over the past decade, while the average OECD increase has been just 1.5%.

According to analyst Amir Whiteman, the survey is no cause for surprise.

“Israel is a sort of multi-branched ‘Soviet Union’ when it comes to agriculture,” he explained. Thirteen agricultural lobbies such as the Honey Production and Marketing Board and the Dairy Products Board “turn Israel  into one big cartel, with no real competition,” he accused.

Large corporation such as Tnuva and Strauss manage to “trample” small competitors, and to make it nearly impossible for new players to enter the market, he warned.

The latest data “was completely predictable, and matches the non-competitive market conditions in Israel,” he continued.

The solution is simple, Whiteman explained, “Cancel all of the agricultural boards and the cartel-like regulation that comes with them, end the protective quotas that prevent – or at least restrict – imports, and create a free market.”

However, he continued, “All this is fairly simple in principle, but very difficult to implement politically speaking, given the opposition from various parties with a strong interest in maintaining the status quo – at the expense of the populace, and of the poor in particular.”

“One cannot help but be depressed at the government’s weakness in the face of these parties, Tnuva and Strauss in particular,” he added. “Instead of protecting our interests, our elected officials try to distract us… Minister of Agriculture Yair Shamir and Finance Minister [Yair] Lapid put a price limit on cream cheese, as if that’s what will bring respite to the public, and [Economics] Minister [Naftali] Bennett, who energetically promotes reform and market competition, is silent; apparently he mustn’t anger his ‘brother’ Lapid.”

“Crony capitalism” is like an illness in the Israeli market, “and the time has come to put an end to it,” he concluded.