New plan to lower produce prices, save NIS 2.7b. yearly
Gov’t to recognize European standards for fruits, vegetables
Finance Minister Avigdor Liberman continues to wage war on Israel’s high cost of living. Liberman and Agriculture Minister Oded Forer announced a plan to increase competition in the agriculture industry, increase the range of products available and lower the prices of fruits, vegetables and eggs for the consumer.
The program will save Israelis some NIS 2.7 billion a year, or NIS 840 per household, the ministers said. Forer called the move “the greatest reform that has been made in agriculture in the last 30 years.”
The five-year plan, which is included in the Economic Arrangements Law that will accompany the 2021-2022 budget, will increase competition through a broad and gradual reduction in tariffs for all fruit and vegetables, as well as immediate price cuts for a variety of products such as eggs, avocados, garlic, peas, figs, artichokes.
In addition, Israel will recognize European standards for fruits and vegetables, and regulation of produce imported from Europe will be reduced. This will lead to a significant increase in the range of products expected to be imported, such that, for example, nectarines and apricots can be consumed throughout the year and not just in the summer months.
Other products that are currently inaccessible to the Israeli consumer, such as berries and the durian fruit popular in Thailand, will be able to enter the market as well.
The program also includes a broad support package for the agriculture industry that includes direct budget support for each farmer per cultivated dunam, support for the egg industry, expanded tax benefits to encourage capital investment, support for complying with local produce marking standards, lowering the cost of farming inputs, and an investment of over NIS 2 billion for raising productivity in the agriculture industry. Grants will be available for farmers to purchase new equipment, and collaborations with start-ups will be encouraged.
Egg farmers will be given direct subsidies for each egg produced, with priority given to farmers in the Galilee in order to strengthen the periphery. In addition, grants and investments will be given to help them upgrade to more modern chicken coops.
The news is encouraging for Israeli consumers, but threatening for farmers and egg growers concerned that the changes will harm their businesses. Following the announcement, the heads of regional councils announced a warning strike on Sunday.
“The egg industry supports 3,000 egg growers, with 2,000 of those in moshavs on the Lebanese border,” declared Moti Alkabetz, secretary-general of the Poultry Breeders Association in Israel. “What Hezbollah has been trying to do for many years, Liberman is doing in one slice.”
Fruit and vegetable prices have skyrocketed by over 80% in recent years, and the tariff reductions are expected to significantly lower their as well as egg prices by an estimated 25% or more, the ministries said.
The program follows OECD recommendations and is a significant step in placing Israel among other developed countries for agricultural policies, they added.
“The agriculture reform is one of the most important in the Arrangements Law and comes to strengthen the Israeli farmer while treating the cost of living,” Liberman said.
Last week, the Finance and Economy ministries announced a plan to ease the regulatory burden on importers and allow more imports in order to reduce the cost of living, which they said would save the economy about NIS 5b. per year.