Finance Minister Yuval Steinitz. Price controls are not the answer.
Finance Minister Yuval Steinitz. Price controls are not the answer. Photo by Michal Patel
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The price of tomatoes at Israel's wholesale produce market has nearly doubled in the past two weeks, from NIS 4.6 per kilogram two weeks ago to NIS 7.2 as of Sunday. On Thursday the wholesale price of hothouse tomatoes was NIS 5.8, according to the Israel Plants Production and Marketing Board.

Hothouse tomatoes were selling for NIS 8.8 a kilo at Tel Aviv's Carmel Market Sunday, NIS 7.99 a kilo at Mega Ba'ir outlets in the city, and NIS 6.99 at Super-Sol Sheli stores in Tel Aviv.

Rami Levi, owner of the eponymous deep-discount supermarket chain Rami Levi Shivuk Hashikma, said on Sunday, he was drastically reducing his orders for fresh tomatoes in response to the price crunch, even if it meant creating a shortage in his stores.

"Today I ordered 10 pallets of tomatoes, compared to 100 pallets on a normal day," Levi said. "I expect there to be a tomato shortage in the branches during the day, but I'd rather people not buy at this price. If I don't order a large amount the demand will drop, in the hope that prices will drop accordingly."

Levi said the retail chains should charge customers about 20% above the wholesale price - around NIS 9 per kilogram.

"Indeed, we saw an increase in the price of tomatoes prior to Independence Day," said Zvi Alon, the general manager of the Plants Production and Marketing Board. "The main reason is that we are in between production seasons. There are areas that have already given out their winter harvest and are now being readied for the next season's planting. There are also fields that haven't been harvested yet because the fruit is still unripe."

Alon said the average wholesale price for tomatoes in 2011 was NIS 3.16 per kilogram, but that it rose to nearly NIS 6 per kilogram in November and December.

"We can expect lower tomato prices only in another three to four weeks," Alon said. "In the meantime, the prices will be higher."

While Alon said the higher prices are normal for this time of year, he noted that at this time last year the wholesale price of a kilogram of tomatoes was just NIS 1.5. "Perhaps last year there were more areas under cultivation, so there was no decline in the quantity of tomatoes," Alon suggested.

Steinitz opposes cottage-cheese price controls

While on the issue of Israeli food staples, Finance Minister Yuval Steinitz said on Sunday he was against reinstating government price supervision over cottage cheese.

Writing in response to a demand by MK Zahava Gal-On (Meretz ) to restore state price controls on the dairy product that has come to symbolize consumer rage in Israel, Steinitz argued that monitoring retail prices does not increase competition in the long run and should be avoided as much as possible, as recommended by the Trajtenberg Committee.

In a letter to Gal-On, Steinitz explained that the Finance Ministry does not believe that restoring price controls on cottage cheese would benefit Israeli consumers and is working "to provide structural solutions that will reduce dairy prices in the long term" through various government bodies that have been established to these ends.

In her appeal to Steinitz, Gal-On argued that cottage cheese is "a staple item in a highly concentrated, cartel-like sector that does not maintain free competition" and that it is sold "for a much higher price than it would be were it under government supervision."