Social reforms would deprive workers in the periphery of their livelihood, say canning and poultry sources

Pri HaGalil CEO Oshik Efraim threatened that his tuna canning operations would have to close shop and lay off 85 workers if the government went ahead with the Trajtenberg Committee's recommendations to drop import duties on food products such as canned tuna. The company has been at the center of a media circus for several months now due to the workers' highly publicized protest against other, unrelated layoffs.

The country's tuna canning industry employs about 1,100 workers, the large majority of them in the periphery. These jobs would be lost if import duties are lowered on canned tuna, say canning companies.

The tuna does not come from Israel, but plenty is processed and canned here.

The Trajtenberg recommendations are designed to lower the cost of living and redirect budget resources toward social welfare. The Finance Ministry is planning to fast-track the plan to drop import duties on food products, including many that lack local competitors.

The manufacturers, which object to the plans, say the move won't actually increase competition and lower prices as intended because local companies will have to close shop.

"We currently have fierce competition between five local tuna canners and some 20 importers," said Starkist Israel CEO Michael Mitelman, whose company controls 35% of the market. "We won't have a problem switching over to importing if they lower duties, but we'll be forced to lay off employees. Most of the tuna canning factories are in the periphery, and workers there don't have many alternatives."

The local tuna market is worth NIS 650 million a year, he said.

Poultry farmers are fighting the social reforms for a completely different reason: the government's intent to fund free education from age 3 - one of Trajtenberg's central recommendations - by dropping subsidies for egg farmers in the Galilee.

"It's inconceivable that the poor residents of the Galilee would be the ones paying the price of the social protest," said Yaakov Cohen, head of the Israel Egg and Poultry Board.

The subsidies, legislated in the 1980s under the Galilee Law, grant farmers in 27 Galilee communities 7 agorot for each egg they produce. It costs the state NIS 70 million a year, and the treasury has tried to do away with it in the past.

There are about 2,000 farmers in the Galilee, whose hens are responsible for 65% of the 1.8 billion eggs laid in Israel every year. The subsidy is equal to about 15% of their costs.

Cohen threatened an immediate strike if the government does not change its plans. Many of the farmers are even poorer than the population groups the Trajtenberg committee sought to help, he said.

Profit margins on egg farming are very low. Many of the egg farmers are above age 60, and have no other income.

Meanwhile, food manufacturing giant Tnuva is planning to invest tens of millions of shekels in upgrading its hard cheese production line this year, said industry sources. The government is advancing plans to lower import duties on hard cheeses. Tnuva has a lot to lose from such a change.