The cottage cheese campaign is Israel's most successful consumer protest in years. Finally, Israeli consumers were roused from their apathy and began to demand lower food prices, which are significantly higher than the prices of similar products overseas.
Nevertheless, the protest's success in sweeping the entire public along behind it has not found suitable resonance among the decision-makers. They - primarily the Agriculture Ministry and the Industry, Trade and Labor Ministry, bolstered by a populist tailwind from Knesset members - prefer to pull the wool over the public's eyes with voodoo solutions.
The two principal voodoo solutions are reinstating price controls on a long list of basic food products and reducing value-added tax on food. These steps would indeed lead to a limited, temporary reduction in some prices, but would not solve the problem that has caused them to skyrocket in the first place.
The fundamental problem is the lack of competition at every level of the food industry, from the (government-controlled ) dairy farmers' cartel through the lack of competition among the big food manufacturers (in the case of milk, three companies - Tnuva, Strauss and Tara - control 90 percent of the market ) to the limited competition among the supermarket chains.
Lack of competition is the root of the problem when it comes to food. Even if cottage cheese becomes cheaper now, this will not help reduce the price of olive oil (which cannot be imported, inter alia because of high customs duties ), canned tuna or diapers. Nor will it create competition among the thousands of food products sold in Israel, most of which are made by a handful of companies: Five producers control 44 percent of Israel's food market.
Price controls don't create competition; on the contrary, they reduce it. Lowering VAT also won't create competition, nor would it help the poor: It would merely force the government to forfeit NIS 5 billion in tax revenue, with most of the savings going to the wealthy.
Neither of these measures addresses the root of the problem: the lack of competition in the food industry. Thus if these are the measures the government decides to adopt, Israel's first consumer protest is doomed to fail.
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