Two months ago, companies that produce cooking oil asked the Trade and Industry Ministry to raise the import tariff imposed on cooking oil. They lobbied for higher import duties by citing the difficult conditions faced by local producers.
This story of protection for cooking oil producers has been with us for many years. Up until the beginning of the 1990s, it was impossible to import cooking oil freely. Limited import quotas proved very lucrative for importers with "connections," who won these import licenses. A little over a decade ago, it was decided to expose local industry, including the producers of cooking oil, to import competition.
It was decided to impose, temporarily, a high tariff to give local oil producers a chance to adjust. The tariff was supposed to shrink gradually and disappear entirely in 2000. But the oil producers - market leader Shemen, in particular - fought against lowering the import duty. The laws in Israel on kashrut and Sabbath observance, they argued, make it relatively more expensive here to produce cooking oil. And the workers at these companies feared that lowering the tariff would lead to reduced local production and ensuing layoffs.
It is worth noting that the level of production in Israel - its quality and the range of products - has improved significantly during the past decade as a result of competition from imported cooking oil. (The quality of packaging has also improved. Remember how the glass bottles used to drip and make a mess?)
There was a period when the tariff was already lowered to 3 percent on cooking oil imported from the European Union and there was also a recommendation from the director-general of the Trade and Industry Ministry at the time, Dr. Reuven Horesh, to completely cancel the tariff. But during Dalia Itzik's term as trade minister, the tariff was raised again to 4.5 percent following the dubious claim that it would cause business difficulties for Shemen, Olivex, Yitzhar and Solbar.
Imports comprise just 15 percent of the cooking oil market and the local producers control this market. Cooking oil is a basic product that is consumed in large quantities by the poorer segments of society. It also is used widely in producing other foods. The import duty thus raises the overall cost of food for consumers; that is, it lowers the standard of living for us all.
The leading company in this field, Shemen, finished 2002 with profits of NIS 11 million, while distributing a handsome dividend of NIS 8 million to its owners. It is, therefore, a bit difficult to understand why the government prefers to fatten the profits of the owners instead of protecting the public at large.
Meanwhile, the Trade and Industry Ministry has passed on the producers' request to raise the tariff to an external accountant, Daviv Goldberg. But there is really no need for this review. The import tariff should be abolished immediately to lower the price of cooking oil and raise everyone's standard of living. The decision will be in the hands of Trade Minister Ehud Olmert. This provides a good opportunity to examine his worldview. Will it be different from that of Dalia Itzik? Will he be able to resist the pressure?
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