Cutting off the branch you're sitting on
Local olive oil producers fear the effects of possible cuts to import taxes and quotas, one of the popular weapons against high prices in Israel.
Israel's olive oil manufacturers have prospered in recent years. Owing to government assistance lands allocated for olive groves have expanded. This growth trend has been supported by environmentalists, who attribute ecological importance to olive cultivation. Rising competition with imports is threatening the local sector, with growers fearing cuts to import taxes that they say enable them to compete with foreign olive products. Local growers fear an end to the expansion and the possibility of abandoning groves under cultivation.
The possibility of cutting import duties on olive oil, as part of a broader policy of opening the Israeli economy to competition, was discussed in a few sessions convened by the Industry, Trade and Labor Ministry in the past year. The crux of the deliberations was the claim that retail prices for olive oil in Israel are double those in other developed countries.
In July olive oil importer Y.T.V. Food Industries named a number of government ministries, and in particularly the Industry, Trade and Labor Ministry, in a High Court of Justice petition demanding that import taxes be reduced and import quotas increased for olive oil. The complainant argued that the limited supply of local olive oil leads to high prices, while at the same time steep levies are imposed on imports.
In recent years the Agriculture Ministry has taken several measures to help develop the domestic olive industry, including adding 50,000 dunams (about 12,500 acres ) to the land under cultivation. Some of the new groves have access to purified wastewater for irrigation. A wide range of producers has benefited from this policy, including Arab farmers tending family groves and kibbutzim with more than 1,000 dunams of olive trees.
"If a policy of reducing [import] quotas is introduced, it is liable to lead to our removing groves," said Oren Hechter, head of olive oil production for Kibbutz Magal. "Even if we made the best olive oil we wouldn't be able to compete with imports given our high production costs and expenses such as fertilizer," Hechter said.
Michael Noy-Meir, in Tzippori, takes a different approach to producing olive oil. His main income comes from other agricultural products, but he presses olive oil using organic methods from trees located around the community, some of them centuries old. He says the olives from such trees create particularly high-quality oil.
It's become a family business, and the Noy-Meirs even have their own press. They recently had the opportunity to put an additional plot of land under cultivation, and declined. "We decided not to do it because of concerns over changes to the quota policy that could affect profitability," Noy-Meir's daughter Ayala explained. "We can continue to operate because we have regular private customers who will continue to buy from us, but we cannot increase the size of our olive groves," Noy-Meir added.
Local olive oil producers are represented by the Plants Production and Marketing Board, a farmers' consortium some of whose directors are government-appointed. Adi Naali, who is head of the olive sector for the board, stresses not only the economic significance of olives in Israel but also their environmental and visual importance.
"We respect the environmental contribution of olive trees, including their effect on the landscape, on air quality and on land preservation," Naali said. "In Europe, such utility is respected and olive growers are compensated. In Israel, the protection given to farmers is via the tax on imports."
In a statement the Industry, Trade and Labor Ministry confirmed discussions about import duties but said no changes are currently pending. The ministry said voluntary import quotas (in agreements with other countries ) are adjusted each year, taking the needs of local producers into consideration. "Local production is not supposed to be hurt because the main factor considered in reducing the quotas is domestic yields," the ministry said.
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