Imports are the answer
Competition in the dairy market is crucial. Adopting the Trajtenberg Committee's approach would facilitate the import of processed foods, including dairy products - a move that would lower prices and raise the standard of living.
The summer's consumer protest has achieved something very important: It has empowered the consumer against the manufacturer.
From now on, large companies will no longer be able to make decisions about raising prices without taking the consumer response into account. Now, all executives understand that if they overly exploit their market strength and hike prices beyond what is reasonable, the public will revolt, call a boycott, and hurt the firm. The company chairman or CEO may even have to pay with his job, as happened with Tnuva and Zehavit Cohen, who was forced to step down Sunday as the company's chair.
Cohen very successfully exploited Tnuva's monopolistic power and sharply raised the prices of its products over the past few years. Only now, after months of protest and boycotts, has Tnuva announced that it lowering prices somewhat. And as the market leader, its move led the Strauss and Tara dairies to follow suit.
The questions that remain are how to ensure that this price drop is a permanent one, and how to determine what a "fair price" is for dairy products. Only one thing can provide us with the answer - unfettered competition. Therefore, in a market in which there isn't much competition, like the dairy market, a sector that has a tendency toward cartels, the aim should be to increase the level of competition.
This can only be achieved by opening the market to unrestricted imports, without customs duties or any other levies. When companies can start importing dairy products from Europe, the three major dairies will be forced to streamline their operations, cut costs and lower their prices to global levels - for good.
There must also be a clause in any related legislation to prevent Tnuva, Strauss or Tara from becoming dairy importers, because if that happens, competition will continue to be stifled.
The government, which discussed the Trajtenberg Report Monday, must understand that what happened at Tnuva is directly related to that report. The report contains a chapter on battling monopolies and encouraging competition by reducing tariffs and opening the economy to competitive imports.
Adopting the Trajtenberg Committee's approach would facilitate the import of processed foods, including dairy products - a move that would lower prices and raise the standard of living.