The Ideology Is Dead. Long Live the Deal

One of the last great ideological strongholds in the kibbutz movement is tumbling down, as the members of Shefayim have voted to privatize the kibbutz.

Shefayim its not just a kibbutz; it's The Kibbutz. No one driving along the coastal highway can miss the massive shopping center that it owns; it is one of the largest and richest kibbutzim. This is one of the reasons why, after over 150 kibbutzim have been privatized over the past decade, the privatization of Shefayim is drawing considerable press attention.

The fall of Shefayim, after years of obstinate resistance, has a number of causes. The most important one is the feeling among the members that the collective ideology had dwindled to a mere pretense, and if the vision is gone, one might at least dismantle it properly.

"The kibbutz understood that this is the only way to enshrine in our generation and in the one to follow the principle that income and expenditure must be directly linked," says kibbutz secretary Yona Tal, former manager of Shefayim's water park. "In recent years, and for all kinds of reasons, this has not been the case - neither in Shefayim nor in many other kibbutzim. It's no secret that in kibbutzim you often find people who prefer to live without making a living."

Yona Tal is the sister of Nathan Tal, who in his term as secretary a decade ago attempted to privatize Shefayim, but the attempt did not fair well. "Today people were ripe for the change, and the decision was passed with a sweeping majority of 85% of the 600 members who came to vote," she recounts.

But the actual term "privatization" is not something that Tal is willing to accept. "Our model is called a 'safety net,' and it means that if members find it genuinely difficult to make a living, the kibbutz will step in with a financial safety net," says Tal. "On the other hand, no one will get the net if he can't prove he needs the net. The great support for the model shows we were ripe to move over to it."

Danny Bar Kama, 62, a Shefayim member who works as an architect for a large planning company in Tel Aviv, was one of the strongest supporters of the move. "We, the older kibbutz members, are inculcated with the kibbutz idea. I'm saying it because this move has its sadness. But it was absolutely inevitable, unlike in many other privatized kibbutzim."

Bar Kama says that unlike in many kibbutzim, the new generation didn't leave Shefayim and the kibbutz kept growing, with half the new arrivals being partners of kibbutz members. "These newcomers didn't really comprehend what a kibbutz was about," he says. "It caused a lot of problems in daily life. People didn't chip in on the collective effort, and became concerned exclusively with their family unit. The togetherness of Shefayim began to crumble."

"The worst problem to arise from this was the concealing of income. People didn't report income from outside sources, let alone giving it away to the kibbutz. Or for instance, a few years ago we accepted a 35-year-old man with dental problems that had cost NIS 100,000 to treat. In such a case, we'd be wondering why he applied to the kibbutz before the treatment and not after. It made us feel a bit like suckers, really."

"Similar things would happen regarding studies," Bar Kama continued. "The kibbutz pays the tuition fees for its members, but there was this one case in which a guy came from a wealthy home in Tel Aviv, and we had to pay for his studies. On top of that, we're not even sure he's paying back and shares his income with the rest of us. The principles of privatization that we approved will not allow this to happen. If someone comes in needing dental treatment, he'll pay for it himself; but there will be care for those who really can't afford treatment."

Kibbutz Shefayim is one of the wealthiest members of the kibbutz movement, not because of profits, but because of its capital, assets and income sources. It was one of the few kibbutzim that didn't need debt assistance from the state and banks during the great recession of the 1980s. Moreover, Shefayim was one of the "donor" kibbutzim, contributing some of its income to help failing kibbutzim, unsuccessfully trying to shield them from the crisis. The kibbutz contributed NIS 4 million - NIS 20 million in today's terms.

The greatest asset and main income source of the kibbutz is the commercial real-estate site of Hutzot Shefayim, in which the kibbutz invested nearly NIS 100 million, loaned from banks. It also had to pay tens of millions of shekels to the Israel Lands Administration to capitalize the rights on the site, which had been previously classified as agricultural land. It should be noted that unlike many other kibbutzim in similar situations, Shefayim paid the administration the market price of the over-20 dunams (some five acres) worth of developed land, as estimated by a government appraiser. The value of the site is estimated today at close to half a billion shekels.

The kibbutz has several other sources of considerable income, including a guest house with a conference center, a large plastics factory (Polikad) and a water park (Shefayim Venehenim). Unlike other kibbutzim that passed the administration of their real estate assets to external companies, Shefayim members administer their businesses on their own.

Shefayim is also one of the largest kibbutzim, with over 700 members. According to a member who preferred not to be named, "many people tried to join us and very few wanted to leave. I think these people wanted to get in on the extensive real estate rights of the kibbutz, rather than really join the collective. Now this notion of joining for the cash will cease. Whoever comes is welcome, but he will not get any rights on any of the assets the kibbutz and its members have amassed. Paradoxically, this will make it easier for us to accept new members. If in the past we'd try to reject applicants in every possible way - because we didn't want to split the dough - now we will welcome them with open arms, because they won't be getting any shares. Anyone who'll want the shares will have to pay dearly."

Shefayim may have many assets, but it does not always turn a profit. The kibbutz closed 2008 with worse results than 2007.

Despite the fact that the complete data is yet to be released, it is already known that Polikad suffered a loss, along with the rest of the plastics industry in Israel. The hotel industry had improved, but members say the situation there is far from glittery.

About 70% of the kibbutz members' living expenses come from their own work, and the rest is sponsored by the profits of its corporations. According to one member, one of the arguments in support of privatization is that if the quality of life for every member will depend on nothing but their income, they would have more motivation to earn more from their work, and more funds can be dedicated to expanding the kibbutz's financial operations.

The real potential of Shefayim is in its real estate, especially in private housing. When these will become available for trade - perhaps in a few years - the living quarters and lands will become the main source of wealth for the kibbutz members. The kibbutz has housing rights over a total of 60,000 square meters, which can be realized by members at 96% discount. Their value is estimated at $2,000 per square meter, or about a billion dollars all in all. The Israel Lands Administration is entitled to about a third of that.

According to another member who declined to be named, "there will be registration [of the properties], people will get their rights and will be able to rent out, sell or inherit the property. An apartment in Shefayim will cost $700,000, maybe even up to $1 million. We are talking about an apartment plus 300 square meters of land. "

"The members have not yet fully realized the financial potential here, but what they did get, I think, is one of the main reasons they supported privatization. When they reach full privatization, a member will be able to buy a three-room apartment in Tel Aviv and still have half a million dollars to spare. I'm not just talking about Shefayim - Ga'ash, Glil Yam and Sdot Yam will all profit. We'll all be [the luxury coastal estate] Arsuf."