Cabinet Votes to Ease Taxation of Meat and Dairy Imports

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Dairy products in an Israeli supermarket.Credit: Dan Keinan

The cabinet voted on Sunday to liberalize Israel's dairy economy, opening 20% of the market for hard cheeses, yogurt and cream to imported products duty-free.

The cabinet also elimated duties on calf imports and set a quota of 5,700 tons of duty-free fesh beef.

Meat and dairy products constitute more than 17% of the average household expenditure on food in Israel. The prices for the goods here are higher than in many other countries due to market failures, import quotas, regulatory requirements, lack of competition at several stages of the production process and kosher certification requirements.

In voting for the reforms, the cabinet adopted the recommendations of an inter-ministerial committee headed by Finance Ministry Director General Yael Andorn. Other committee members included Agriculture Minister Yair Shamir, Economy Minister Naftali Bennett, Finance Ministry Budget Department Director Amir Levi and Antitrust Commissioner David Gilo.

The committee found that supermarket chains were not giving the public clear enough information about the distinction between fresh beef and beef that is frozen and then defrosted. As a result, regulations will be passed requiring that meat be clearly marked in this regard. The government will also provide 25 million shekels ($7.2 million) a year in support to the pasture-fed beef industry, including to help publicize the difference between fresh and frozen beef. Another 45 million shekels will be allocated to support feedlot farms, where animals are fattened, to help them to adjust to changes in the market.

Prime Minister Benjamin Netanyahu ordered a delay on eliminating the duty on calf imports to give animal welfare groups the chance to make objections to the Finance Ministry, according to Anonymous animal rights group.

In the dairy sector, the committee carried out a comprehensive survey comparing product prices and market conditions around the world. The price of milk was found to be significantly higher in Israel than the average among other developed countries, mostly due to the absence of price competition on the part of the major dairies and the cost of the requirements of kosher certification.

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