Contacts between the government and dairy farmers designed to come to an arrangement that would make the sector more efficient and drive down retail dairy prices resulted in an agreement in principle on Friday.
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Complicating implementation of the agreement is the opposition of milk producers from moshav cooperative communities, who produce nearly half of the country's milk. On the other hand, kibbutz dairy farmers are expected to support the deal and when it comes to a formal vote this week, the pact is expected to pass.
Dairy farmers that were parties to the agreement have consented to a gradual reduction in the price they receive from the dairy manufacturers for their raw milk. In return, the government agreed to moderate the reform plan that it has been pushing for the dairy sector. Under the agreement, the state is to pay small dairy farmers who cease their operations a combined NIS 200 million. The state, however, has agreed to scrap a plan which was a central component of the recommendations of the Kedmi committee on food pricing, that would have allowed for the trading of milk quotas. The government also agreed to scrap many of the customs reductions that were designed to encourage imports of competing dairy products from abroad. If it goes forward, the plan would be in effect for eight years, meaning that for the next eight years, no further reform in the dairy sector would be undertaken.
One major question mark over whether the plan would actually be implemented involves the opposition of dairy farmers from the country's moshavim. One hundred milk producers from moshav cooperative communities voted almost unanimously in Tel Aviv on Thursday to oppose the compromise that was worked out by the Dairy Board, the Agriculture Ministry and the Israel Cattle Breeders Association, which is controlled by the movement representing kibbutzim, cooperative communities with a higher degree of cooperative ownership than the moshavim.
Proponents of the plan say it would make the industry more efficient. In his remarks in opposition to the compromise, moshav movement secretary general Meir Tzur said the dispute was not between the collectivized kibbutzim and moshavim (where supplies are frequently purchased together and produce marketed jointly ). It was also not a battle with the Cattle Growers Association and the Dairy Board, he said. "There are no good guys and bad guys. The fight is with the government, which is putting forth proposals that will destroy the family farm on the moshavim," Tzur claimed. "We are saying that we need to fight and we won't permit ourselves to be frightened by them."
Tzur said he does not think the cattle breeders' group or the Dairy Board or Agriculture Ministry would go ahead and sign a proposal that has not garnered the support of the moshavim, which represent about half of the country's milk production. Proceeding with the compromise without the moshav movement's blessing, he predicted, would lead to conflict with the kibbutzim, which he said neither party is interested in.
The moshav movement will present its own alternative plan to the government, Tzur said, which would provide that for every agora decrease in the price of raw milk that the farmers would agree to, the manufacturers would forgo 2 agorot on dairy products and the retail supermarket chains would reduce their profit margins by 4 agorot. "Based on this formula," he explained, "we are forgoing 6 agorot [per liter of raw milk], the dairies would give up 12 agorot and the retailers 24 agorot."
"Such a joint step would reduce the price of dairy products to the consumer without producing a wild level of imports, which would be a destructive step for the dairy farm, the food security enjoyed by the public, the Israeli economy, farm employment and the consumer," Tzur said. The consumer, he claimed, would not be the party that would benefit from increased imports of dairy products, adding that the alternate moshav movement proposal would not require state funding, but would be carried out by some streamlining of operations at the dairy farms, including perhaps cooperation among farms. "It's a proposal that everyone profits from, maybe other than the retail chains and the dairies, which will earn a little less."
He said representatives of the family farms would meet at the beginning of this week with Histadrut labor federation chairman Ofer Eini, who expressed support for opponents of the compromise being touted by the Agriculture Ministry, the cattle growers association and the Dairy Board.