The government appears to be staging a second major retreat on its ambitious plans to end production quotas in exchange for direct farm subsidies.
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The Israel Farmers Association said it reached an agreement on Saturday night with the finance and agriculture ministries. It would maintain egg-production quotas, in return for farmers agreeing to a reduction of the price they receive for each egg, over seven or eight years, by6 agorot (1.6 cents), from 49 agorot.
The association said the government had also agreed to cover 60% of the costs for upgrading poultry sheds, a figure that could reach 1 billion shekels. It said officials had also agreed to extend the Galilee Law, which gives egg and poultry producers in the Galil and Golan Heights 100 million shekels in aid a year. The law is due to expire next year, and under the agreement it would be extended another 15 years.
Treasury officials said Sunday they had not yet signed the agreement, but if the government does accede to producers’ demands it will mark the second major setback for the plan to replace productions quotas that artificially raise prices for farm goods with direct subsidies to growers.
The Organization for Economic Cooperation and Development has urged Israel to move to direct subsidies in the hopes it would make farming more efficient and lead to lower retail prices. But the government has said it won’t force growers to adopt the reform and is seeking voluntary agreements, which has weakened its hand.
Although the government has made some progress in the beef and fish segments, the key dairy segment has reportedly succeeded in keeping production quotas in place.
Finance Minister Moshe Kahlon and Agriculture Minster Uri Ariel met recently with producers, which the Farmers Association said signaled that both ministries had consented to the accord. But a treasury source said yesterday that it wasn’t true.
“No agreement was either presented or signed. The Finance Ministry wasn’t part of the talks that the Agriculture Ministry had with the egg industry,” said the treasury source. “What was released talks about a 1-billion-shekel government investment and that can’t be reached in one night of talks.”
Sources in the treasury said a 6-agorot price reduction of seven or eight years was too little to justify the subsidies the government would be giving and that they want an immediate price cut of 10 agorot. They said the treasury is willing to subsidize upgrades of poultry sheds for medium-sized and large growers only, not for smaller, inefficient ones.
Meanwhile, in the beef industry Israel has already moved to a system of direct farm supports, but imports of frozen beef — the main competitor to local products — is still subject to quotas and cattle raisers has so far refused to agree to any increase in them. Meanwhile, new entrants, most notably Super-Sol, Israel’s biggest food retailer, have entered the meat-import market in competition to Tnuva and Dabah, which dominate imports.
The fish sector has also moved to direct aid for now, although long-term plans for the sector will only be discussed after the High Holidays in September and October.