Israeli Dairy Giant Hikes Prices, Leaves Cottage Cheese Unchanged

Tnuva executives, speaking on condition of anonymity, said they had no choice but to raise most dairy products because the 9.5% increase in raw-milk prices is costing the company NIS 15 million a month.

More than a year after the cottage cheese boycotts, Tnuva is raising its prices, adding its name to the list of Israeli food makers to announce increases over the last several weeks.

The company, Israel's biggest food manufacturer, said it was raising prices on a range of products by 3.5% on average in a week.

Tnuva was at the epicenter of the 2011 social protests. The demonstrations were inspired by a boycott of the company's flagship product, cottage cheese, before they widened in the summer to housing and the general cost of living.

The company said it was keeping its price unchanged for now, but reserved the right to raise it later. It also opted for a modest 2.5% increase in white cheese, one executive said, citing "the social sensitivity about basic products found in every home in Israel."

"Despite the increase in raw-milk prices and high production costs, we have adjusted prices as little as we could and will continue to absorb part of our rising costs," said Tnuva CEO Arik Schor.

In a similar bow to testy public opinion, Strauss, the No. 2 maker of dairy products, announced price rises of 3% to 5% earlier his week, but it left its iconic Milky pudding product unchanged.

But unlike Strauss, which limited its price rises to dairy products after the government approved a rise in the price dairies pay for raw milk, Tnuva said it was raising prices across the board. Thus, prices for Sunfrost frozen foods, Mama Of chicken products, Ma'adanot frozen baked goods and others will rise by 4.6% on average, Tnuva said.

Tnuva executives, speaking on condition of anonymity, said they had no choice but to raise most dairy products because the 9.5% increase in raw-milk prices is costing the company NIS 15 million a month.

"In October last year Tnuva lowered prices on its products at cost savings to consumers of about NIS 130 million," Schor said. "Since then we have tried to find a balance between consumers, who deserve low prices, and Tnuva's need to cope with higher manufacturing costs."

But consumer groups yesterday weren't buying Tnuva's explanations.

Itzik Alrov of the Consumers movement said food makers had formed a united front and called on consumers to reduce purchases to send a message back.

The Dear Israel movement called for a boycott of a wide range of goods and manufacturers, including Bisli and Bomba snacks as well as Osem ketchup, Strauss Sky Sunfrost frozen foods and imported Heinz ketchup.

The Tnuva price increases follow ones announced over the past two months by Unilever Israel, Osem, Vita Pri Galil and Strauss. These companies have cited higher prices for commodities globally, higher costs for electricity and water, and the one-percentage-point increase in the value added tax in September.

In related news yesterday, the management of the Milk Council, the government company that oversees dairy production nationwide, approved by a wide majority a reform of the sector to bring down the price of dairy products.

Under the agreements, the target price for raw milk - the price dairies pay farmers - will be reduced over the next four years while the market for dairy products will be opened to more import competition, although less than the Finance Ministry had hoped for in its original plans to shake up the market.

Yesterday, Shaike Drori, director general of the Milk Council, called the final agreement fair, saying it takes into account the interests of all sides involved - dairy farmers, dairies and consumers. Still, council members representing the moshavim declined to vote after hundreds of farmers, especially from the south of the country, said they would refuse to close their operations as the agreement requires of the smallest and least efficient producers.

They will demonstrate on Sunday in front of the Prime Minister's Office in Jerusalem and on Thursday opposite the Cattle Growers Association in Caesarea, where the group will be meeting to vote on the agreement.

Tali Meyer
Tomer Appelbaum