Is the Honey Cartel Pollinating the Seeds of Israel’s Next Social Justice Protest?

The price of honey in Israel is 35% higher than in the U.S. because the local industry is controlled by a cartel. Now, the Agriculture Ministry is looking to give this status quo an official seal of approval with the newly proposed Honey Law.

Honey producers should expect a sweet new year thanks to a new law proposed by the Agriculture Ministry that would give the government’s full blessing to the current cartel that controls the industry.

At NIS 56 per kilogram, the price of honey in Israel is about 35% higher than it is in the United States. The Honey Law, as it is being called, that is currently sitting on the desk of Agriculture Minister Yair Shamir, could ensure that it stays that way.

When asked to comment, the ministry said that discussion of the proposed law was still ongoing and that no final decision had yet been reached on how to regulate the honey industry by law. However, the current situation and the Agriculture Ministry's role in creating and perpetuating it is far from encouraging.

Ahead of deliberations of the bill, the non-profit Kohelet Policy Forum, which seeks to promote free market principles in Israel, published an analysis of the current nature of the local honey market and predicted how it will look after the Honey Law is passed. The analysis describes an industry in a modern-day advanced economy like Israel, where it is impossible to raise bees, produce honey, store and sell commercial quantities of honey, graze bees, place beehives just for pollination purposes or import honey without the approval of the industry commissioner. In the case of the honey industry that commissioner is the Honey Council, a private company controlled Israel's large beekeeping operations.

For all intents and purposes, the council is the beekeepers' guild. Ten of the 14 council members are representatives of the beekeepers. The Agriculture Ministry holds the remaining four seats. This means that to get approvals necessary to enter the honey industry, or even just a farmer seeking to place a beehive on his own land, it is necessary to gain approval from the beekeeping companies that currently dominate the industry.

In practice, that means that a farmer owns all the agricultural products yielded by the land he owns, except for the nectar of his flowers. The nectar belongs to the state, meaning the Honey Council, and only it can decided who will use it. This power is unchecked by any formal criteria for receiving permits — the council simply chooses to whom it will give licenses.

Accordingly, the council plans precisely the number of beehives in Israel and the distance between them. Over time, the mandatory distance between beehives has grown to 1,500 meters today. In practice, the council stopped granting altogether new licenses for setting up beehives. Today, some 500 beekeeping operations exist in Israel, but the 50 largest control 80% of the beehives.

Honey imports could reduce the dominance of the guild were it not for an import tariff of close to 100%. An inter-ministerial committee that examined competitiveness in the food industry, known as the Kedmi committee after its chairman, Industry, Trade and Labor Ministry (now the Economy Ministry) director general Sharon Kedmi, discussed this possibility. However, the Agriculture Ministry killed off the initiative by spreading the fear that opening the market to honey imports would lead to a collapse of the local industry.

The small amount of honey that is imported to Israel today comes through duty-free quotas. However, the Agriculture Ministry gives the vast majority of these duty-free honey quotas only to authorized resellers, who receive their license to sell honey from the Honey Council.

Furthermore, while there are 40 companies authorized to sell honey by the council, in practice the market is a lopsided duopoly. The company Yad Mordechai Apiary, owned by major Israeli food conglomerate the Strauss Group, sells 63% of the honey sold in Israel. Another 17% of the market is controlled by Emek Hefer Apiary.

While pollination services are essential for agriculture, instead of finding a solution that would regulate such services the Agriculture Ministry prefers to leave the honey cartel in place. Now, it even wants to give in formal approval in the Honey Law.

Two years ago, the similar Milk Law was passed, turning the cartel running the diary industry from one protected not just by Agriculture Ministry regulations but by force of law. It should be remembered that three months after that law was passed, the protests over cottage cheese prices broke out, setting off what would become the summer 2011 social justice protests. The connection between these two events was not coincidental.

Ilya Melnikov