Tnuva announced Sunday it is to drop wholesale prices on 30 dairy products, following a 6.4% fall in the price manufacturers pay for raw milk.
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The move follows severe criticism leveled at the country’s dairy manufacturers about a week ago by Agriculture and Rural Development Minister Uri Ariel, for not lowering prices despite the decline in their own outlays for raw milk.
The finance and agriculture ministries have also lowered the retail price for dairy products under government price controls by 4.6%.
The Agriculture Ministry said it expected the country’s dairy manufacturers – of which Tnuva is the largest – to follow suit. Strauss and Tara have also said they will be lowering prices.
The law bars dairy manufacturers from dictating the retail price supermarkets charge for their products.
It remains to be seen if all the savings the retailers are set to enjoy will be passed along to the consumer.
Agriculture Minister Ariel said the point in lowering the so-called target price for raw milk was so that consumers, rather than retailers, would benefit from the savings.
“By virtue of my position, it is my intention to have the [price] supervision unit examine whether prices for products that are not under price controls have also been lowered,” Ariel stated.
“If I find this has not been done and that the profit from the milk price reduction is going to the [retail] companies, I will use my full authority to force the retailers to lower prices that are not controlled, and will consider placing additional products under supervision,” Ariel added.
Tnuva, which was recently acquired by Bright Food of China, will be lowering prices by 4% to 7% on most of the products on which price cuts have been made. The list price for cottage cheese – an Israeli staple that became a major focus of the cost of living protests of 2011 – will be cut by 4%. The price for white cheese spread is being cut by 6.8%.
Ariel called on Antitrust Commissioner David Gilo to investigate whether the dairy manufacturers engaged in price fixing, after reports that the manufacturers would only be lowering price-controlled dairy products. In fact, however, the dairy manufacturers have gone beyond that.
Tnuva’s move to lower wholesale dairy prices is more extensive than the price reductions that the country’s second-largest dairy manufacturer, Strauss, announced last Thursday, which involved a 2.5% to 6.7% price drop on 15 items.
The third-largest dairy, Tara, which is owned by the Central Bottling Company, said it will also inform the supermarket chains of a drop in the prices it charges them.