Duties on Imported Olive Oil Won't Be Cut, in Bid to Save Local Industry

Local producers asking the government to increase customs duties to make imported olive oil more expensive in Israel.

Import duties on a number of food items were reduced by Finance Minister Yuval Steinitz this month - but local olive producers have successfully lobbied for imported olive oil to be excluded from the list, in a bid to boost the flailing local industry.

Producers put pressure on members of the Kedmi committee, the commission looking into ways to reduce the cost of food here, not to cut duty on imported olive oil brands, saying that such a reduction would deliver a blow to the local industry. They claim the local industry is in a precarious state and that imported oils are 15% to 20% cheaper than local products.

Local producers are also asking the government to go one step further and actually increase customs duties to make imported olive oil more expensive in Israel. Alternatively, they are calling for subsidies to the industry, until the local olive oil sector stabilizes.

"The [local] sector gets no support or subsidy," said Zvika Cohen, senior deputy director general at the Agriculture Ministry. "There's a crisis and competition with Spain over who will uproot olive plantations first." He said it will take about a year to 18 months for the current crisis in the industry to subside. Until then, he said, the local industry must be given assistance, including by raising import duties.

The local industry's plea had a receptive ear Wednesday at a session of the Knesset Finance Committee, where Knesset members were told that many local growers are considering uprooting trees and that producers are thinking of shutting down operations. Committee chairman Moshe Gafni (United Torah Judaism ) said he would hold off on any action until a meeting scheduled for Sunday on the subject between Agriculture Minister Orit Noked (Atzmaut ) and Industry, Trade and Labor Minister Shalom Simhon (Atzmaut ).

"The olive oil sector is in a global crisis," said Adi Naali, who heads the olive oil division of the Plant Production and Marketing Board. "Dumping is going on in Europe. Spain, which is our major competitor, manufactures almost 40% of the world's produce and has accumulated large surpluses."

Olive oil consumption in Israel amounts to 17,000 tons a year, including 6,000 tons of imported oil, Naali said, adding that European producers get indirect government subsidies of between 30% and 50%.

However, Maayan Nesher of the Finance Ministry's budget division told the Knesset Finance Committee that no additional duties on imported olive oil are necessary. "The duty on olive oil is relatively high. The Agriculture Ministry already provides support for Israeli brands and to combat fake product, which has a major impact," she said, in apparent reference to products whose origin or quality are misrepresented on the packaging. "We currently see no reason to increase duties," she added.

Importers of foreign olive oil say any duty increases would immediately be passed along to the consumer and would even push up the retail price of local olive oil. Local retailers, they claim, sell cheaper imported oil at the same price as the local product and simply pocket the difference as additional profit.

Scorched olive trees in the West Bank, 2013.
Daniel Bar-On