Ministers Battling Each Other Over Dairy Price Deal

On Sunday, the committee - made up of professional staff from various ministries - will meet to formulate immediate solutions to the steep increases in dairy product prices.

Industry, Trade and Labor Minister Shalom Simhon decided yesterday to expand the examination of the dairy industry and study the entire Israeli food industry in an attempt to find ways to lower consumer food prices.

A committee comprising representatives of various government ministries and other bodies will investigate the state of the Israeli food sector, including such issues as over-centralization and concentration of economic power in the hands of a few companies, and profit margins at all levels. At the same time, the committee will continue to search for quick solutions to the price increases in the dairy sector. "We have reached the conclusion that there is a need for an in-depth examination, not just for the dairy industry but for the entire food industry," said Simhon yesterday at a job fair and conference in the northern town of Shlomi. "It is not just a matter of cottage cheese and not just dairy products."

On Sunday, the committee - made up of professional staff from various ministries - will meet to formulate immediate solutions to the steep increases in dairy product prices. The committee includes members from the Finance, Agriculture and Industry, Trade and Labor ministries. It will also include representatives of the dairies, supermarket chains and farmers. The group is supposed to present Simhon with recommendations within a week as to what immediate steps can be taken to lower prices.

Finance Minister Yuval Steinitz is also taking action: He has ordered the Tax Authority and the treasury's budgets division to provide their recommendations on reducing dairy prices early next week. The recommendations may include steps such as lowering taxes on such products: For example, setting a lower level of VAT for food products.

Steinitz, his deputy Yitzhak Cohen, Antitrust Commissioner David Gilo and senior business executives met yesterday in Steinitz's office in Tel Aviv to discuss the issue. The CEOs of the three largest dairies, Tnuva, Strauss and Tara, also attended; as did the CEOs of Israel's largest supermarket chains.

Steinitz plans to coordinate his policy with Simhon and Agriculture Minister Orit Noked within a few days, but both are representatives of the farmers: Noked comes from the Kibbutz Movement and Simhon from the moshavim.

Simhon said Prime Minister Benjamin Netanyahu had given his ministry responsibility for the matter. Simhon said that, along with the other two ministries, he would act to rebalance the economy in favor of the consumer.

Tnuva: We need a package deal

A number of food manufacturers complained at the meeting that they have very low profit margins for dairy products - 4% to 6%. Even the now infamous cottage cheese, which is under a consumer boycott in response to its high, and rising, price, is not profitable, said one industry CEO.

"There is a feeling of enormous disorder," said one dairy industry executive who attended the meeting. "Two ministers [Steinitz and Simhon] are attempting to push the dairy price issue, each one by himself without cooperation with the other. It seems there is no coordination between the ministers. Everyone wants [to be in] the headlines," he said.

Tnuva CEO Arik Shor said after the meeting that there's a need for a package deal between the dairy farmers, dairies, supermarkets and the government. "Everyone must give their share," said Shor, saying any nonintegrated solution was like "putting a Band-Aid on cancer." He said he thought it was possible to reach a solution in a week to 10 days.