Six months before it is scheduled to go into effect, an ambitious plan by the Health Ministry to force food makers to affix prominent labels to products deemed unhealthy is under attack from other parts of the government.
The economy and industry, justice and finance ministries were all represented on the committee that proposed the labeling rules last year, but in recent weeks they have turned against the initiative and in support of food importers, who have opposed the plan all along.
TheMarker has learned that Justice Minister Ayelet Shaked met on Thursday with importers under the aegis of the Federation of Israeli Chambers of Commerce and voiced opposition to the current draft of the new labeling standards. The ministry confirmed the details and said it seeks to delay the rules’ introduction.
Meanwhile, the Economy and Industry Ministry has given the health Ministry a position paper asserting that “the current formulation of the draft rules is unacceptable. We support the regulatory goals of proving more information to the consumer: Our opposition is to the way the information will be presented under the proposed rules,” said the paper, a copy of which was obtained by TheMarker.
The Finance Ministry also plans to put up obstacles to implementation of they regulations, arguing that they contradict government policy of reducing business regulation and will impede imports.
The draft calls for the placement, starting in January 2018, of red labels on foods with more than 800 milligrams of sodium, 22.5 grams of sugar or 6 grams of saturated fat per 100 grams of product. The rules, which are set to gradually increase in severity, are part of Health Minster Yaakov Litzman’s campaign against unhealthy eating.
The campaign to water down the rules elicited an angry response from the Health Ministry.
“Even the economy and finance ministries, who are responsible for promoting economic growth, productivity and employment, should be concerned about the fact that we are raising a generation of very overweight people, who will be less productive and will struggle to serve in the army or join the labor market,” Health Ministry Director General Moshe Bar Siman Tov told TheMarker.
He said the labeling requirements would raise retail food prices by a negligible amount only.
While importers have vociferously opposed the labeling system, which is based on one adopted by Chile, Israeli food manufacturers have come out in support.
Mirroring the stand of importers, the Economy Ministry’s main objection is that the proposal has no counterpart in the developed world and will effectively block many imports. It “entails major costs that would in the case of small products reach 25% of its total cost and affect the price to the consumer,” the ministry said in its position paper.
The paper said that foreign manufacturers were not in a position to adjust ingredients as easily as domestic makers in order to avoid the red label, and that the effect would be to make imports less competitive. It also said that the January 2018 start date was too soon.
Food industry executives who asked not to be identified said the dispute was likely to significantly delay the introduction of the new labeling rules.
“When the matter comes up for a vote, the Health Ministry will encounter opposition in the coalition. We can assume that Litzman and Finance Minister Moshe Kahlon won’t want to ruin a perfectly good relationship over this because they have other joint interests,” said one food industry executive. “They’ll make all kinds of compromises, like delaying implementation and giving manufacturers and importers more time to prepare.”
The manufacturers effectively accept the importers’ contention that prices for them will rise. “The manufacturers would prefer that the importers are stuck in a situation where they have to raise prices because of the label requirement, which will let manufacturers sell their products at lower prices than importers, or to raise their prices,” said one.