Netanyahu to Announce Plan for Lowering Dairy Prices in Israel

Cut dairies' profit margins, advises committee.

Dairies should have a lower profit margin on their products, according to the interministerial committee charged with examining dairy prices.

Prime Minister Benjamin Netanyahu, who set the committee up one month ago, is expected today to announce what steps the government will take to lower the price of dairy products. The committee is recommending that the profit on price-controlled dairy products be reduced, although government officials are still divided on the extent of the reduction.

cheese - Olivier Fitoussi - June 17 2011
Olivier Fitoussi

The cabinet ordered dairies to report their profit margins on 10 to 20 items whose prices were controlled up until a decade ago, including white cheese, cottage cheese, yellow cheese and pudding. This comes in place of a proposal to bring back the price controls on these items, a move the Finance Ministry sharply rejected.

Agriculture Minister Orit Noked has said these products should be brought back under price control if it is determined that their prices have risen significantly.

In order to reduce the prices of products under government control, the dairies' profit margins may be shaved, and the price dairies pay farmers for milk may also be reduced.

Along with the treasury, the Industry, Trade and Labor Ministry is calling for an immediate cut to the price of milk sold to dairies, which is currently NIS 2.15 per liter. The Finance Ministry wants a gradual 20% cut, while the agriculture and industry and trade ministries are calling for lesser reductions.

As compensation, farmers would be permitted to sell 10% of their raw milk on the free market.

These ministries agree that dairies must to be forced to clearly label which products are subject to government price control.