Small Kibbutz Enterprises May Be Facing Murky Future

Collectives’ accountant casts doubt on their ability to survive competition from around the world.

Ninety percent of kibbutz-based industrial enterprises with sales of less than NIS 50 million a year will not survive global competition and will close by the end of the decade, according to Yaron Reichman, who heads the kibbutz movement's accounting firm, Brit Pikuach.

Reichman was speaking last week at a kibbutz industry and finance conference in Tel Aviv. As reported in the kibbutz newspaper Hazman Hayarok, according to data that Reichman presented, 100 of the 113 kibbutz enterprises that have sales of less than NIS 50 million will close in the coming years due to an inability to deal with global financial challenges.

The kibbutz industry conference also dealt with housing on kibbutzim. The secretary of the kibbutz movement, Zeev Shor, called on the banking industry to find ways to enable those who grew up on kibbutzim, then left and are now returning, to take out mortgages on kibbutz homes. Because of the collective ownership model of kibbutzim, the process would differ from that in other settings: Kibbutz members cannot simply give their bank lenders a mortgage security interest for a home loan since the land is owned by the kibbutz rather than the resident. Shor said addressing the mortgage issue would also be a profitable proposition for banks, in light of the fact that housing construction on kibbutzim is approaching NIS 1.5 billion a year.

Every year, kibbutzim around the country take in about 2,000 new members, Shor said, adding that if a new procedure on mortgages was implemented on kibbutzim, it would greatly ease new members' ability to buy or build their own homes in the collective communities. Shor's comments relate to the roughly 75% of kibbutzim that are so-called "renewed" collectives, meaning that they have reduced the collective character of their operations and that members must invest in their own accommodations. On the remaining 25% of kibbutzim, where the traditional model still prevails, members are provided with housing.

Also at the conference, real estate appraiser Nehama Bogin, who is involved in the field of residential kibbutz construction, blamed the Supreme Court for the high cost of housing in Israel in general, which she said nearly a decade ago limited the sale of agricultural land by kibbutzim and moshav cooperative communities that could have been purchased by young couples wanting to build homes. As a result, Bogin said, housing prices in the country have risen and are not likely to decline in the near future due to a shortage of land.

The kibbutz industry conference also heard from economist Robert Parker, a senior adviser at the bank Credit Suisse, who surveyed the global economic picture. He reportedly surprised those in attendance by not only predicting that worldwide inflation over the next year and a half would remain low, but also that basic food prices, including dairy products, meat and poultry, rice, potatoes and fruits and vegetables, would substantially decline globally from their current high levels.