MKs: Dairies Must Lower Their Prices

Panel also calls for parliamentary investigation of rising food costs.

The Knesset Economic Affairs Committee called on the dairy companies yesterday to undertake immediate steps to lower the price of milk. The committee also demanded that the government immediately restore the lower, regulated price of cottage cheese, and consider the possibility of imposing a reduced value added tax (VAT ) on basic food items, including dairy products. Moreover, the committee called for a panel to investigate rising food costs.

The proposals were formulated by committee chairman MK Carmel Shama (Likud ).

Carmel Shama- David Bachar
David Bachar

Meanwhile, the heads of the diary companies proposed a comprehensive examination of the rise in prices in recent years, including the cost of production. They also vowed to cooperate with investigations of the situation.

Some of the companies attributed part of the increase in prices to the chain supermarkets. However, they refused to give information about their profits or to lower the price of cottage cheese immediately.

The heads of the supermarket chains, with the exception of Rami Levy, who owns the Hashikma chain, did not participate in the committee meeting, even though they had been invited.

MK Shama led the committee in proposing the creation of a parliamentary panel that will examine both rising food costs and the oligopoly that characterizes the operations of the supermarket chains.

The committee also asked dairy producers "to heed the public. Fix this situation as soon as you can because every day that passes, you are accumulating damages that are being expressed in the Knesset."

Shama began the meeting with a call for price controls to be restored on cottage cheese.

"Restoring controls sounds unpopular on an economic level because we all want a free market, but there is no reason for the citizens to pay more. The debate is not about cigarettes or caviar, but about cottage cheese, a basic item ... Cottage is not caviar: It is a basic food item," he said.

Agriculture Minister Orit Noked suggested that "in order to restore the trust of the public immediately, the price of cottage cheese must be regulated for a certain period and, in parallel, other measures need to be considered."

Noked was referring to a directive that would require companies to report profits on all items whose price was deregulated, starting in 1999.

Tnuva CEO, Eyal Melis said that "being such a well-loved item, [cottage cheese] has come to symbolize the public protest and we must take note of it. Our role as an Israeli company is to listen, and act accordingly."

"There is no doubt that we will have to undertake a move that in our view is an all-encompassing one - a broad and extensive evaluation by the regulator. We propose a thorough examination of all the elements affecting the cost in the food chain, including farmers, dairies, retail stores and the government, and an examination of consumption habits."

"Since 2007 the price of cottage cheese has risen by 40 percent. The costs to producers, including the price of milk, labor, water, energy and other factors, have all risen - some by 25 percent and others by 65 percent," Melis added.

Eran Elsner, CEO of Tara dairy, called for a "round table" forum that would analyze the price of cottage cheese. He said that the costs of production, raw materials, marketing and management account for 24 percent of the price of cottage cheese.

"We do not set the price and the question should be addressed to the retailers," Elsner said. "We sell cottage at NIS 4.76 and its price rises to NIS 8 [in the stores]."