Netanyahu's Cheesy Past

In 2003, Netanyahu agreed with the budgets' department's plan to gradually reduce, over a 5-7 year period, the high tariffs imposed on imported dairy products.

There is no argument about the fact that Benjamin Netanyahu's sense of humor is very dry. Otherwise it's impossible to explain his big show at the cabinet meeting two days ago. He turned to Agriculture Minister Orit Noked, and through her to the rest of the cabinet, and said: "Get up, act, learn from [MK Moshe] Kahlon how to find solutions," referring to the struggle of the Communications Minister with the cellular telephone companies.

Why is this funny? Because Netanyahu is "the minister overseeing economic strategy" and also the prime minister. Therefore he is the one who should act. Not turn to others. It is also funny that Netanyahu chose to turn to Noked, when he knows that she is part of the agricultural lobby. Noked is a member of Kibbutz Shefayim, which has a large dairy farm, and all her actions are summarized by a simple agenda: improving the lot of farmers. And if this comes at the expense of the other 7.7 million Israeli citizens, so be it.

The third reason for which I burst out laughing was that I remembered how Bibi behaved in similar circumstances when he was Finance Minister. It was in 2003 when the budgets' department presented him with an overall program for dealing with the milk cartel. The plan called for gradual reduction, over a 5-7 year period, of the high tariffs imposed on imported dairy products, in order to allow the import of cheeses, yogurt, butter, powder milk, and thus create competition for Tnuva, Strauss and Tara. The program also concluded that there must be an end to quotas, to "target prices" for milk, and to the organization of dairy farms into cartels. In order to sweeten the bitter pill a bit, it was agreed that as part of the reforms the regulation of prices on most dairy products would be lifted.

Netanyahu heard what the economists of the budgets' department had to say, and was enthused. He immediately said that he is in favor, and even came out with a new slogan for the public: "Breaking the monopolies," of cellular telephony, in ports, and in the dairy market. He realized that the minute the dairy market opens up to competition, the prices would drop, quality would improve, and it would be possible for the dairy business to grow.

The problem was that the agricultural lobby heard him and was shocked: How can they undermine the most profitable branch of agriculture? Immediately MKs from all parties rallied against the reform, and the farmers' magazines put out an emergency announcement explaining that Netanyahu is planning to "destroy the dairy market, harm the settlement that is protecting state lands, and destroy the productive population that lives along the borders." Against such forces Netanyahu could not stand his ground, and in December 2003 he shelved the reform plan.

Today there is no chance that Netanyahu would even dream of raising it for discussion. All he wants now is quiet. The sad part of this story is that what was left of the grand plan of 2003 is the sweetener. And thus, in August 2005 the Sharon government lifted price controls on many dairy products, including the famous cottage cheese, and the prices skyrocketed.

Now, Finance Minister Yuval Steinitz says that he will study the entire subject in depth. He says that he will consider whether it is appropriate to lower tariffs and allow imports. He says that he will examine the milk cartel of the dairy farms and the Milk Council which sets the price for milk. He says that he will seek to do away with restrictions exempting the field of agriculture from coming under the scrutiny of the antitrust authorities, so that they could deal with the milk cartel. He also says that he will consider restoring cottage cheese and other products back into the list of items whose price is regulated.

If I may wager, all that will remain of all this high and mighty talk, in the end of the day will be that cottage cheese (and possibly other items ) will once more be brought under regulation. Because this is the easy solution. Because it is the populist solution that the public will appreciate. Because this will not require a fight with the powerful agricultural lobby.

The quality of cottage cheese, whose price will be regulated, will deteriorate, and the companies will put out an "improved" cottage, with vitamins and iron, and that will be marketed to the people. They will increase the price of other dairy products, which are not regulated, so that we will gain cottage cheese, but lose out on the other products.

As long as we have not altered the basic structure of this oligopoly,the cartel of dairy farms, dairy companies, and supermarket chains will continue their party at our expense.