Senior business journalist Nehemia Shtrasler has been talking and writing a great deal recently about the cost of living in general, and food prices in particular. In his campaign against the high cost of living, he doesn’t let the facts confuse him, to use one of his own favorite expressions.
As anyone who takes an introductory course in logic knows, by using incorrect assumptions you can reach any conclusion you desire. It will even be legitimate, if a person keeps it to himself. But the fact that Shtrasler uses his media platform to fire so many dummy shells into the public space – which in any case is abuzz with discussions on the subject – is far less legitimate.
Here are a few facts and numbers relating to food prices in Israel compared to the rest of the world, which you won’t find in Shtrasler’s articles: About 8 percent of the total value of agricultural production in Israel is subsidized, compared to over 20 percent in Europe. Israel is in 34th place among the 36 members of the OECD in terms of government support for agriculture. In addition, in Europe and the United States the rate of value added tax on food is 6 to 8 percent, as compared to 18 percent here. Expenditure on kashrut is of course unique to Israel.
The dairy economy is one of the first examples to come up for discussion in this context. It’s true that the prices of dairy products in Israel are higher than those in Europe. The main reason is not the bolshevism of the Dairy Board, as maintained by “Menshevik” Shtrasler, but rather the basic facts: In Europe, cows are raised on natural pasturage and free roughage. Here, most of their nutrition is based on imported grains, which are far more expensive.
The target price mechanism, which is fixed in the Milk Law and supervised by government authorities, is determined on the basis of real costs and not on some whim of the farmers or the dairies. No “dairy guild” in the guise of the Dairy Board decides on it. An independent professional body established by legislation determines the price, so that it will serve both small and large producers and fulfill the basic intention of government policymakers - to decentralize the dairy industry so that it is spread all over the country, mainly in the peripheral areas, where most of the dairy barns are located. Shtrasler’s attack against the dairy farmers is therefore unjustified.
The absence of competition among the marketing chains is one of the reasons for the high price of milk. The new owner of Tnuva (the dairy cooperative that was privatized in 2008) is exploiting the lack of competition in Israel in order to sell its products at the monopolistic level, which means maximum profit for the seller, rather than at the level of balance between supply and demand. That, rather than pressure from dairy farmers, is what causes the exaggerated price,. That was the main reason for the “cottage cheese crisis” and other serious phenomena. The absence of competition among the marketing chains is also responsible for the high prices of other products, such as rice, for example, which is not produced in Israel, and which was sold a year ago for 10 times the importer’s price.
Shtrasler constantly preaches in favor of a complete opening of the food market to imports. It’s interesting to note that the beef market was opened to massive import of calves, with the surprising result of an increase in the price of fresh meat –again due to shady business connections between importers and slaughterhouses that eliminated competition. The same is true of apples, which were imported last winter and whose price increased rather than dropping.
About 95 percent of dairy products worldwide are sold in domestic markets, only 5 percent in international markets, and Shtrasler’s horror stories about the production boards, whose job it is to organize production and solve the problem of surpluses and shortages that characterize every agricultural economy in the world, are virtually unrelated to the problem of the consumer price – certainly not to the prices of goat milk and cheeses that aroused his anger.
All this should be sufficient to cause Shtrasler to get off the backs of the dairy farmers and the Dairy Board. But if that’s not enough, perhaps a bit of humility would help. I would expect someone who never put his hands in manure, never got up at 3 A.M. for milking and never helped a cow with a difficult birth, to demonstrate a little more humility when he sits in front of the keyboard and indiscriminately, and unfortunately sometimes without any relation to the facts, attacks those who bear the burden of this difficult and Sisyphean work on a daily basis, summer and winter, so that Shtrasler will have milk in the latte that he drinks in his Tel Aviv cafe. His attacks certainly don’t help the consumers.
The writer was a Meretz MK and today serves as the secretary general of the Israeli Farmers’ Association.