Tnuva and Strauss' Sour Milk

The problem with a consumer boycott is how long it can last. That's why it is necessary to strike now, while the iron is hot, and effect a substantive reform of the dairy industry.

The social protest that started some two months ago has already racked up one proven success - an economy-wide reduction in prices. It began with gasoline, continued with cottage cheese and later spread to every other product in the economy.

The manufacturers, merchants and marketers understood that something had changed in Israel. No longer would there be a never-ending party of price increases and a submissive public. From now on, the public would get mad, take action and fight, and it would no longer be prepared to pay any price demanded of it. The result is obvious: This year, the High Holidays will be much cheaper than last year.

The struggle is being spearheaded by students from Tel Aviv University, who have marked Tnuva as a target. They stand outside the big supermarkets and urge the public not to buy Tnuva's dairy products.

The public has acceded only partially: Young people are in fact boycotting the company, older people less so. But the result is that Tnuva has recorded a 10 percent drop in sales.

Strauss, the second-largest company in the industry, has also been hard hit. Sales of its flagship product, Milky puddings, plummeted in July and August, since the public was no longer prepared to pay its exaggerated price. This week, Strauss responded by dropping the price of a Milky by a whopping 24 percent, on condition that you buy four containers at once. That is because Strauss fears that once the public is done dealing with Tnuva, it will turn its attention to Strauss.

Tnuva and Strauss have responded by introducing various sales, but the students understand that these are temporary reductions, special deals that can be canceled from one day to the next. They want to see a real change - in other words, a consistent, long-term reduction in prices. Will they succeed?

This week, Manufacturers Association President Shraga Brosh lashed out angrily at those behind the boycott of Tnuva. He declared patronizingly that the students should pay focus on their studies instead of boycotts that border on anarchy. "Imagine if we were to impose a counter-boycott under which no graduate of Tel Aviv University would get a job, or if we were to stop giving scholarships," he said. How terribly frightening. What would we do without the jobs supplied by the big cheese? How would we study without his scholarships?

Brosh, who from time to time joins forces with Histadrut labor federation chairman Ofer Eini in order to create a "social-welfare" image for himself, has now revealed whom he really represents. He does not care about the exaggerated prices of products made by Tnuva, Strauss and others. He does not care that these manufacturers' production workers cannot make ends meet because of the high prices. What he cares about is maintaining Tnuva's huge monopolistic profits.

For Brosh's information, this is a justified boycott, because Tnuva does not operate in a competitive market. It has monopolistic power, as it controls some 50 percent of the dairy products market. Therefore, it is correct to create a counterweight in the form of an organized consumer public. Because then there will be a fair battle: one monopoly against another, one market power against another.

It is also annoying to hear Zehavit Cohen, CEO of Tnuva's owner, Apax Partners, saying that she is prepared to bring down prices only in the framework of an agreement that includes the entire supply chain - that is, the dairy farmers, the manufacturers and the supermarkets. But when she raised the prices of milk products by dozens of percent over the last three years, did she ask permission from the "supply chain"? Then she shouldn't be dependent on it now, either.

Cohen also refuses to publish Tnuva's financial reports, so the public does not even know how many hundreds of millions that monopoly earns.

The problem with a consumer boycott is how long it can last. Those in charge at Tnuva hope that in another few days, the diplomatic-military-Palestinian-Turkish issue will rise to the top of the public's agenda. And then, who will care about the price of cottage cheese?

That's why it is necessary to strike now, while the iron is hot, and effect a substantive reform of the dairy industry. The high customs duties on imported dairy products must be brought down immediately and drastically so that milk, powdered milk, yogurt and other dairy products can be imported freely from Greece and other European countries.

Free imports are the solution. Free imports will introduce competition into the industry and serve as a sword of Damocles over the heads of Tnuva and Strauss. And that will cause them to reduce their prices consistently over time.