Food Prices Fall, But Not In Israel

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Five years after Israel’s Cottage Cheese Protest, when thousands protested against the high cost of Israel’s basic food products, MK Uri Maklev called for an urgent meeting in the Knesset plenum and demonstrated that things haven’t got better since.

“Sadly, despite all the protests and efforts, food prices have not become less,” Maklev said. “What was not done to reduce the cost of living? Regulatory barriers were removed, import quotas were increased, there were food industry reforms, taxes and tariffs were reduced, war was declared against monopolies and more. These made nice headlines, but in practice, at the grocery store, they do not reflect what’s going on.”

Maklev explained that International Monetary Fund indices indicate that on average, since the social protest five years ago, world commodity prices fell by an average of 18.9% percent. But this is not reflected in Israel’s high food prices.

“Food prices were kept from rising not because of public and government struggles, but because world prices of raw products are declining,” he said. “Realistically speaking, prices have not fallen and they have even increased.”

“Israel is one of the most expensive countries in the OECD (Organisation for Economic Co-operation and Development), not only because of high housing prices but also because of the cost of food,” he said. “Worldwide, products are tens of percents cheaper than in Israel.”

Maklev noted that although Israeli food prices only increased by 2.3% in the past five years, the profits of companies and retail chains increased by much more.

“The profit margins in company and retail chain reports did not fall from heaven but came from the public,” he said. “If so much effort was made to regulate prices, how come consumer prices have not dropped and retail chains rake in so much more?”

Much more needs to be done, he insisted. For example, he said, he had submitted a bill that would require retailers to mark the price they paid for fruit and vegetables alongside the price they charged customers in order to apprise customers of their profit margins.

“Such transparency would lead to chains reducing disproportionate profit margins and lowering the cost to the consumer,” he said.

In response to Maklev’s plaint, Minister Yariv Levin of Likud spoke glowingly of measures planned for the future.

“An increase in imported food products is due in coming months,” he said. “At present, the Finance, Health and Finance Ministries are working to formulate regulations regarding this and to reduce prices. The Israeli food market is characterized by a high level of concentration [of business in the hands of three or four players, leading to a dearth of competition]. Measures taken by the government are having a positive influence and there is a noticeable decrease in concentration, but we still are in the midst of work whose influence will be felt in the future.”

That future may be a long time coming.

David Steger – Matzav.com Israel

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