In anticipation of a hike in milk prices, the Finance Ministry warned the Israeli Dairy Board that it would open the market to competition by permitting the import of dairy products to Israel, Israel Radio reported on Sunday.
The cost of unpasteurized milk, the main basic ingredient of dairy products, is likely to increase by 9 percent in October as a result of the rise in the rate charged by dairy farmers for the milk they produce, subject to Ministry of Agriculture quotas.
The current rate stands at 2.14 NIS per liter of milk, and the price was expected to increase by 20 agorot. This hike will precipitate a 5% price jump in the cost of dairy products.
A Finance Ministry official said that negotiations with the Dairy Board aimed at moderating the price hike had failed, forcing the ministry to formulate an alternative plan that includes a substantial reduction in customs rates, and an increase in import quotas, including those for milk powder.
A Dairy Board official told Israeli Radio that no one discussed the issue, and described the news as a publicity spin by the Finance Ministry.
According to Shapira’s report, government offices abandoned supervision of food costs in Israel between 2005 and 2011, allowing companies in a non-competitive market to set the prices. This brought about increased profits for manufacturers and importers, while contributing to the economic hardships faced by the average Israeli.