ISRAEL AT WAR - DAY 147

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Dairy prices to rise by 9%, with further hikes for next 3 years

Cost of basic milk and cheese products had been set to rise by 16%, but last-minute agreement slows process; prices to rise by 3% each May until 2026

File: People shop for dairy products at the Shufersal Deal supermarket in Katzrin, on November 28, 2022. (Michael Giladi/Flash90)
File: People shop for dairy products at the Shufersal Deal supermarket in Katzrin, on November 28, 2022. (Michael Giladi/Flash90)

An expected 16 percent increase in the price of dairy products scheduled for Monday will now be split across three years, after Finance Minister Bezalel Smotrich came to a last-minute agreement with producers overnight ahead of the May 1 measure.

Instead, the government-regulated prices are jumping by 9.28%. Even though the rise formally came into effect at midnight between Sunday and Monday, the cost will only rise once the ministry publishes its order.

The next jump, by 3.1%, will be in May 2024, with two more increases by the same percentage taking effect in May 2025 and May 2026.

A 1-liter carton of 3% milk was set Monday to jump from NIS 6.23 ($1.72) to NIS 6.81 ($1.87), while a 250-gram tub of soft white cheese will rise from NIS 4.98 ($1.37) to NIS 5.44 ($1.50).

Additionally, a scheduled rise of 1.5% agreed to by former finance minister Avigdor Liberman for November 2024, was canceled. Dairy companies will be compensated under the new deal.

Smotrich hailed the agreement and blamed the price rise on the “irresponsible conduct” of the previous government.

“We are beginning a process of a thorough reform of the dairy industry. I have asked professionals at the Finance Ministry to examine the entire production chain,” Smotrich said.

Prime Minister Benjamin Netanyahu (left) and Finance Minister Bezalel Smotrich during a press conference, at the Prime Minister’s Office in Jerusalem, on April 30, 2023. (Alex Kolomoisky/POOL)

“All of this is with the goal of freeing up the economy from excessive centralization and anachronistic planning, and moving toward an open and competitive market,” he said in a statement.

Along with much of the world, Israeli consumers have felt the pinch of rising prices in nearly every consumer category.

Dairy prices in Israel are a sensitive issue and have sparked reactions that often snowball into mass demonstrations against the high cost of living. In 2011, the so-called cottage cheese protest sparked weeks of social unrest, resulting in supermarkets lowering dairy prices and policy reforms aimed at lowering consumer prices.

Dairy producers say that the price of the food grains for cattle that account for a significant part of the cost of producing dairy items has jumped, raising costs.

In mid-November, dairy giant Tnuva announced a 4.7% increase in the price of hundreds of dairy products whose prices are not government-regulated, and some non-dairy substitutes. Tnuva has explained the increases as being due to the “sharp rise of [the cost of] raw milk,” which has increased by 24% since 2019 and has added NIS 400 million ($115 million) in expenses to the company.

Shufersal, Israel’s largest supermarket chain, said it would oppose the price hike by taking the affected products off its shelves, as it previously did with other large food manufacturers like Unilever and Tara, the country’s second-largest dairy processor. But Shufersal later said it would consent to raise the price on certain products, ending its boycott of the brand over the rising costs after only a few weeks.

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