Finance minister blames previous government for looming dairy price hike

Smotrich vows to block 16% jump in cost of basic milk and cheese products, slams deal between manufacturers and predecessor Liberman, who tells him to resign

Milk for sale at a Rami Levy supermarket in Jerusalem on July 17, 2022. (Yonatan Sindel/Flash90)
Milk for sale at a Rami Levy supermarket in Jerusalem on July 17, 2022. (Yonatan Sindel/Flash90)

Finance Minister Bezalel Smotrich on Thursday said he was striving to avert an approaching sharp increase in the price of basic dairy products, while blaming the hike on his predecessor and the previous government.

MK Avigdor Liberman, leader of the opposition Yisrael Beytenu party and finance minister when the current government took over at the end of last year, blasted Smotrich for not taking responsibility for the country’s economic situation and “whining” about those who came before him. He also called on Smotrich to resign.

The exchange came after the Agriculture Ministry announced Monday that price-controlled dairy items were going up by 16 percent from the beginning of May.

A 1-liter carton of 3% milk will jump from NIS 6.23 ($1.72) to NIS 7.23 ($1.99), while a 250-gram tub of soft white cheese will rise from NIS 4.98 ($1.37) to NIS 5.77 ($1.59).

A 200-millimeter sour cream will cost NIS 2.81 (77 cents), up from NIS 2.4 (66 cents). Emek yellow cheese will go from NIS 37 ($10.19) to NIS 51 ($14.05 ) per kilo.

To ease the planned rise in prices, Smotrich reached out to Agriculture Minister Avi Dichter, asking him to sign a decree that would slash the hike from 16 to eight percent.

“Due to an agreement signed by Liberman in the previous government, the price of controlled dairy products are set to automatically increase by 16% at the beginning of next month,” Smotrich said in a statement. “We won’t let this happen.”

“Over recent weeks, the professionals at the Finance Ministry and I have been examining several ways to moderate the increase and formulate solutions that will make it easier for the public and cover the opacity and irresponsibility of [previous prime minister Yair] Lapid and Liberman.”

Finance Minister Bezalel Smotrich presents economic and budget plans for 2023-2024, February 28, 2023. (Courtesy)

Liberman in turn blamed the government that preceeded his term as finance minister, a coalition led by current Prime Minister Benjamin Netanyahu who returned to power following November 2022 elections.

“When I took up my duties as finance minister, I inherited the Israeli economy in a very difficult situation, after irresponsible and populist management that scattered money from a helicopter for the sake of political achievements,” he wrote.

“The time has come for the current Israeli government and Finance Minister Smotrich to stop whining, complaining, and blaming the whole world for their failures,” Liberman said. “Learn your lesson and resign. The citizens of Israel deserve real, responsible, and non-populist leadership.”

Despite living with inflation levels at around half the rate of the rest of the developing 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.

Yisrael Beytenu party chairman MK Avigdor Liberman at the Knesset, on April 16, 2023. (Yonatan Sindel/Flash90)

In mid-November, dairy giant Tnuva announced a roughly 4.7% increase in the price of hundreds of dairy products whose prices were 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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