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Melted butter (iStock)
Melted butter (iStock)
Reporter's notebook

I can’t believe there’s no butter! ToI’s sleuth churns a spreading Israel crisis

Why is there no butter on supermarket shelves? Is it the fault of the farmers? The producers? The PM? The unions? China? Foodies? The weather?… Or are we milking fake news?

Simona Weinglass is an investigative reporter at The Times of Israel.

At a large Shufersal supermarket in central Tel Aviv on Wednesday, there was no butter to be found. Plenty of margarine. Ample supplies of the Danish Lurpak butter-based spread. Lots of things you wouldn’t believe are not butter.

But no butter.

The woman behind the dairy counter, where dozens of fancy cheeses were on display, shrugged when asked about the absent staple. “We don’t have any,” she replied, stating the all too obvious.

“There’s a nationwide shortage,” lamented a woman buying cheese. “I haven’t been able to bake for a month.”

The store manager, Idan Alperovich, confirmed this. “We order butter, and Tnuva [Israel’s largest dairy and food company] brings us a few boxes, which sell out within hours.”

But he was optimistic. And he had an explanation, which, it would turn out, was more than many people have. “I hope now that the [Jewish] holidays are over, things will improve, because people [in the dairy industry] are going back to work.”

Plenty of cheese but no butter. A dairy products counter at a Tel Aviv supermarket, October 23, 2019 (Simona Weinglass/Times of Israel)

Elsewhere in Tel Aviv the situation was no better. At City Market on Ibn Gabirol Street, the cashier suggested we should “ask Tnuva why they don’t give us any butter. In my opinion, Tnuva is doing this on purpose, it’s some kind of trick.”

At a branch of the Tiv Taam supermarket chain nearby — success! Two brands of butter were on sale, at NIS 12.90 ($3.65) and NIS 13.50 ($3.82) for a 200 gram package. Except it was Lithuanian. And that’s nearly twice the price of local butter. Of which there was none.

In Jerusalem the situation has been the same for weeks. From the smallest neighborhood groceries to the largest supermarkets: no local butter; and either no imported butter, or Danish, Finnish and French brands at double and triple the price.

A shelf in a Tel Aviv grocery store, October 23, 2019 (Photo:Times of Israel)

On social media, users have been sharing tips on rare sightings of the elusive commodity, in a sometimes tongue-in-cheek manner.

“Spotted, ten packages of Tnuva butter,” one Twitter user wrote on Friday (Hebrew link): “In a grocery store in Moshav Ramot Meir. I bought two and am willing to barter for a ticket to Nick Cave.” (He’s an Australian musician returning to Tel Aviv next June after a sold-out visit last year.)

Other social media commenters have used the shortage to make political statements: It’s all the fault of the right, or the left, the unions, the prime minister, etc.

Some commenters are affiliated with a slew of recently minted right-wing groups. In a Facebook post dated October 17, Yoni Blondi, a researcher at the libertarian Kohelet Forum, wrote: “Why is there a shortage of butter? Because the government interferes in the [market]. The price of butter is regulated ‘for our benefit’ and the producers have no incentive to be more efficient or compete, nor can they lower or raise the price in response to demand, and what is the result? A shortage.”

Blondi concluded that “protectionist” institutions like the Israel Manufacturers Association and the Histadrut labor federation are standing in the way of efficient markets and that the labor federation in particular should be abolished.

An anti-Netanyahu Twitter user, by contrast, wrote on Friday, “For months now there is no butter in the supermarkets, f*cking butter. Tell me again how Netanyahu has been great for the economy. When I cook Thai food it’s a challenge to get ingredients like kaffir limes, green papaya and galangal. That’s legitimate. But butter…”

Did China take it?

Some commenters trace the shortage to the Far East.

“Tnuva is exporting the butter abroad, especially to China!” wrote one commenter on the Channel 12 website.

“Bibi has sold half the country to the Chinese!” added another.

Both commenters were referring to the fact that control of Tnuva, Israel’s largest food company, was sold to a Chinese-government-owned food conglomerate called Bright Food in 2014. At the time of the sale, former Mossad director Efraim Halevy warned that the sale could prove dangerous to Israel’s “food security.”

A prop from a February 24, 2014, protest against the sale of the Israeli dairy company Tnuva to a Chinese firm (photo credit: Roni Schutzer/Flash90)

“The fact that Israel’s largest food company is owned by the Chinese government will lead to a situation where the company implements policies that serve the interests of China [and not Israel],” he told the Ynet website.

Still other online commenters celebrated the butter shortage as a setback for a dairy industry they believe is cruel to animals. A website called Tivonews (Vegan News) published an article about an earlier bout of butter shortage in January entitled “Dairy products: The beginning of the end?”

“The sooner dairy products disappear the better for people and animals,” came one response. Added another: “Amen.”

But seriously

The Times of Israel contacted representatives of Israel’s dairy farmers, food producers and the government to find out what is going on. All agreed that there is a shortage. (Hurrah.) But they disagreed on its cause and insisted that the answer is “complicated.” (Oy.)

Eviatar Dotan, director of the Israel Cattle Breeders Association, which represents dairy farmers on kibbutzim and moshavim, said local farmers have been producing less milk because there is less demand from the dairy producers, the largest of which is Tnuva. Tnuva, he said, buys 80 percent of all milk produced in Israel, for cottage cheese, yogurt, butter, drinking milk and other products.

Bread and butter (iStock)

And why are Tnuva and the other producers buying less? “You need to ask the dairy producers.”

Pressed, Dotan explained that the entire dairy industry is run on the basis of the “Milk Market Planning Law,” which went into effect in 2011. This law determines how much milk will be produced every year, sets the price that dairy producers pay farmers, and controls the prices consumers pay in the supermarket. Despite the “planned” nature of the market, he said, producers like Tnuva have a lot of say in determining what the annual milk quota will be.

So why is the dairy market planned? According to the website of the Israeli Dairy Board, the nonprofit organization charged with planning and coordinating Israel’s dairy production, there are two main reasons that the government decided that oversight, as opposed to free-market forces, was required.

The first: because it is important that “the supply of milk and its products be primarily local.” The second: because the government wants to ensure the livelihood of kibbutzim and moshavim that are often strategically located along Israel’s sparsely populated borders.

“The recognition of the need to continue to run the dairy market as a planned sector of the economy,” the Dairy Board’s website elaborates, “is part of the government’s policy to preserve and strengthen the geographical spread of Israel’s population, by protecting Israel’s existing dairy farms and prioritizing an economic anchor for settlement in Israel’s periphery.”

Which sounds fine in theory… and utterly fails to explain the butter shortage. And so back to Dotan.

Eviatar Dotan director of the Israel Cattle Breeders Association (Facebook)

He said the Dairy Board listens to producers like Tnuva, Tara and Strauss, and tries to set quotas on milk production based on what these producers say their demand will be. But the producers, as we know, have been demanding less raw milk of late. And Dotan, as he had already told us, doesn’t know why that is.

“If the producers asked for 100 million liters more milk, they would be able to make enough butter, and the shortage would be over. You need to ask them,” he repeated, “why they are not demanding more milk.

“The farmers,” he noted, “are upset.”

As they should be. They’re ostensibly ready and waiting to meet consumer demand. And, in a “planned” market designed to ensure that the supply of dairy products is primarily local, they’re not being enabled to do so.

Global warming and foodie fashion

Uri Wollman, a spokesman for the Dairy Board, refused to point the finger at Tnuva, the government, or the dairy farmers.

The way he tells it, hot summer weather and food consumption trends are to blame.

“Butter is made out of the fatty parts of milk, and cows produce less fatty milk in the summer when they’re hot,” he said. “Tnuva, which is the near exclusive butter producer of Israel, has less fatty milk to work with.”

Dairy cows at Moshav Ba’erotayim, central Israel (File photo: Gili Yaari / Flash90)

Learned support for this theory is to be found in a 2017 op-ed in the New York Times, where one of the world’s foremost experts on butter, Elaine Khosrova, hypothesized that a global phenomenon of heat stress associated with climate change is suppressing cows’ appetites and causing them to produce less milk.

Uri Wollman, spokesman for Israel’s Dairy Board (Facebook)

Wollman also mentioned rising global butter prices as a cause of the shortage. Prices have climbed from just over $2,000 a ton in 2016 to close to $4,000 a ton today, according to industry sources.

Wollman said the Economy Ministry foresaw that there would be a shortage of butter this year, and therefore issued two tenders that would allow importers to bring in butter without paying tariffs as they normally would be required to do. But importers had little incentive to import expensive foreign butter when they initially had to sell it at the regulated price of NIS 3.94 per 100 grams, he said.

The Economy Ministry eventually did away with this requirement, but evidently too late to head off the shortage.

Wollman also said that butter has become more popular with Israeli consumers in recent years, in keeping with the global foodie culture emphasis on whole foods.

“There is a trend worldwide and in Israel as well to eat more butter and less margarine and trans fat,” Wollman said. “You see a lot of bakeries now making bourekas with butter instead of margarine. Studies show that butter is actually not so bad for your health.”

Tnuva: Government needs to get out of the way

A spokesman for Tnuva blamed the government, and insisted Tnuva was doing its best to raise production and meet demand.

Tnuva, the spokesman said, produces butter at a loss due to the low consumer price set by the government. Nevertheless, he said, that low price is not the reason Tnuva is not producing sufficient quantities.

Tnuva butter (Courtesy)

In a statement sent to the Times of Israel, Tnuva blamed government control of the dairy market, not just consumer price controls, for the whole fiasco.

“The only reason for the shortage of butter in Israel is a shortage of fat in the dairy industry, which is controlled and run by the state, which determines the quotas of milk supplied to the market,” the statement read.

“Tnuva did not stop and does not plan to stop the production of butter out of considerations of price or its own benefit. Tnuva produces as much butter as it can as a function of the availability of fat.”

“As evidence of this, while in 2018 the butter market grew by 8%, Tnuva’s butter production grew by 28% in order to make up for the decline in imports of butter and the decline in butter production of other producers. In effect, Tnuva provided 1,000 extra tons of butter in 2018 and as a result exhausted its inventory as 2019 approached. In addition, milk production quotas did not increase in 2019 and in fact milk production went down. This decreased the amount of fat in the milk market and deepened the shortage.”

Tnuva sent The Times of Israel a table showing how most Israeli food importers imported less butter in 2018 than they had in 2017 while Tnuva increased its butter production in 2018.

Tnuva controls most of the butter market in Israel, with a small percentage produced by competitor Tara and the rest imported. The company was founded in 1925 as a cooperative of dairy producers from kibbutzim and moshavim in the Jezreel Valley. Over time it became a monopoly in most of the food categories it operated in.

In 2008, many of Tnuva’s kibbutz and moshav shareholders sold a controlling share of the company to the British Apax Partners private equity fund. Apax Partners is reported to have pushed to increase the price of cottage cheese to NIS 8, a move that precipitated nationwide social justice protests of 2011.

Demonstrators take part in protest against the Tnuva dairy company over its prices at supermarket in Modiin on September, 13 2011. (Jorge Novominsky/Flash90)

In 2014, Apax Partners sold its share of the company to Chinese-owned Bright Food.

So is China a factor after all? Tnuva insists that it isn’t: It’s doing its best to raise production, but there’s just not enough fat to go around.

‘No shortage of imported butter’

Agriculture Ministry spokeswoman Dafna Yurista offered a new perspective.

While, she acknowledged, there had been a butter shortage earlier this year, there wasn’t one now. The import pricing issue has been sorted out, and although there is a shortage of Tnuva butter at the government regulated price, more expensive imports are available.

Lithuanian butter on sale at a Tiv Taam grocery store in Tel Aviv (Simona Weinglass/Times of Israel)

“The Agriculture Ministry makes recommendations to the government about butter inventories in Israel,” Yurista explained. “At the end of 2018 we identified the potential for a shortage of butter in Israel and recommended opening the market to imports. After many hurdles, the finance minister signed off on quotas for importing butter without tariffs. The Economy Ministry then publicized two tenders for importing butter without tariffs.

“In the beginning they would have had to sell it at the regulated price, and once we realized no one was willing to import butter under those conditions, a tender was publicized in which imported butter could be sold at any price. What happened as a result is that imported butter is being sold in stores, but at higher prices than the local price.”

Yurista said that the government does not keep tabs on what happens in every supermarket or grocery, but that to the best of her knowledge imported butter can be easily obtained throughout the country.

So why are Israelis still complaining? “Israeli consumers are not interested in imported butter and clearly prefer the butter of Israeli producers like Tnuva and Tara due to considerations of habit, price and taste,” she said.

That’s a relief! The supermarkets and groceries we visited must be mistaken or aberrations. The social media critics must be spreading fake butter shortage news. Either that, or Israelis are all so patriotic we are simply willfully blind to all that non-Israeli butter on the shelves.

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