Israel’s ‘inefficient’ kashrut system costing taxpayers millions — study

Proposed reforms will see an overhaul of the kosher certification process for businesses and may bring down costs for consumers

Ultra-Orthodox representatives of the Chief Rabbinate cross Jaffa Road in Jerusalem as they deliver a kosher certificate to a local restaurant, on December 31, 2019. (Hadas Parush/Flash90)
Ultra-Orthodox representatives of the Chief Rabbinate cross Jaffa Road in Jerusalem as they deliver a kosher certificate to a local restaurant, on December 31, 2019. (Hadas Parush/Flash90)

Israel’s kosher certification system is riddled with inefficiencies and non-transparent processes that are costing taxpayers an approximate extra NIS 13.1 million ($4 million) per year and leading to duplicate and sometimes triplicate certifications, according to a study by the Israel Democracy Institute (IDI).

The study was published this month as the new government is advancing a plan to overhaul the kosher certification industry in the face of opposition from the Chief Rabbinate of Israel and ultra-Orthodox lawmakers.

The plan was unveiled in July by Religious Affairs Minister Matan Kahana, of the Yamina party. The proposal would seemingly end the monopoly of the local rabbinates, under the authority of the Chief Rabbinate, as the only bodies that can issue kosher certificates, and would allow for the establishment of a series of private kosher certification agencies that will be required to uphold religious standards set by the Rabbinate.

The proposed plan would also see the creation of an overarching supervisory body of the Chief Rabbinate to monitor the private agencies and ensure they uphold the standards.

The Chief Rabbinate has long resisted any reforms to its monopoly and has sought to quash private competing agencies. It issued a statement rejecting Kahana’s new plan, calling it “a dangerous initiative to destroy kashrut in Israel,” and said the proposal “would mean the end of kashrut in the state and the creation of a ‘bazaar’ of groups with impure motives that will begin handing out certification.”

“The current kashrut system is plagued by problems with quality, uneven standards, poor employment conditions for supervisors, problematic supervision and varying levels of competency,” Kahana said in a video announcing the proposed reforms in July.

Currently, establishments and operations that seek kosher certification must get one from their local rabbinate, but a majority also go through a separate certification process from private entities (Badatz, for example) to adhere to more stringent kashrut regulations so they can cater to different ultra-Orthodox streams and communities.

The building of the Chief Rabbinate of Israel in Jerualem. (Flash90)
Illustrative: The building of the Chief Rabbinate of Israel in Jerusalem. (Flash90)

The planned reforms would do away with the need for a kosher certificate directly from the Rabbinate, which costs businesses about NIS 7-8 million ($2.18-2.49 million) a year, according to the IDI research. Businesses may pay as much in additional fees for the work of supervisor (mashgiah) throughout the year.

In addition, this setup forces businesses to comply with the requirements of local rabbinates that may be different and inconsistent with those of private entities, also potentially driving up costs.

Ariel Finkelstein, a co-author of the IDI study and a PhD student in the Department of Political Science at Bar Ilan University, told The Times of Israel that the reform plans were a welcome initiative that could eventually lead to an overall “reduction in the cost of food production, and consumer prices.”

“It’s agreed that reforms are needed but no one really has the data and that’s what we wanted to do with this study — bring in as much data to help the reforms along. Currently, we have 150 local rabbinates, and each one is its own world, sets its own rules, and has its own standards. There is no transparency, no efficiency, and no uniform standards,” he said.

“You can really see the striking differences in chain restaurants or bakeries for example. The same place will have to comply with different standards depending on which city the branch is in, and under which local rabbinate. They may be forced to buy certain products specifically or build a kitchen to a certain size to comply with the requirements, which drives up costs. Or the mashgihim [supervisor] hours may be completely different,” said Finkelstein.

The study said that the state kashrut system provides a total of 6.4 million supervision hours per year at an estimated direct cost of NIS 318 million ($99 million) to restaurants, eateries, food manufacturers, fast-food outlets, and hotels. Additional costs can run into the “hundreds of millions to billions of shekels,” the IDI said.

A man walks into a kosher McDonald’s restaurant in central Jerusalem, on April 13, 2016. (Nati Shohat/Flash90)

The average charge for a supervisor can range from NIS 25 to NIS 79 and there are vastly different supervision quotas for similar food operations. For example, a sample of 345 pizzerias found that 14% are required to have daily supervision of up to 30 minutes, 34% precisely half an hour, 29% between 30 minutes and an hour, 18% precisely an hour, and 5% between one and two hours, according to the study.

“The differences in the hourly rate and number of hours required leads to huge differences in the actual cost of kashrut supervision,” Finkelstein said.

The study found that religious councils’ total income from kosher supervision services stood at NIS 49.7 million ($15 million) per year, but expenses amounted to NIS 62.8 million ($19.59 million), which means that “the state is subsidizing the kashrut system to the tune of NIS 13.1 million a year.”

The IDI research also found that some 88% of the products sold in supermarkets have duplicate kashrut certifications, and an additional 9% had three kashrut certifications. Just 12% of the products had only a Rabbinate kashrut certificate.

“This phenomenon shows that many of the food production industry do not have a real need for kashrut certification from the state-run rabbinate, but that they apply for such licensing only because of the legal obligation to do so. The existing reality leads to unnecessary duplication of kashrut certifications and to excess costs to both the suppliers and the consumers,” according to the study.

The solution “is the privatization of a kosher system, or at the very least to allow businesses to obtain a kosher certificate from a private rabbinic entity, without the need for additional certification from the local rabbinate,” it read.

Another aspect of the reform is that it will likely affect imports of food products and force the recognition of items certified as kosher abroad, Finkelstein said.

“At the moment, products coming into Israel need approval from the Chief Rabbinate even if they have been certified abroad. So even products with the OU stamp [Orthodox Union] may not be approved. The planned reforms say private agencies can approve and oversee imported products,” he said.

According to a Finance Ministry document submitted to the Knesset Committee on Special National Infrastructure Projects and Jewish Religious Services this month and seen by The Times of Israel, the reforms can lead to savings of up to NIS 550 million ($117 million) a year for food establishments and consumers.

The IDI study was based on Freedom of Information requests submitted to religious councils and local authorities, an independent sample of 1,000 industrial food products, and the Finance Ministry document.

In 2018, the religious-Zionist Tzohar organization launched its own private kosher certification agency, months after a Supreme Court ruling paved the way for kosher competition. That ruling allowed kosher agencies to issue certifications to private businesses, as long as the certificates did not use the word “kosher.” More and more eateries have adopted the private agency’s services over the past three years, bearing certificates with the word “Tzohar,” but not “kosher.”

Amy Spiro contributed to this report

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