JOINT ANNOUNCEMENT
An agreement of principles in the dairy
industry has been signed
for reducing the price of milk and dairy
products to the consumer
The Minister of Finance and the Minister of Agriculture have signed an agreement of
principles with the farmers and the Dairy Board to reduce the price of milk and for
gradual exposure of dairy products to import.
The Minister of Finance, Dr. Yuval Steinitz: “This is a significant step that will
lead to a gradual decrease in the price of dairy products for citizens. The
reduction of customs will increase competitiveness and strengthen the dairy
industry in Israel.”
The Minister of Agriculture and Rural Development, Orit Noked, says: “The
agreement forms a balance between consumers and dairy farmers, at a price of
increased efficiency of dairy farms, while opening the dairy industry to
controlled, gradual import and ensuring the safety of food in Israel, which will
continue to rely mostly on domestic production”
The Minister of Finance, Dr. Yuval Steinitz, and the Minister of Agriculture, Orit
Noked, signed an agreement of principles with the dairy farmers for reducing the
target price and proportionate opening of the dairy industry to import with the aim of
reducing dairy product prices for the end consumer. This agreement was signed
further to the recommendations of the Committee for Socioeconomic Change for
reducing the financial burden that is imposed on citizens of the State of Israel and the
recommendations of the committee to examine food prices in accordance with the
agreement of principles that was formed by the Prime Minister’s Office, the Ministry
of Finance, the Ministry of Agriculture, the Dairy Board and the Cattle Breeders’
Association. These agreements were formed after weighing all of the issues related to
reducing customs, such as: The external benefits in the field of agriculture, foreign
trade considerations and considerations of employment in peripheral regions and
development of domestic industries, along with the considerations of high food prices
in Israel. The agreement of principles will be brought forth today, Sunday, for the
approval of the Government, following which it will be brought forth for the approval
of the Dairy Board and the Cattle Breeders’ Association.
The aim of the agreement of principles is to reduce the price of milk and dairy
products for consumers and develop and streamline the dairy farming industry. In
addition, it is to transform it into a more efficient production unit by increasing to a
minimum of 70 dairy cows, with an annual production capacity of not less than 700
liters. The streamlining process was set for implementation in 2013-2016.
The streamlining of the industry will involve a voluntary retirement plan that will be
offered to small dairy farm owners and enlarging remaining dairy farms (with a
capacity
of
approximately
100
million
liters
per
dairy
farm).
Enlarging the existing dairy farms will be from the enlargement of production quotas
from persons retiring from the industry and as a result of natural population growth
and a resulting increase in demand for milk. The streamlining of the industry will lead
to reduced average costs for milk production.
At the same time, education and research in the industry will be increased for
improving the professionalism of dairy farms and management skills.
During the period of expedited streamlining, in 2013-2016, the state will support the
transfer of production quotas from interested producers. The sum of the support will
begin at NIS 2.6 per liter and will decrease to NIS 1.8 per liter gradually each year.
Beyond this, the quota recipient will pay 20 agorot per liter.
In addition, during the expedited streamlining period, a normative return (prescribed
in the regulations) of 2% per year will be deducted from the target price paid to the
dairy farmers by the central dairies for crude milk, for 4 years at least, plus 6.8 agorot
per liter, index linked. The duty of the Dairy Board for dairy farmers will be reduced
by half an agora. The reduction will be spread over 3 years, in the following manner:
0.17 agorot per liter in 2013, 0.17 agorot per liter in 2014 and 0.16 agorot per liter in
2015.
Customs will be reduced significantly starting in 2012. In addition, from January
2013, additional quotas will be opened for importing dairy customers with 20%
reduced customs, in order to allow for the import of dairy products `as soon as
possible. The reduction of quotas will allow for the reduction of customs in the import
of fresh cheeses and will complete the move of reducing the customs for hard cheeses
and white cheese spreads with long shelf lifetimes, or that may be imported frozen for
defrosting soon before distribution.
In addition, the reduction of customs will allow for the exposure of the local economy
to the import of various dairy products, including fresh cow and goat milk cheeses,
table butter, cream for cooking, whipped cream, condensed milk products, various
yogurt types and more. The details are as follows:
A. Fresh cheeses
1. The customs charges for fresh cheeses from cow’s milk will be reduced from
NIS 21.36 per kg (an effective customs rate of 126%) to NIS 8.5 per kg in
2013 onward (in accordance with the reduction outline for hard cheeses as set
forth).
2. For fresh cheeses made of goat and ewe’s milk, the customs will be reduced
from NIS 21.36 per kg to NIS 14 per kg.
In addition, another quota of 2,000 tons will be opened, which will be added to the
existing quota of importing hard cheeses of 7,500 tons, giving a total importable
quota of 9,500 tones for all different cheese types that will be regulated in
accordance with the market demand and supply.
B.
Butter in packages of less than 1 kg, dairy spreads and oil and fat
products produced from milk
In 2012, a quantitative quota of 500 tons will be opened for import at a 20%
reduced customs rate, which will be gradually increased to 1,250 tons over 4
years.
The opening of the quantitative quota will allow for import of about half of the
domestic production of table butter to the end consumer and will increase local
competition.
C.
Milk and creams with no more than 6% fat content
The existing general customs rate – 153% This rate will be reduced in 2012 to
60% and will be gradually reduced to 40% over 4 years.
D.
Milk and creams with more than 6% fat content
The existing general customs rate – 153% This rate will be reduced in 2012 to NIS
7 per kg but not more than 609% and will be gradually reduced to NIS 5.5 per kg
but not more than 60% over a 4 year period.
In addition, starting from 2012, a quantitative quota of 500 tons will be opened for
import at a 20% reduced customs rate, which will be gradually increased to 1,250
tons over 4 years.
The reduction in customs and the quota will allow for import of types of cooking
cream, whipped creams and raw material, including for the pastry industry –
which until today has been blocked by high customs rates.
E.
Condensed milk and cream or those with a sugar or sweetener additive
that are not powdered
The existing general customs rate is 52% or 136% in accordance with the specific
product. The general customs rate for all products in this category will be reduced
to 40%.
F.
Yogurt
The existing general customs rate – 119% This rate will be reduced in 2012 to NIS
7 per kg but not more than 609% and will be gradually reduced to NIS 5.5 per kg
but not more than 60% over a 4 year period.
In addition, starting from 2012, a quantitative quota of 1,000 tons will be opened
for import at a 20% reduced customs rate, which will be gradually increased to
2,000 tons over 4 years.
The reduction in customs and the quota will allow for the import of different
yogurts, including sour creams, yogurt drinks, yogurt with fruit additives and
yogurt based on milk only – which import has been limited until today due to the
high customs rates and limited quantitative quota.
G.
Hard cheeses – it has been agreed that the existing outline as determined by
the Minister of Finance in the Hard Cheeses Order as set forth above will be
updated so that in 2013 the customs will be reduced to NIS 8.5 per kg for most
imported cheese types, while for other cheese types, such as: Halloumi, processed
cheeses, grated chesses and blue "marble cheese". The outline for customs
reduction will be updated gradually from NIS 10 per kg in 2013 to NIS 8.5 per kg
in 2016. The reduction of customs for hard cheeses will be stopped by a fixed rate
of NIS 8.5 per kg.
In addition, the update of the order will include an increase in the quantitative
quota over 6 years through to 2018.
The Ministers of Finance and Agriculture will appoint a tracking committee with
representatives of the Ministry of Agriculture and Rural Development, the Ministry of
Finance, the Cattle Breeders’ Association and the Dairy Board. The function of the
committee will be to track the progress of the outline, and it may recommend that the
ministers update the outline and make corrections, including legislative amendments.