Israel Farmer Association general manager Avshalom Vilan, a former Meretz Member of Knesset, told "Globes" that Tnuva Food Industries Ltd. executives warned against the soaring price increases and said that the government must deal with Tnuva's monopoly - it controls 70% of the dairy market. Vilan warned, however, that opening the dairy market to imports was impractical.
"Tnuva executives warned in real time about the rising prices, and said that this trend was liable to blow up in Tnuva's face, but greed was stronger," said Vilan. "However, talk about importing dairy products is not serious. Total exports of cheese products are just 6%. It is possible to import hard cheeses with a long shelf life, and it's possible to import evaporated milk, but I have no doubt that the large dairies will dominate imports of evaporated milk, thereby winning a prize for their improper conduct, and the manufacturers will be screwed. The formula of a target price for a dairy farmer enables him to live with dignity - and dairy farmers are not rich like the tycoons who control the dairies and retail chains."
Vilan added, "What has happened here is a cynical attempt to by some dairies to put their hands deeper into consumers' pockets by raising their profit margins. Whereas two years ago, dairies received 11% from cottage cheese, they now get almost 20%. They've doubled their profit margins."
Vilan said, "Those who lifted controls can reimpose them If the dairies do not lower prices, the government can intervene in the price of cheeses and bring them back under control. "Any attempt to import dairy products is a populist measure that will harm producers, and in my opinion, there is little chance of it being passed. "The Europeans criminally subsidize products, sometimes causing surpluses and harm. I think that the target price mechanism, under ordinary conditions, works better because it protects the weak producers. There is a difficult national problem here - 30% of milk producers with small dairy farms in outlying communities are liable to be the ones hurt by any change in the target price, which is an especially delicate matter about which no public debate has been held."
Published by Globes [online], Israel business news - www.globes-online.com - on June 21, 2011
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