The Ministry of Industry, Trade and Labor is formulating a deal for lowering the price of cottage cheese in exchange for not reimposing price controls. The average price of cottage cheese before the boycott was NIS 8 per tub; it has since fallen to NIS 5.50 per tub as retailers offer temporary discounts.
Representatives from the Ministry of Industry, dairy farmers, dairy companies, and retailers met yesterday. At the meeting, the ministry agreed not to reimpose price controls on cottage cheese, if the dairy companies and supermarkets cut the price of cottage cheese for at least one year. The cut is reportedly NIS 1-2 per tub.
Ministry of Industry, Trade and Labor director general Sharon Kedmi represented the ministry in the talks. Manufacturers Association president Shraga Brosh represented the dairies, because of the legal sensitivities of the issue. The dairy farmers cannot coordinate prices, so any general agreement on lowering the price of cottage cheese requires mediation.
"No specific price cut is being mentioned," Brosh told "Globes" today. "The intention is for the price to be lowered and for all the parties to give something, in other words, the farmers, the dairies, the retailers, and the government will compromise."
"Globes": What about other food products? After all, cottage cheese is just a symbol.
Brosh: "Sharon Kedmi announced that a committee will be set up to deal with food prices in general. We're talking about food, but hasn’t the price of fuel also gone up? Housing hasn’t gone up? Local rates haven’t gone up? There is a new tax burden and the government has levied NIS 6 billion in taxes in the budget - and it has reached cottage cheese."
The parties will again meet next week, and a deal will reportedly be reached by the end of next week.
The Ministry of Industry has made no announcement and Tnuva Food Industries Ltd. declined to comment on the report.
Yesterday, "Globes" reported that, last year, following a debate by the Knesset State Control Committee on the price of cottage cheese in November 2010, Tnuva agreed to freeze the price of cottage cheese until March 2011, and the Ministry of Agriculture agreed not to reimpose price controls on it. The moves came after public anger on the sharp rise in the price of cottage cheese after price controls were lifted.
In response to the disclosure about the report that Tnuva commissioned from McKinsy & Co., which advised the company to raise prices for products with inelastic demand, Tnuva implied yesterday that it reach an agreement with the Ministry of Agriculture last year to freeze the price for cottage cheese in exchange for no new price controls. Tnuva told "Globes", "After internal consultation and consultation with the Ministry of Agriculture, we decided not to raise the price of cottage cheese and to absorb the costs for cottage cheese in 2011. On Friday, we announced that we will not raise prices for dairy products until the end of the year."
Published by Globes [online], Israel business news - www.globes-online.com - on June 27, 2011
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