"Kashrut, strict safety add to high food prices"

Industry Ministry chief Sharon Kedmi: "Food prices in Israel are much higher compared with OECD countries."

Kashrut and strict food safety boost food prices in Israel, Ministry of Industry, Food and Labor director general Sharon Kedmi told the Knesset Finance Committee today. "Food prices in Israel are much higher compared with OECD countries."

Kedmi added, "The Israeli market is very small and is highly concentrated, with a small number of players and oligopolistic conditions. The presence of private labels is very limited, at 10-15%, compared with 50% in OECD countries.

"Other factors for high costs are religious restrictions, even if legitimate, such as the need to make factories kosher, and very strict food safety since the Remedia [tainted infant formula] affair. Government policy also contributes through direct intervention in the form of quotas, tariffs, and subsidies, and through indirect intervention. There are macro factors, such as higher prices for inputs, global economic growth, which have affected the exchange rate, reflected in the appreciation of the shekel."

The Finance Committee argued over the Kedmi Committee's recommendations to lower tariffs, which will open the Israeli food market to more imports, harming domestic producers.

Finance Committee chairman MK Moshe Gafni (United Torah Judaism) said, "There are cases in which lowering tariffs will have an insubstantial effect on prices, but will lead to layoffs, and should therefore be considered carefully. The cost of living should be handled through regulation: review how a clique, which benefits from concentration, makes huge profits, as they simultaneously produce, market, and sell without paying proper taxes."

Gafni added, "If the Ministry of Finance is planning sweeping tariff cuts, we will not lend a hand to this. The committee is promoting a bill that will require its approval for lowering tariffs."

Published by Globes [online], Israel business news - www.globes-online.com - on June 18, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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