Gov't slaps price controls on more dairy products

The government found Tnuva was making "unreasonable" profits on whipping cream and soft white cheese - prices should fall 20%.

For the first time since the cottage cheese protest in the summer of 2011, the government has intervened on dairy product prices. Minister of Finance Yair Lapid and Minister of Agriculture Yair Shamir signed an order placing price controls on 5% soft white cheese and 38% whipping cream. Following the move the prices of the two products should go down by about 20%.

According to the price list of Tnuva Food Industries Ltd., the recommended price of a 250 gram container of 5% soft white cheese to consumers is NIS 6.54. With the introduction of price controls, the price should fall to NIS 5.23. The recommended price to consumers of a 250 milliliter container of 38% whipping cream is currently NIS 8.23, and should fall to NIS 6.60.

At the same time prices of dairy products under supervision including milk in sacks and cartons will fall by 1.1%. This is due to changes in production costs less a temporary price hike of 3.5% to consumers and 4% to dairies that was approved in October 2012.

Cream and white cheese are in the dairy categories that have the fewest producers. Tnuva has a 50% share of the white cheese market and together with Strauss Group Ltd. (TASE:STRS) and Tara holds 90% of the market. Tnuva has 70% of sales in financial terms in the 38% cream market.

Today's decision follows an examination of the market by an external accountant appointed by the government, which found that the profits made by Tnuva on these two products was "exceptional and unreasonable."

Published by Globes [online], Israel business news - www.globes-online.com - on December 30, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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