Yesterday evening, the Ministry of Agriculture signed an agreement with the representatives of the farmers that will enable the reform in agriculture to proceed.
Under the agreement, there will be a gradual opening up of produce imports, and local growers will receive their safety net in the form of direct support totaling NIS 700 million. Most of the charges for employing foreign workers will be abolished, and the amount that a farmer can deduct from his income for workers’ accommodation will rise.
On protection of flora, it was agreed that the regulations will be set by the Ministry of Agriculture and the mechanism will be taken away from the hands of the farmers. The aim is to synchronize Israeli regulation with the norm in Western countries and to cut bureaucracy for importers. Without such a reform, it will continue to be difficult to import fruits and vegetables, even if the customs duty is zero. It was also agreed that the government will pass a law on labelling of source country, and a law for the encouragement of investment in agriculture.
The first phase of the agricultural reform was carried out in March this year. Customs duties were cancelled mainly on produce of which production in Israel is low, such as pineapples, mangoes, mushrooms, and avocadoes. This phase alone is meant to save the public some NIS 400 million annually. There were small reductions is duties on other items: the duty on olives, for example, was cut by 20%, and the duty on potatoes and tomatoes was cut by 15%. Most of the duties on produce remained fairly high, but this was meant to be the first of five annual phases resulting in a 90% reduction in customs duties.
The reform is meant to replace indirect support for local agriculture through barriers to imports, which the OECD recommends against because it distorts the price mechanism, taxes consumers and harms the environment, with direct support through subsidies.
Minister of Agriculture Oded Forer welcomed the agreement, saying, "Everyone understood that they had to lend a hand in the battle over the cost of living. Members of Knesset will withdraw their demand to abolish the reduction of customs duties, agriculture will benefit from substantial support to encourage capital investment, innovation and R&D, and the citizens of Israel will enjoy varied and cheaper agricultural produce, all year round."
Dubi Amitai, chair of the Farmers' Federation of Israel and of the Presidium of Israeli Business Organizations, said, "This is a historic agreement for the farming industry after intense and difficult negotiations. The agreement narrows the wide gaps that existed between us and the Ministry of Agriculture, and gives farmers tools approaching fair competition, although they too will be examined over time. The agreement will remove a heavy burden from the farmers’ shoulders, and allow the State of Israel to maintain nutrition security as far as produce is concerned."
Amitai added, "Despite the agreement, unless the government manages to deal with the concentration in wholesaling and retailing, it is not certain that we shall see lower prices for consumers."
Published by Globes, Israel business news - en.globes.co.il - on July 5, 2022.
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