Israel's butter shortage seen continuing

Butter Photo: Shlomi Yosef

"No one can import and sell at the controlled price."

"No one can import at the price of butter overseas and sell at the controlled price. The butter shortage will continue. The situation is absurd," importers told "Globes" today, after the Ministry of Economy and Industry changed the tender for importing butter for the consumer, following a report on the subject by "Globes."

Late last week, the ministry withdrew the tender it published for importing 1.4 million kilograms of table butter for consumers. A new tender was issued requiring importers to sell imported butter at the government-dictated controlled price of NIS 3.80 per 100 grams. The original tender published in late March, which was closed on April 3, included no binding conditions for the consumer price.

Suppliers surprised by the requirement

Last week, after "Globes" asked the Ministry of Economy and Industry whether imported butter would have to be sold at the controlled price, the ministry changed the tender. The new tender, scheduled to close on April 11, stated that the new tender published "replaces any previously published tender. It also states, "In case of a deviation in the sale price for butter, the quotas committee is authorized to invalidate the rest of the importer's license for that year, and the importer will not be entitled to quotas in the following year."

The suppliers who expressed willingness to participate in the tender were surprised by the requirement. A source in the sector said that the price that the Ministry of Economy and Industry was aiming at was totally unrealistic. "You can't work on such a margin in refrigeration… (even if) the importer decides to lose money, the retail chain won't agree to work on such a low net margin, because it also has many expenses."

"The shortages are still severe"

The Ministry of Agriculture and Rural Development confirmed late last week that the shortage of butter was likely to continue. "It takes two to three months after the quotas are distributed for butter to reach Israel, which means that a slight shortage of butter will persist at the current time," the ministry said. At the same time, sources in the retail chains told "Globes" that Tara was again supplying small quantities of butter to the retail food chains, but "the shortages are still severe, shelves are rapidly emptied, and consumers are buying large quantities for storage because of the shortage."

The Ministry of Economy and Industry said in response, "After the Ministry of Agriculture and Rural Development made it clear that the controlled price for butter did not apply to imported butter, and that applying the controlled price required a meeting of the prices committee, headed by the Ministry of Finance and the Ministry of Agriculture and Rural Development, which is likely to take time, the Ministry of Economy and Industry has decided to apply the controlled price to imported butter. The tender was therefore published again, and the importers were given another week to submit bids. The committee will meet next Sunday to distribute the quotas."

Published by Globes, Israel business news - en.globes.co.il - on April 8, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Butter Photo: Shlomi Yosef
Butter Photo: Shlomi Yosef
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