January 22, 2018

Strong Shekel Wreaks Havoc on Exports to US

Tel Aviv…It is no secret that the American kosher market has increasingly relied on Israel as a key manufacturer of kosher food products. Come this Passover as much as 80% of machine made matzoh products sold by US grocers will come from Israel. But Israel’s competitive pricing may be an endangered species as its own currency has shown surprising strength in recent months against the US dollar and the Euro. The exchange rate is rapidly moving to the 2011 rate of $3.40 to the US dollar. The fluctuations in the rate are certainly creating problems for American companies working to negotiate deals with Israeli manufacturers. While importers say that they do not see any drastic price increases in the short-term, they point to past currency fluctuations that did eventually have an effect on prices. Some Israeli companies feared negotiating based on the US dollar, fearing they might be shortchanged by the falling value of the dollar. One small manufacturer told his American buyer: “Why should I lose money in America if I can make money here?” ‘At least one American importer said that a manufacturer he did business with insisted on adding a clause that prices were tied to the prevalent exchange rate.