June 27, 2011

Will Cottage Cheese Revolt Lead to Facebook Price Control

Jerusalem…More than 100,000 people have added their names to the Facebook page protesting the high price of Israeli cottage cheese and rising food costs in general. The protest which is gaining momentum daily has the government holding emergency meetings and Knesset committees calling for investigations into why not only the dairy products but food do prices overall have soared. Globes business news reports that food prices in Israel have increased by eight percent in the last three months and are tens of percent more expensive than in any European country.

Israeli supermarket chains are reporting a 25-45% drop in cottage and soft white cheese. However the large discount chains lowered the price of a 200 gram container from almost 8 shekels ($2.60) to 4.50 shekels and are actually reporting a 10 percent increase in sales. Tnuva which is Israel's largest dairy is reported to be offering yeshivot much lower prices if they buy in bulk.

Finance Minister Yuval Steinitz convened a meeting of the leaders of the food industry to discuss the high cost of dairy products. Representatives from the country's major supermarkets and food manufacturers attended the session even as dairy farmers stayed away because they say they are being falsely blamed for the high prices. An official for the dairy farmers said they receive 2.40 shekels per liter for milk which is a price regulated by the government. He said it’s the major dairies that together with the supermarkets raise prices at the expense of the consumers. David Gilo, chairman of the Antitrust Authority, said that importing dairy products is one idea which could help to lower prices. However, when Finance Minister Steinitz offered this idea, Shraga Brosh, president of the Manufacturers Association suggested Israel import a new finance minister. Globes also found that Israeli made foods exported to the US are cheaper there by tens of percentage points than they are at home. This includes products from Wissotszky, Osem, Materna, Elite and others.

From the perspective of the kosher industry, supermarkets have been quick to capitalize on the campaign, with many supermarket chains, including well-known retailer Rami Levi offering discounts on the infamous cheese. Politically, the media has dubbed the cheese “white gold,” and in a recent Knesset session the cheese was referred to as a “luxury item” and an opposition lawmaker presented PM Benjamin Netanyahu with a container of the good stuff. Can importing dairy to the land of milk and honey solve the crisis for consumers? Unlikely, says one food analyst. Due to Israel’s high tariff laws instituted to protect home-grown business, only a limited number of dairy products can be solvent in the country. There is a real concern that the cottage cheese revolt may be only the beginning of a new modern-day consumer revolt of soaring food process.