Deal with Farmers to Clear Way for Import Reforms

Grapes growing at a vineyard in the northern coastal town of Zichron Yaakov. (Moshe Shai/Flash90)
Grapes growing at a vineyard in the northern coastal town of Zichron Yaakov. (Moshe Shai/Flash90)

Negotiations between the Israeli government and farmers for compensation in losses due to coming import reforms are progressing and should enable the new market setup to start by 2017, Globes reported on Thursday.

An ambitious plan to end import taxes on food products and at the same time remove production quotas on eggs and milk could save Israeli consumers 2.6 billion shekels overall, according to a Ministry of Agriculture estimate.

But the farmers have insisted that the reforms cannot be at the expense of destroying their livelihood, and so talks over compensation for them are underway.

The Ministry of Agriculture says it expects negotiations with the farmers to be concluded by the end of June. The ministry intends to present the plan for government approval in July, fast-track any necessary amendments to the legislation, and implement the reforms by 2017 or earlier.

The reforms will affect vegetables, fruits, fresh and frozen meat, frozen vegetables, poultry, dairy products, eggs, honey and olive oil.

Nonetheless, the government does not foresee a big loss in tax revenue.

“On most products, the impact will be marginal, because the import taxes are not in place to enrich the state coffers but to protect domestic production; but if the farmers are compensated, they do not need protection,” an Agriculture Ministry official said.

“The import tax today is high, making import unprofitable, but it does not generate significant revenue; it limits supply. If there is ample supply, the prices will go down. No one will charge high prices, because they will have competition.”

Meanwhile, the Ministry of Agriculture and Ministry of Finance concluded negotiations with farmers to open the market for Pesach, for which the farmers will be paid NIS 78 million. Fish farmers will receive NIS 37 million of that sum; the 12 largest fisheries responsible for 80% of local production will each receive NIS 2.5 million.

A senior government source characterized the decision to compromise with the farmers through compensation was strategic. “It was worth paying them a lot of money for Pesach to get them to agree. It doesn’t matter if prices go down for Pesach. It matters that the farmers understand the government will pay them for each shekel lost.”

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