Israeli food manufacturers had an average profit of 12.7 percent in 2016, the last year for which figures were available, the Economy Ministry said in a report. The figure is the highest that it has been in 20 years, according to the report, which said that it was “an unusual profit margin that is atypical of traditional industries or of wholesalers.”
In 2007, the profit margin for the companies was just 7 percent.
The report was issued by the Ministry’s chief economist in light of the announced price rises in the Israeli economy, and it points out that some of the most profitable firms have been some of the largest food manufacturers in the economy, including Osem, Unilever and Schestowitz, a major importer and wholesaler of food, cosmetics, and other consumer products.
In recent weeks Osem, one of the largest food manufacturers in Israel, announced that prices would go up at the beginning of 2019 by between 2 percent and 4.5 percent on a large number of its products; dairy concern Tnuva has announced price rises of between 2 percent and 3 percent; and bakeries and bread companies are seeking price increases on price-controlled bread products of 3.4 percent. As the result of protest by consumers and intervention by political officials, all three of the price increases, and others including increases for electricity and water, will be muted, with smaller increases than had been planned.
The Manufacturers Association said that the report was “partial and misleading, unfortunately. It only includes ten companies, most of them large importers who employ people in Israel and abroad. It does not account for the increases in water and electricity, taxes, arnona, and other factors that contribute to price structure.
In addition, the report does not specify if the profits and price rises are on products that are under government price supervision, the cost of which had nothing to do with the companies.
“In the next report, we would hope that the Ministry would issue a report which includes the many Israeli companies that proudly employ tens of thousands of Israeli workers, which will provide a better picture of how salaries and other expenses contribute to the costs of products,” the Association said.