The poultry reforms proposed in the new Arrangements Law should lead to a 20% reduction in the price of fresh and frozen chicken. Outlays on poultry reach NIS 4 billion annually, leading Finance Ministry officials to compare its economic impact to the natural gas sector.
Finance officials claim that while the industry was intended as a free market, the poultry council originally tasked with veterinary and marketing duties decided of its own accord to create a cartel and raise prices.
Officials at the ministry say the cartel was created following the signing of an agreement in 2012 that coordinated the number of chicks to be raised among the poultry farmers. "The poultry council took it upon itself to organize the 15 farmers and create a legal cartel."
According to the ministry, the arrangement led to price increases of more than 20%, especially ahead of the holidays.
A new Finance Ministry proposal will outlaw the 2012 agreement. Furthermore, it will be illegal for poultry farmers to coordinate prices and the poultry council will be barred from dealing with fresh chicken.
Finance officials have rejected a poultry council statement that it will drop the matter, claiming the Agricultural Ministry should not supervise the council.
The agricultural minister has already announced that he would oppose the reforms, but Finance officials believe he could be convinced to support them.
The finance ministry stated on Thursday that no reforms in the poultry sector have been undertaken despite the significant need and expressed hope that it will be undertaken soon.
The second reform championed by Finance involves the fast-expanding goat milk sector. The sub-industry is currently run using quotas and guaranteed prices. Finance officials believe the quotas limit local production, with the excess capacity been exported abroad.
Sources at the finance ministry said that "Tnuva's goat cheese sells for half the price in the US as it does in Israel." According to the reform, goat cheese production would continue in Israel while positive incentives would be given to farmers in the periphery and restrictions placed that would prevent the creation of a cartel.
Published by Globes [online], Israel business news - www.globes-online.com - on July 30, 2015
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