The Agriculture Ministry and the farmers’ representatives signed an agreement yesterday evening that will allow the agricultural reform to move forward.
According to the agreement, imports of produce will gradually open up, and local growers will receive their safety net in the form of direct assistance totaling NIS 700 million. The majority of the fees associated with hiring foreign labor will be eliminated, and a farmer will be able to deduct more money for workers’ lodging from his income.
On flora protection, it was decided that the Ministry of Agriculture would set the rules and remove the mechanism from the control of the farmers. The goal is to streamline bureaucracy for importers and bring Israeli regulation into line with Western norms. Even if there is no customs duty, importing fruits and vegetables will remain challenging without such a reform. It was also decided that the government would enact laws encouraging investment in agriculture and labeling the source country.
In March of this year, the agricultural reform’s first phase was implemented. Customs duties were mainly removed from low-production produce like pineapples, mangoes, mushrooms, and avocados. The public is expected to save about NIS 400 million a year from this phase alone. There were modest reductions in the duties on other goods, such as the 20% duty cut on olives and the 15% duty reduction on potatoes and tomatoes. Even though this was the first of five annual phases that were supposed to lead to a 90 percent reduction in customs duties, the majority of produce-related duties remained relatively high.
The reform aims to replace the indirect support for local agriculture provided by import barriers, which the OECD advises against because they distort the price mechanism, raise consumer prices, and harm the environment, with direct support provided by subsidies.
Oded Forer, the minister of agriculture, praised the agreement and said, “Everyone was aware that they needed to participate in the fight against rising living expenses. Members of the Knesset will give up their demand to end the reduction in customs duties, agriculture will receive significant support to encourage capital investment, innovation, and R&D, and Israelis will have access to a wide variety of affordable agricultural products throughout the year.”
The Farmers’ Federation of Israel’s and the Presidium of Israeli Business Organizations’ chair, Dubi Amitai, said: “After lengthy and challenging negotiations, the farming industry has reached a historic agreement. The agreement closes the enormous gaps between us and the Ministry of Agriculture and provides farmers with tools that, while they too will be evaluated in the future, approach fair competition. The agreement will relieve the farmers of a significant burden and enable the State of Israel to maintain produce-based nutrition security.”
Despite the agreement, Amitai continued, “It is not certain that we shall see lower prices for consumers unless the government manages to deal with the concentration in wholesaling and retailing.”
On July 5, 2022, Globes, Israel’s leading business news source, published the article in English.
