Moshe Kahlon signs order aiming to ease butter shortage
Butter has been in short supply for over a year, with Israel’s dominant producers reporting that government-fixed prices for basic dairy items have made continued production unprofitable.
By EYTAN HALONFinance Minister Moshe Kahlon speaks during a ceremony whereby Amir Yaron is sworn in as Bank of Israel governor by President Reuven Rivlin, in the presence of Prime Minister Benjamin Netanyahu, in Jerusalem December 24, 2018(photo credit: AMIR COHEN/REUTERS)
Finance Minister Moshe Kahlon increased tariff-free import quotas for butter with immediate effect on Sunday, a move aimed at shortening the wait for the return of cheap butter to Israeli supermarket shelves.Butter has been in short supply for over a year, with Israel’s dominant producers – including Tnuva and Strauss – reporting that government-fixed prices for basic dairy items have made continued production unprofitable. High tariffs and quotas on products from abroad have meant that importing butter for sale in the domestic market, has not proven economically feasible.According to the order signed by Kahlon, tariff-free import quotas for domestic-use butter will increase from 2,400 tons to 2,750 tons, after already being raised from 1,250 tons under customs regulations issued for 2019 and 2020.For industrial purposes, tariff-free quotas will increase from 2,650 tons to 3,500 tons, after previously not being eligible at all for tariff-free imports.“In my view, the correct economic move is the complete abolition of the quota on butter but, due to the limits of the transitional government, such measures are currently impossible,” said Kahlon. “The purpose of the order to increase tariff-free quotas is to increase the amount of butter in the market and reduce the existing shortage in stores. Nowadays, there is no reason for a shortage of butter, and in the future we will need to make significant decisions in this field to ensure that Israeli consumers will not face such a situation again.”Consumers seeking to purchase butter in recent months have been able to buy imported brands from Europe. These brands can cost as much as NIS 8.45 ($2.40) for 100 grams, however, compared to the government’s fixed price of NIS 3.94 ($1.12).Last month, the Finance Ministry called on the Agriculture Ministry to open up the butter market and entirely remove import quotas and tariffs, which currently range between 126%-140% for domestic butter products and between 144%-160% for industrial butter.Rejecting the recommendation, the Agriculture Ministry pointed the finger back at the Economy Ministry, blaming it for the current shortage.In a letter obtained by Hebrew-language financial newspapers, the Agriculture Ministry blamed the Economy Ministry for the manner in which quotas are distributed, rather than the limits themselves.
