Dairy Policy in Israel -Winds of Change

Yossi Malul, ICBA

In the wake of the relevant WTO agreements, profound changes are taking place in Israel's dairy policy. Although milk production quotas were introduced as early as 1963, their implementation and enforcement relied then on subsidies, intended to maintain low consumer prices. At the same time, it was the producers' right and duty to produce enough milk to satisfy local demand, without creating unnecessary surplus.
Referred-to WW agreements, and additional bilateral agreements between Israel and the EU, USA, and others all point in the same direction, namely the reduction and ulterior abolition of tariffs, custom dues and other factors limiting free trade.

Even if the implementation of the various agreements are phased in periods of different length - the generally accepted goal is a global dairy market devoid of any administrative constraints, whatever their origins or intentions. It remains to be revaluated, if in the envisaged tree market there will be any need or possibility for quotas, intrinsically opposed to the idea itself.

At present, milk production quotas in Israel belong individually either to a Kibbutz with dairy cows or to a family herd in a Moshav village. Although in principle there exist possibilities of rendering quotas mobile by selling or leasing, in practice the involved parties are still hesitant towards an open market for quotas, a situation apt to jeopardize the necessary stability created by conscientious and careful planning of the dairy sector.

The very essence of dairy farming demands stability, because it involves major investments in buildings, equipment and technologies. Also, last but not least, the breeding of efficiently producing dairy cattle requires length of time -roughly three years frotn conception to a lactating first-calf heifer.

Recent studies of the ways and means to support dairy farmers and consumers of dairy products reveal the actual situation in most advanced dairy countries -at the time being, they all have substantial support mechanisms for their dairy sectors. Considering the size and physical capacity of the Israeli dairy sector in the context of a global open market, it should not surprise that Israeli dairy farmers and their representative organizations insist on maintaining the indispensable framework of planning for the sake of stability, ensuring efficient production to the benefit of producers and consumers alike.
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