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Israel: Dairy Industry Planning Law - 2008

17 September 2008

USDA Foreign Agricultural Service

ISRAEL - A draft of the proposed "Dairy Industry Planning Law - 2008" has been presented to the Israeli Parliament, the "Knesset".

The goals of the law are to increase the efficiency and consolidate the dairy industry, ensure the quality and safety of dairy products, ensure a stable supply of milk and dairy products at appropriate prices for producers and consumers, and to promise good working conditions for the dairies.

Currently, the industry acts under a series of previous regulations and marketing orders established over several decades, reports the USDA Foreign Agricultural Service. This new legislation marks the first time the Government of Israel (GOI) has attempted to legislate a comprehensive law that would organize relations among all the industry’s players: milk producers, dairies, and consumers.

The dairy sector is an important part of Israel’s agricultural sector. The production value of the dairy industry in 2007 totaled NS2.4 billion ($665 million), while production volume totaled 1.19 billion liters of milk. Due to its unique characteristics and its overall importance to the agriculture economy, dairy is one of the only two industries (the other is table eggs) that remains a “planned industry.” All milk production is under a quota system and milk prices are controlled.

Although the dairy industry’s activity is fully planned and organized, the legislative basis for its activity is incomplete. The production quota is managed by the “quota manager” who acts under the “Control on Products and Services Order” (milk production) from 1967 (so called “the milk order”). This order is an emergency order and is due to be cancelled. The daily activity of the quota manager and his decision making relies on data and manpower of the “Dairy Board,” which itself acts with no legislative basis. The Dairy Board allocates the production quota, regulates the seasonal milk surpluses by fixing differential “target prices” for raw milk, and also decides on marketing channels for the surpluses.

The “Target Price”, which is an important tool in implementation of the production plan, is the price paid by the dairies to the farmer for the milk. The “Target Price” is updated monthly according to the change in the production cost. The update of the Target Price and the obligation to purchase the raw milk from the farmers for “a price which is not lower than the Target Price” are based on old voluntary agreements between the players involved in the dairy industry, and they lack a solid legislative basis.

Due to the situation described above, the MOA decided to prepare the “Dairy Industry Planning Law-2008,” which is supposed to supply a full, comprehensive and organized basis for the planning and operation of the dairy industry, including establishing the legislative basis for the Dairy Board.

TheCattleSite News Desk



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