Ministry of Agriculture and Rural Development of t : Yet another step to reduce the cost of living: the Ministers of Finance and Agriculture signed an order that places white cheese and whipping cream under price control which will reduce their price by some 20%

 Additionally, consumer prices for all price controlled milk products will be reduced by 1.1% from the beginning of January.

The Minister of Finance, Yair Lapid, and the Minister of Agriculture and Rural Development, Yair Shamir, have signed a price control order for milk products that will reduce the consumer price for price controlled milk products by 1.1%.  Also, an additional two products will be placed under price control, 5% fat white cheese and 38% fat whipping cream, as a result, their price will fall by some 20%.  The price reductions were made possible by lowering the dairies profit margin and by the reduction of price discounts given to retailers that, for the most part, were not passed on to the consumer.  Together, this allowed for a 1.1% overall price reduction.  The 1.1% periodic price revision will not apply to cheese due to the 2.5% price reduction instigated by Tnuva last July.  The price revisions will take effect from January.

The Ministers decision to place cream and cheese under price control was taken following the recommendations of a Ministry of Finance and Ministry of Agriculture inter-ministerial Price Committee.  The committee's recommendations were made after public hearings as well as an examination of Tnuva's dairy division's profitability carried out by the inter-ministerial committee through an external auditor and after being provided with additional figures by the dairies.   Whilst the price control mechanism does not constitute a long term solution for the economy's failures, this decision was made in light of the present situation (the lack of competition and the dairies high profits at the expense of the consumers).

The price reduction includes a reduction in dairy profits for these products as well as a reduction in the expected discounts given by the dairies to the suppliers.  The periodic price revision of price controlled products is based on changes in production costs less the temporary consumer price increase of 3.5% and 4% to the dairy approved in Februar 2013.  An examination carried out by the Ministry of Finance and Ministry of Agriculture inter-ministerial Price Committee found that white cheese and whipping cream enjoyed an unreasonable profit margin in relation to prices set for price controlled products.  The white cheese market is the most centralized with the three largest dairies holding some 90% of the total market share.  With regard to the whipping cream market, Tnuva has an 80% share of the market.