Since the “Cottage Cheese” protest in 2011, Israel has been taking steps to reform some aspects of its agricultural policy with the aim to decrease consumer prices, while continuing to support its farming sector. In 2016, the Ministry of Agriculture and Rural Development (MARD) and Ministry of Finance (MoF) initiated a process to further reform agricultural support policies through the reduction of market price support and an introduction of direct payments to farmers, which was applied to beef production in pasture area and to the dairy sector (see trade section).
As part of the Government’s attempts to reduce regulatory burdens, in 2017, thirteen programmes were formulated and approved in areas that are under the responsibility of ten regulatory bodies, encompassing the Veterinary Services, the Planning Authority, the Dairy Board and Plant Protection Services. The government expect these programmes to result in direct savings of ILS 135 million (USD 37.5 million) per year and indirect saving of ILS 835 million (USD 232 million) per year.
On May 2016, the Joint Prices Committee of the MARD and MoF (henceforth “Committee”) discussed a proposal put forward by MARD to impose price control on the margins of fruit and vegetables to respond to the concern that large wholesalers and retail chains may use their market power to inflate prices. In 2017, as a first step, the Committee required the main retailers and wholesalers to supply MARD with their operational and marketing costs for the years 2015–17. As of 2017, the Committee had evaluated the profitability of the main sellers of fresh produce in 2015, finding a large variation in profitability but no indication of excessive profitability. Based on the analysis of 2016 data, the Committee may consider whether to require any intervention, such as imposing a price control or introducing other binding rules.
Several efforts have been undertaken to encourage greater competition in marketing of and consumer access to local and fresh horticulture produce. First, MARD allocated ILS 20 million (USD 5.5 million) for 2017-19 to support local authorities to enable and facilitate direct sales of agricultural produce (farmers’ markets) within their municipal boundaries. The programme also aims to encourage consumption of locally produced fruits and vegetables, and to strengthen and assist individual, independent farmers to co-operate under this umbrella, thereby increasing their income. Second, the government is conducting a regulatory impact analysis of unfair trading practices to improve commercial relations between farmers and sellers of fresh fruit and vegetables. Responses to a government-led 2017 consultation of farmers and farmers’ representatives suggest that legislation may be needed to establish rules for fair trade. Third, to enhance price transparency in the food chain, the government launched a smartphone application providing daily fruit and vegetable wholesale prices to users (USDA/FAS, 2017).
The government has renewed its interest to improve the animal welfare, sanitary, environmental and economic performance of the egg production sector. Following 2007 and 2010 decisions that were not applied, and recommendations of a professional committee in 2015, the government in 2017 decided to once again take steps to improve this sector whilst implementing changes with greater flexibility, including via poultry houses relocation. A budget of ILS 340 million (USD 94.5 million) has been allocated towards funding renovation of infrastructure and poultry houses with a planned reduction of the price of eggs by ILS 0.05 (USD 0.01) to also occur as a result of expected improvements in production efficiency from upgraded assets and economies of scale. The reform programme, still under discussion, would last from 2018 to 2022.
Price reducing measures were not applied consistently for all commodities in 2017. After four years of continued decline, the guaranteed prices of selected commodities increased in 2017, by an average of 6% for raw milk; 0.3% for eggs; and 1.7% for wheat. Changes in milk target prices depend on changes in cost of production and have resulted in the national producer price for milk being significantly higher than international prices. Milk accounts for 17% of the total market price support measured for the Israeli agriculture in 2017 and hence contributes significantly to relatively high level of Israel’ farm support.
Confronted with a five year drought that may continue, the Water Authority imposed further restrictions in water allocation, particularly in the North, thereby reducing water supplied to agriculture. In 2016, due to a lack of precipitation, the Upper Galilee and Golan Heights regions were disconnected from the national water system. In 2017, the situation worsened and in order to prevent damage to the Sea of Galilee’s water quality, the “Kinneret surrounding” was also disconnected. Withdrawals from users on any water course leading to the Sea of Galilee were restricted. The “Kinneret surrounding” area’s water allocation was cut by 8%; that of Upper Galilee and Golan Heights was cut by 25% in comparison with the previous year’s allocation. Further water cuts will be implemented in 2018, for the third year in the North, equivalent to a cut of 36% compared to 2015 allocations and of 19% in the Sea of Galilee region. A yet-to-be-determined water allocation cut will also be applied in the national water system fed by seawater desalination due to a sharp decline in stored groundwater. Farmers have already been advised to prepare for the expected water cut.
In parallel, the government clarified the implementation of its reform of the agricultural water pricing system. In 2017, in an effort towards equity, the government approved the amendment of the Water Law (called “the amendment to article 27”) introducing flat water rates and removing the extraction levy for fresh water supplied to agriculture, and the Water Authority published rules for its implementation. These rules specify the expected tariffs and the accepted method for calculating the “normative costs”—reflecting the real cost of pumping and distributing the water—for producers using independent water sources. These producers will have to pay a water fee corresponding to the difference between these calculated normative costs and a gradually reduced water tariff of ILS 1.81 per cubic meter to the national water company Mekorot by June 2019.1 Producers located in areas lacking alternative water sources—defined as the Upper Galilee, Golan, Jordan Rift Valley, Judea and Samaria, and the Jordan Valley—will pay ILS 1.54 (USD 0.43) per cubic meter to Mekorot in June 2019.
In 2017, the Investment Administration of MARD continued its effort to support and encourage the agricultural sector to treat agricultural waste, in order to mitigate the impacts of such waste on environment and human health. The programme supports the transformation of agriculture’s by-products into usable recycled products or raw material to be used for renewable energy production and it provides support for the reduction of waste transportation to landfills. It covers fixed capital formation and offers payments for co-operatives that want to build new waste treatment compounds on their common land. More specific efforts by the Investment Administration include the establishment of animal and plant waste treatment facilities (carcasses and excrement of poultry, fish, sheep and pigs) under a three-year, ILS 20 million (USD 5.6 million), plan, which ended in 2017 but will be renewed in 2018; a project on the treatment of tree branches (pruning) in order to prevent the damage resulting from charcoal production which is a severe environmental hazard, amounting to ILS 6 million (USD 1.7 million) over a three-year period beginning in 2017; and the construction of facilities for the treatment of effluents from dairy cow milking parlours, amounting to ILS 18 million (USD 5 million) over a three-year period beginning in 2017.
To support the sustainable use of natural resources and to respond to changing climate conditions, the Investment Administration launched a multi-year (2018-2020) ILS 45 million (USD 12.5 million) programme to support the adoption of new technologies in the field of precision agriculture, such as satellite-based information services, interpreted drone images or sensors which transmit data used for irrigation control, fertilization, spraying and growth. The programme provides grants for new technology and for the development of new information services.
A new budget of ILS 1.5 million (USD 0.4 million) has also been allocated for regional agri-environmental projects that promote agricultural practices decreasing the negative impact of intensive agriculture on natural resources or encouraging positive externalities, and promoting the adaptation to climate change. The budget will be allocated to four regional councils during five years (2017-2021). Selected projects shall be led by the regional council representatives in co-operation with farmers, extension services, residents, ecologists, economists, and experts from MARD and the Nature and Parks Authority.
In co-operation with the Israeli Meteorological Services, MARD is in the process of collecting and quantifying the relevant climatic data for agriculture in Israel, with the objective to provide tools for future risk assessment. The programme, to be completed in mid-2019, includes past climate assessment and 2030-2050 forecasts of more than 50 critical climatic indicators for the different production sectors in agriculture in 11 different agro-climatic zones in Israel.
In 2017, MARD’s Land Conservation and Drainage Division has assigned approximately ILS 10 million (USD 2.8 million) to its soil conservation programme to minimise runoff and erosion processes. For 2018, the provisional budget is set to increase by 20% in order to continue promoting the conservation of agricultural land and better management of water and land for flood control.