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Sunday, January 12, 2014

Why Israelis pay 25% more than the OECD average for produce

When the OECD accepted Israel as a member, they might not have realized that they were accepting the only currently socialist country in the West (the US appears to be headed in that direction as well). Israelis pay 25% more than the OECD average for fruits and vegetables - a statistic that will not surprise most Israelis - because of the Soviet-like market structure that prevents competition in that area.
“Israel is a sort of multi-branched ‘Soviet Union’ when it comes to agriculture,” he explained.
Thirteen agricultural lobbies such as the Honey Production and Marketing Board and the Dairy Products Board “turn Israel  into one big cartel, with no real competition,” he accused.
Large corporation such as Tnuva and Strauss manage to “trample” small competitors, and to make it nearly impossible for new players to enter the market, he warned.
The latest data “was completely predictable, and matches the non-competitive market conditions in Israel,” he continued.
The solution is simple, Whiteman explained, “Cancel all of the agricultural boards and the cartel-like regulation that comes with them, end the protective quotas that prevent – or at least restrict – imports, and create a free market.”
However, he continued, “All this is fairly simple in principle, but very difficult to implement politically speaking, given the opposition from various parties with a strong interest in maintaining the status quo – at the expense of the populace, and of the poor in particular.”
“One cannot help but be depressed at the government’s weakness in the face of these parties, Tnuva and Strauss in particular,” he added. “Instead of protecting our interests, our elected officials try to distract us… Minister of Agriculture Yair Shamir and Finance Minister [Yair] Lapid put a price limit on cream cheese, as if that’s what will bring respite to the public, and [Economics] Minister [Naftali] Bennett, who energetically promotes reform and market competition, is silent; apparently he mustn’t anger his ‘brother’ Lapid.”
I'm so glad we have Yair Lapid and Naftali  Bennett working together for our benefit. What could go wrong?

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