Recommended: Stop monitoring the price of butter and allow the market to set the price

The Prices Committee of the Ministries of Agriculture and Finance has recommended that ministers stop monitoring the price of butter and allow the market to set the price. The committee recommends that ministers change the way butter is monitored in a pack that sets a maximum price for reporting profitability and prices. That is, manufacturers and retailers will report butter prices to the state but will pierce them themselves. Today, the maximum regulated butter price is NIS 3.94 per 100 grams.
The committee recommends that the change be effective as long as the duty exemption on butter is revoked. Upon expiration of the temporary order, price control will resume, subject to the regular updating mechanism for the prices of dairy products and in the necessary adjustments to the last price set before it is taken out of control.
 If the ministers approve the recommendation, no maximum price for butter will be set in a package, local or imported, but the committee will continue to monitor the level of profitability and prices of butter in the market. In light of this, the committee recommends that manufacturers and importers with a market share of more than 20% in the 12 months prior to the report will report data on prices and profitability to the committee once a year, in accordance with current reporting on dairy producers. The large retail chains (as defined in the Food Law) are subject to a control order on the prices of groceries and services, as part of which a reporting obligation has been established regarding the profitability of large retailers from the sale of food products under price control, including butter.
The committee members noted that the opening of the market is expected to increase competition in the industry and lead to a decrease in Tnuva's market share and market power in the butter market. In this situation, the fear that manufacturers in the butter market will achieve excess profitability is weakened, thus reducing the need to set a price.
All this despite the fact that it has been proven that the margin of importers in import butter is greater than the margin of domestic producers and that most of them sell at the price of supervision and above. The committee's decision stated that: "It is possible that in the short term the removal of supervision will lead to a certain price increase, in light of the need to organize importers and the existence of initial costs, but it seems that even if such an increase occurs, it will not last long. Relative to Israel. "

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