Milk prices rise by 9.28%, increase to double over the next three years

Following a series of last-minute efforts by Finance Minister Bezalel Smotrich, a deal was signed Sunday night at midnight between the Finance Ministry and Israel’s dairy manufacturers that saw the cost of price-controlled dairy products rise by 8.28% on Monday morning, instead of the expected increase of 16-17%.

The details of the deal will see the total increase in price over the next few years land at a point higher than the initially expected 16%. Per the agreement, the cost will rise by another percentage point next week, putting it at a 9.28% total increase. Another price increase of 3.1% will take place in May 2024, another increase of 3.1% in May 2025 and another increase of 3.1% in May 2026.

The price increases will apply to 1% and 3% milk in bags and cartons, 5% white cheese, 38% fat heavy cream, certain yellow cheeses and “Eshel” and “Gil” sour creams.

In a statement from the Finance Ministry, Smotrich tried to shift the focus of the discussion to the smaller increase occurring in the next two weeks, rather than address the series of spikes that will occur as part of the deal he struck, ultimately culminating in the full expected amount.

“We managed to curb the increase in the price of milk by almost half. It was not easy, mainly due to the irresponsible behavior of [former prime minister Yair] Lapid and [former finance minister Avigdor] Liberman. The dairies had demands, but after long negotiations – we stopped the increase in price, which was supposed to be double,” he said.

Will their be legal ramifications for the cut?

On Sunday, it was unclear whether the nation’s dairy manufacturers would seek legal action against the minister, whose spur-of-the-moment decision to put off the full price increase unilaterally violated an industry agreement put into place at the end of last year.

“We would like to thank the dairies that, despite the previous agreement signed by Liberman that delayed the eligibility for the price increase, agreed to the request of Smotrich to spread the price increase and make it easier for the public,” Smotrich said.

“After the urgent response we had to give in a short time, we are entering into a thorough correction procedure in the dairy industry,” he continued.

The increase in the price of government-controlled dairy products has been expected for months, and Smotrich was specifically called upon to take action to curb it in January by the chairman of the Economic Committee, Likud MK David Bitan.