Dairy costs set to drop amid cost of living crisis

The Agriculture Ministry put forward an amendment on Wednesday to the late-2022 law which increased the price of dairy products in Israel. The amendment is intended to temper the overall price increase in order to bring down the cost of living, according to a statement from the Agriculture Ministry. 

By reducing the cost of milk itself, the Agriculture Ministry aims to reduce the price of all dairy products as they are all primarily milk-based.

"Amending the milk law will make milk more accessible and affordable for all Israeli citizens!" said Agriculture Minister Avi Dichter in a statement. "We will continue to support our local farmers to ensure a stable food supply to Israel. The Agriculture Ministry is working closely alongside the Finance Ministry to implement a policy to lower the cost of living which also optimizes production in the agricultural sector."

How did we reach this point?

In March 2022, the Joint Price Committee for the Finance and Agriculture Ministries recommended an increase in the prices of regulated dairy products at a total rate of 6.49%, according to the Agriculture Ministry's website. At the same time, the ministers decided to split the price increase into two stages. The first, which came into effect at the beginning of September 2022 was at a rate of only 4.9%. 

The last price update was made in March 2019, when the prices of dairy products increased by about 3.4% according to the Agriculture Ministry.

According to the amendment itself, the method of calculating the cost of milk production will be done according to the annual production costs in the large dairy farms whose production capacity is 800,000 liters or more. Additionally, for four quarters, 2.15 agorot per liter will be deducted from the calculation of the target price every quarter.

According to the agreement, the validity of the existing target price calculation mechanism, with the changes agreed upon, will be extended until the end of 2025.