The last year was a difficult one for Israeli exporters: in the first nine months of 2015 the export total of fresh produce was $878 million, a drop of more than 11% compared with the same period in the previous year. End of year data is not yet available, however it is safe to say the contraction in exports will be reflected.
Following an all time record year for Israeli exports in 2013, when exports reached $1.6 billion, this year’s drop comes on the back of a 7% drop in 2014, establishing a concerning trend. As it turns out, there are numerous factors that can at least partially explain this trend: high production costs, low exchange rates, sanctions in the European market, the shaky Russian economy, low research and development funding, a lack of international trade pacts, bureaucratic issues, and more.
Perhaps the most fundamental issue with Israeli exports in recent years is simply that the cost of production is too high: high taxation and a lack of governmental support makes it very difficult for Israeli growers to produce at profitable costs.
Yet, as a result of months of protests and outcry concerning the state of the Israeli agriculture sector and the lack of government support, the Israeli government is set to shift the support for agricultural growers from indirect protections to direct financial support. Currently the government’s support is based primarily on tariffs and quotas of imports which are meant to allow growers to remain competitive in the local market. “We have reached an understanding that the current methods of support must be altered,” said Itzik Cohen, the CEO of the Israeli fruit growers association. “The new system of support will set a direct line of support for growers, as is common in most of the OECD countries. This will allow growers to continue to produce without having to fear this or that crisis.”
The growers explain that receiving direct support will allow them to continue supplying produce at low cost which is attractive for consumers without suffering financial losses in their operations. “Agriculture in Israel is going through a rough patch in recent years. Growers are forced to band together, with smaller growers being forced out of the market. Production costs are also increasing and the demands for environmental protection are creating new costs,” explained Cohen “the high prices we are seeing in supermarkets are a result of that. We believe the new agreement with the government will halt these negative trends.”
Sources: ynet.co.il, israel.agrisupportonline.com