End price gouging on produce

Since 2020, the price of fruit has risen more than 70 percent and that of vegetables by almost 45 percent. Even during the coronavirus year, when prices were generally falling, those for fruits and vegetables rose 4.4 percent. This is not an ”organic” price increase, but the engineered consequence of crude interference in market forces by growers and their lobby.

The main reason for the increase in prices is a drop in production. While the population is growing by 2 percent a year, harvests are no bigger than they were a decade ago. To that, it has to be added that importing fruits and vegetables is mission impossible – the government imposes duties that can reach as high as 500 percent. In addition, it enforces quotas that limit the quantities that can be imported. The result is constantly rising prices and a steady drop in the consumption of fruit and vegetables. They’re simply too expensive.

The suspicion is that the growers are adjusting production by way of their lobby. It does this through a pincer movement: On one side, growers are allowed to produce for export while, on the other, agricultural imports into Israel are blocked. The goal is to prevent competition.

Growers insist that the duties and quotas are needed to protect local industry, which might collapse if it faced competition from foreign goods. Absurdly, the Agriculture Ministry supports them. The ministry holds that opening the sector to competition with imported farm goods would all but lead to the end of domestic agriculture. That, in turn, would leave Israel’s population reliant on imported agricultural products, which would lead to higher prices and make the country dependent on the global market. In other words: In defiance of basic economic teaching, opening the market for fruits and vegetables to import competition would actually lead to higher prices.

The facts on the ground tell the exact opposite story. Pears and apples are one example: They are one of the few agricultural sectors open to imports and the tax on imports is relatively low. Yet their prices have remained relatively steady, compared to other fruits and vegetables whose prices have risen.

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Farmers’ production costs are high, as are their labor costs and the water they need for irrigation, while global warming is hurting the harvests. But the solution to all this can’t be millions of consumers being held prisoner to higher prices or left without farm products at all. Therefore, alongside giving assistance to growers, the time has come for the government to order an opening of the market to competition by lowering tariffs and making it easier to import.

The above article is Haaretz’s lead editorial, as published in the Hebrew and English newspapers in Israel.