The Cottage Cheese Coup

By Moshe Feiglin

27 Sivan, 5771
June 29, '11

Translated from the NRG website

Editor's note: The price of a small cup of cottage cheese in Israel has recently risen in Israel to a whopping 8.00 NIS, triggering a Facebook-driven public boycott of the cheese.

The temporary solution for the unbridled surge in food prices is imports. Israel is a small market and our immediate borders are closed. A long tradition of centralized government has created a monopoly on basic goods. Even though Israel has long ago adopted a free market track, there are still a number of pockets in which no real competition exists.

When the vast majority of the production and marketing of milk products is concentrated in the hands of just a few companies while the market is closed to free import, the antitrust authorities can talk themselves blue in the face, but a cartel will be created. No phone calls, clandestine coordination or illegal actions are necessary to bring it to life.

When the government removed its supervision over the price of staple food products, it was supposed to encourage free market competition and reduce prices. But that is not what happened. Instead of competition replacing supervision, the cartel replaced it. In the instances where genuine competition replaced centralization, the prices fell while quality was enhanced. The vastly improved Bezeq phone company is an excellent example of how free market competition is supposed to work.

The only way to solve this problem is to open the centralized markets to genuine competition. But until independent producers and marketers enter the market, the way to alleviate the current crisis is to open the Israeli cartel to free import of staple products.
When Kadimah MK Roni Bar-On was interviewed this week about imports, he negated the option. It is impossible to import milk, he explained, because it is an issue of kosher standards and the Shas party will leave the coalition as a result. The interviewer accepted Bar-On's remarks without questioning why an Opposition member is suddenly so concerned with the stability of the Coalition.

Bar-On's reasoning is totally off mark. Nowadays, the milk sold in many foreign countries is kosher, with strict rabbinical supervision. In fact, in New York it is difficult to find milk that is not kosher. In other words, if we wanted to import cottage cheese with the finest rabbinical supervision at half price or milk at a quarter of the price, we could. Those people who insist on the kosher supervision of the Israeli milk company, Tnuva, can continue to buy cottage cheese for eight shekels. The fact that this exceedingly simple solution is not applied makes me suspect that there are other interests at work here, besides those of the companies.

That being said, import is just a temporary solution, until the market can become genuinely free. In the long run, Israel must be able to supply itself with its basic needs. The time has come to once again work the Land ourselves. If anybody thinks that Jews working the land is a thing of the past, they are invited to take a short trip to the hills of the Shomron and see how Jewish youths are farming and producing staple products – and succeeding in a most impressive way. Most of Israel's organic produce comes from Jewish labor on these hilltop farms.

The economies of the West are on the verge of collapse. Israeli exports will have a hard time retaining their current levels when the European market disintegrates and Manhattan will be longing for the days of the Great Depression. Israeli farms and firms that will re-invent themselves now to supply local demand will be the first to emerge from the crisis.