Israel Plans Direct-to-Consumer Food Markets to Tackle High Cost

Israel’s government is planning to increase ways for local farmers to sell directly to consumers to try to help lower the country’s high cost of living.

The Ministry of Agriculture is investing about 15 million shekels ($4.4 million) to build a new digital platform and farmers markets as an alternative to supermarkets, according to Minister Alon Schuster. The aim is to reach at least 10% of the country’s agricultural sales, he said.

The cost of living in Israel is among the highest in thedeveloped world, in part due to food prices. The average trip to Tel Aviv grocery chains likeShufersal Ltd. andRami Levy runs 23% higher than in London, according toNumbeo, a cost of living data collection website.

“The idea is to bypass the bottleneck of the chain stores,” Schuster said in an interview last week. “Today, there’s a situation with three, four, five big players that control things.”

High grocery bills were a catalyst for one of the largest protests in the country’s history in the summer of 2011. Politicians such as Prime Minister Benjamin Netanyahu have since repeatedly promised voters they would tackle the problem.

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Israeli supermarkets have triedvarious tactics to bring prices down, but progress has been slow because of protectionist policies that date back to the country’s socialist era. Costs won’t drop without abandoning those rules, according to Benjamin Bental, chair of the economics policy program at the Taub Center for Social Policy Studies in Israel.

The service provided by large chain stores “cannot be replaced by these nice farmers markets,” Bental said. “I don’t believe that this is really a factor that will affect prices.”

Schuster wants to cautiously open the market while at the same time provide more support for farmers beyond the new initiative, which is in its early stages.

The government is also trying to leverage the recent diplomatic accord with the United Arab Emirates for gains to Israel’s agricultural sector. Israeli firms have struck deals with the UAE to sell fruits, vegetables and evenwine from the Golan Heights, a territory Israel captured in the 1967 Middle East war from Syria.

The two countries are exploring ways to collaborate on food security research and help the UAE cutproduce imports from 80%. Israel can offer expertise around desert agriculture, food preservation, irrigation and fish farming, and benefit from Emirati funding for local research, Schuster said.

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