Supply issues lead to surging prices for agricultural produce in Israel

Vegetable prices in Israel are high by almost every measure. Though prices fluctuate up and down based on the seasonality of the products, both when comparing current prices to historical levels as well as to price levels in other OECD countries, the trend is one of skyrocketing prices with no clear sign of a coming improvement.

The principal cause of the situation is basic supply and demand. Per capita consumption of vegetables in Israel has always been high and an increasing population combined with a growing awareness for the need to eat a healthy diet has ensured that demand remains high. On the supply side, Israel has routinely relied on its own agriculture sector to provide the vast majority of the vegetables consumed in the local market. Israeli farmers however have stumbled upon hard times in the last decade or so which has made it impossible for them to increase the supply as needed; as a result the demand has steadily outgrown the supply in the local market causing the price inflation.

There are many possible reasons for the struggles of Israeli agriculture, but the one thing agreed upon by most remaining farmers is that the government’s reaction to the situation and its lack of support for the agriculture sector are making the situation worse and creating a serious threat for the viability of growing vegetables in the country. “Starting in 2016, it is permitted to import tomatoes freely into Israel. Because there is no limit on imports, supermarkets are importing as much as they like” explains Midan Klop, a young farmer from the Arava valley region who grows tomatoes, watermelons, melons, and squash. “The supermarket chains prefer goods from the Gaza strip or Turkey because it is cheaper. The result is that the cost of growing and delivering the locally grown produce are higher than the price the supermarkets pay for it.”

Driving the government’s policies is the goal of lowering prices for consumers by allowing a free market for agricultural imports. Though that might be effective in the short run, stakeholders in agriculture warn that those policies are shortsighted and will leave the country without farmers to supply the market, as the current economic climate in the sector is forcing many to cease operations. “I won’t leave the land because of this, I’m optimistic and I love agriculture and the land.

People have to realize that local agriculture is important for the country and that the country can’t prefer to help farmers in other countries over our own farmers.”