Israel – Kashrut and strict food safety boost food prices in Israel, Ministry of Industry, Food and Labor director general Sharon Kedmi told the Knesset Finance Committee today. “Food prices in Israel are much higher compared with OECD countries.”
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Kedmi added, “The Israeli market is very small and is highly concentrated, with a small number of players and oligopolistic conditions. The presence of private labels is very limited, at 10-15%, compared with 50% in OECD countries.
“Other factors for high costs are religious restrictions, even if legitimate, such as the need to make factories kosher, and very strict food safety since the Remedia [tainted infant formula] affair. Government policy also contributes through direct intervention in the form of quotas, tariffs, and subsidies, and through indirect intervention. There are macro factors, such as higher prices for inputs, global economic growth, which have affected the exchange rate, reflected in the appreciation of the shekel.”
The Finance Committee argued over the Kedmi Committee’s recommendations to lower tariffs, which will open the Israeli food market to more imports, harming domestic producers.
When we were in EY this summer, we shopped in local markets on several occasions and the food prices were not much higher than you would find in corresponding U.S. markets of equal quality like Wegman’s or Whole Foods. Yes, some imported products were marked up more than would seem justified by he hashgacha costs alone, but there were plenty of kosher products at lower prices than at home. Overall, not such a big difference, even though some posters will cite product A or product B they think is a big ripoff.
News flash: kashrus causes food prices everywhere to be sky high, not just in Israel. If I and my family were not Glatt, our food bill would be about 25% lower than it is.
That still does not explain why food prices in Israel are one of the highest in the world. It does not explain why a bag of pretzels cost 99 cents in NY and the same identical bag cost OVER 2 dollars in Israel.