OECD report- State sponsorship of agriculture leads to higher prices for the consumer
The OECD (Organisation for Economic Co-operation and Development), of which Israel is a member, published its first report reviewing Israel’s agricultural policies. OECD has previously evaluated Israel’s health care system, educational system , environmental performance and more. They present an unbiased comparison of Israel in relation to other developed nations and provide sound recommendations for improvement and praise when deserving.
From the review:
“Israel’s agriculture is unique amongst developed countries in that land and water resources are nearly all state-owned and that agricultural production is dominated by co-operative communities. Since the late 1980s, agriculture in Israel has benefited from: a stable macroeconomic climate; policy reforms; high levels of investment in R&D; a developed education system; high-performing extension services; and accumulated farm management expertise.
Israel is a world leader in agricultural technology, particularly in farming in arid conditions. Israeli agriculture thus relies on an “induced”, rather than “natural”, comparative advantage, one built on knowledge and technological progress…Government support to Israeli farmers has fallen over recent years but a number of market distorting policies are still in place…While the level of agricultural support has been falling,…the share of the most distortive types of support have increased over the last two decades. This mostly reflects continued high border protection for agricultural commodities pushing domestic prices above international levels and resulting in high market price support…More efficient water resource management also remains a critical challenge.”
You can read the full report on the OECD website.
Interestingly enough, the Ministry of Agriculture does not mention OECD’s criticism of market distorting in it’s press release, only OECD’s praise of Israel’s agricultural R&D.
This report shouldn’t come as a surprise to us; after all, we saw in Yisrael HaYom that even though milk is price controlled, it still costs significantly more than milk in the US or the UK. We also learned about the Trachtenberg Report which is breaking the barrier to import which will subsequently lower prices. Hopefully this review will convince our legislators the need for price reform in Israel.