Monday 20 June 2011

Cottage Cheese Wars

In the Jewish calendar, we recently celebrated the festival of Shavuot (Weeks). This marks the moment of the receiving of the Torah, which encapsulates all of the laws which have formed the basis for followers of Judaism for thousands of years. It is traditional to eat non-meat products on this festival (what would a Jewish festival be without some sort of food symbol?), and cheesecake has become the symbol of Shavuot. Therein lies the opportunity for Israeli suppliers of dairy goods.

Shavuot is the peak season of the year for dairy manufacturers, and sellers of dairy products. Sales of dairy products spike dramatically in the weeks leading up to Shavuot, as most of the nation prepares their cheesecake recipes. Whether your favourite is one which is baked, or if you prefer the fridge variety, the supermarket fridges are filled with all types of cheeses and recipes to satisfy every taste bud and recipe. This is the time of the year when new cheese products are launched, and when it is impossible to even get near the supermarket fridges without being lynched by a representative of one company or another to encourage you to taste (and buy) their latest offerings. If you have no idea how to make a cheesecake, there is no need to be discouraged. You can buy a pack that contains a recipe and all the ingredients required for you to make your own, fail-safe cheesecake.

This year, dairy manufacturers took more than the usual advantage of hapless shoppers at Shavuot. Not only were they promoting their cheesy offerings in the usual relentless way, they also took the opportunity to jump the prices of many dairy products, some by more than 20%. As much as this infuriated many members of the Israeli public which is already paying up to 25% more for a basket of groceries than the average across the European Union, it did not leave much time to organise a resistance campaign before the cheesecakes had to be served up for the festival. In the days following Shavuot, however, resistance has grown dramatically to the point where it has even reached the Knesset. Cottage cheese, Israel's favourite cheese and staple for generations of Israelis, has served as a focal point around which the campaign of resistance has rallied.

Until 2006, the price of cottage cheese (along with a number of other dairy products) was controlled by regulation. Price changes had to be agreed by the government before consumers would be required to pay more at the supermarket checkout. The price controls on a number of dairy products (including cottage cheese) were lifted in 2006 to allow the market to control the price. With hindsight, this move may have been a little misguided when considering the dominant position of one supplier in this market. Tnuva still controls some 70% of the volume of cottage cheese sold in Israel. Over the past 3 years, the price of cottage cheese has risen by nearly 40%. During the same period, the price of milk to the consumer (which is still controlled by the government) rose by less than 4%. Even though it is true that the costs of many raw materials have increased recently due to the dramatic increases in the price of fuel, it is also true that the cost of cottage cheese's main ingredient, raw milk, has actually fallen by 8% over the same 3 year period. All of this points to increasing profits for the dairy companies.

The final straw that broke the camel's back for the Israeli public came with a startling revelation. Tnuva is able to provide the same dairy products consumed in Israel, to its overseas markets in Europe and the USA for a price that is up to 50% less than the price paid by Israelis. This is after incurring the additional transportation costs necessary to ship their products to the markets abroad. This points to a clear conclusion - gross exploitation of the home market and oversized profits by Tnuva. This fact has left the usually volatile Israeli temperament boiling with rage. A call to action was made, and has been responded to by more people than was ever expected.

A Facebook page was started, which called for the boycott of cottage cheese for a month by the Israeli public. Within a few days, tens of thousands of people had "befriended" the Facebook page, and sales of cottage cheese were shrinking dramatically. Supermarkets were forced to respond within days by offering all manner of discounts on cottage cheese, including selling 2 for the price of 1. The damage, however, has been done and the Israeli consumer has finally stood up to the power of the monopolies and those who collude to keep prices high. They will not rest until the price of cottage cheese is returned to a more normal level on an ongoing basis. Not only that, there are already plans to boycott a different product every month in order to target other areas where people are being ripped off. Who knows how far this could go? Could it even reach the hallowed grounds of the mobile phone operators, where collusion between the different companies has conspired to keep the prices unreasonably high for Israel's phone-crazy public for so long? I certainly hope so. There could not be a more deserving target of this boycott campaign.

There is a call for the government to reintroduce the cottage cheese pricing regulations. The finance minister has announced that he is considering the possibility of licensing foreign suppliers to import their products into Israel in order to introduce greater competition. This sounds easier said than done, with the difficulties of adhering to the laws of kashrut and agricultural regulations. The chances of this succeeding seem very remote.

As much as Israelis are very outspoken, and seemingly no-nonsense type of people, it seems as though monopolies and cartels have taken advantage of the Israeli consumer for too long. If the reduction in the consumption of cottage cheese following the call to arms is anything to judge by, a consumer revelation may have begun. And this is not a moment too soon. Each month, a different item will be targeted and brought down to size. Candidates for the next "item of the month" are not in short supply.

This is a great example of Israelis pulling together to fight those trying to take advantage of the innocent consumer. Even though there are many examples of Israelis disagreeing with each other and fighting amongst one another, this is a truly victorious moment where Israelis have stood together. This is freedom of speech and expression in the best possible light, and has proven to empower the general public in a way previously never experienced. This is almost certainly not the last of the economic boycotts in Israel.

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