As the first step towards an implementation of the price control plan for fruit and vegetables, Minister of Agriculture Uri Ariel signed today (Tuesday) a decree obligating marketing chains to submit financial data regarding the purchase and sale of fruit and vegetables. This step was initiate in coordination with Minister of Finance Moshe Kahlon, who is expected to sign the decree himself in the following days.
Minister of Agriculture Uri Ariel, signed today (Tuesday), a decree obligating marketing chains to submit their financial statements with data regarding the purchase and sale of fruit and vegetables. In the decree's framework, largescale marketers and wholesalers will be required to provide regular periodic reports regarding both the fixing of fruit and vegetables' market prices and their profits from sales.
The decrees were signed following the conclusions of the Ministry of Agriculture and Ministry of Finance' shared Committee on Prices which had examined the issue of marketing spreads in the fruit and vegetables' sector and had recommended, six months ago, to enforce a price control on fruit and vegetables. Following the decree's signing and after marketers' submission of data, the Committee on Prices shall decide upon the appropriate manner of implementing regulation and combating marketing spreads.
The decree dictates companies to submit, by the end of 2016, their sales data since 2015. This obligation shall apply until the end of 2017, when, according to the Committee's estimate, it will have enough data in order to conduct a representative sample of the fruit and vegetables' price distribution. At this stage the goal of the price control is to receive information and comprehend the market's profitability.
Kahlon and Ariel's shared initiative is aimed at lowering the cost of fresh fruit and vegetables, which are considered a basic commodity for the Israeli consumer. It will furthermore strengthen farmers and ensure a fair market.
"Marketing spreads in Israel are clearly unreasonable. After having examined the issue via the shared Committee on Prices, the Minister of Finance and I have decided to put an end to it.
In order to identify the root causes of these marketing spreads, we have issued a decree obligating supermarkets to report to the government on their purchase costs from the farmers and their selling prices to consumers. When we will attain the financial data, we will be able to analyze them and act wisely and reasonably in order to reduce marketing spreads and lower the cost of fruit and vegetables.
This was our promise to farmers and consumers and we will not cease our struggle to reduce marketing spreads".
In recent years, a marked multi-annual increase in the marketing chains' market share at the expense of open markets and private greengrocers has been noted. According to the Israel Central Bureau of Statistics, in the last decade the marketing chains' share in the fruit and vegetables retail market has grown from 15% to 50%. This trend corresponds to the rising purchasing power of chains that hold fruit and vegetables' wholesalers, or which purchase them via a large wholesaler.
This step has also been fueled by a sample examination which demonstrate that gross and operational profits from the chains' fruit and vegetables department are significantly higher in relation to their overall profit. Furthermore, additional findings refer to the marketing chains' rising sale rates and present a concentrated wholesale segment.
Uri Zuk-Bar, Superintendent of Prices at the Ministry of Agriculture:
"Due to fears rising from the data brought before the Committee regarding excess profitability and abuse of market power, and in light of the objective difficulty to attain cross measurements of the marketing spreads, the Committee asks to obligate wholesalers and retailers to submit data by force of the price control decree.
The control shall be implemented through a decree limited in time, until to end of 2018".