Meir Panim Update
Israel’s “Cornflake Law” Means Crumbs for the Poor
January 16, 2017

Since 2000, food prices in Israel have risen an enormous 50 percent. Though everyone is feeling the crunch, Israel’s poor – including the working poor – are unable to afford a balanced and nutritious diet.

“The average salary in Israel is 17 percent lower than that in developed Western countries,” said Goldie Sternbuch, Director of Overseas Relations for Meir Panim, an Israel-based charity organization which runs soup kitchens throughout the country. “With food prices in Israel 20 to 60 percent above the OECD average, including basic necessities like dairy products and eggs, Meir Panim is experiencing more and more working poor asking for help.”

Several reasons have been cited for Israel’s high food prices. Historically, Israel has limited imports, especially of dry goods, and also placed many bureaucratic challenges on imports in order to protect local producers. Additionally, Israeli farmers find that supermarkets mark up fresh Israeli produce by as much as 700 percent in their stores.

The Israeli government claims that help is on its way with a food reform bill, dubbed the “Cornflake Law.” The importation of many dry goods will now face less bureaucratic obstacles, providing easier entry into the country. However, hefty customs tariffs will remain in place. The new law hopes to allow freer competition in the food market in response to public outcry over its high prices.

“It is estimated that average households will save approximately 900 NIS ($233) a year with the new regulations,” continued Sternbuch. “That’s a step in the right direction, but not enough to be a real game-changer for struggling families.”

The Taub Center notes that food purchases account for 16.5 percent of the average Israeli’s household expenses and 24 percent for low-income earners. Until now, four Israeli food companies held a monopoly on the market, controlling 35-40 percent of supermarket items.

One of Israel’s major food companies, Osem, played down the reform’s expected impact on consumers. Osem Chairman Dan Propper stated that he does not expect the changes to make a large impact on the cost of living.

Although the Central Bureau of Statistics hopes the new law will make a major positive impact on consumers, public opinion is that easing the way for imports into Israel’s supermarkets and street-corner groceries does not translate into lower prices. “It became public knowledge that an Israeli-produced chocolate pudding called ‘Milky’ was selling for three times less in Germany than in Israel,” stated Sternbuch. “Even with public protests about food prices in 2011, known as the ‘Cottage Cheese Boycott,’ dairy prices have not fallen.”

Ofer Klein, head of the economic research division at Harel Insurance and Finance, has said that the new regulations are not expected to have an impact on the food market for at least a year, and the impact is not expected to be dramatic.

Meir Panim is finding more and more working poor asking for our help,” noted Sternbuch. “While solutions to expensive food prices in Israel are being sought, we need to ensure that citizens have proper food in their homes and in their stomachs. Hunger doesn’t wait for effective legislation.”

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