Raw milk prices in Israel are expected to drop in July by about 2.5%, or roughly 10 to 12 agorot per liter, according to estimates. Because this is a regulated price set by the state at the farm gate, dairies will pay farmers less for milk. The question now is whether dairies and supermarket chains, which recently raised the prices of dairy products, will cut retail prices as quickly.
An implementation committee is scheduled to meet next Monday, following instructions from the deputy attorney general. If the current formulas are applied, the drop should reflect lower costs for animal feed, which the dairy sector buys from field crops. Last year that component rose because of drought, but this year’s stronger harvests are expected to bring it down.
The decline may not be passed on immediately to consumers, especially in regulated dairy products. The automatic formula only triggers retail price changes when raw milk rises or falls by more than 3%, and the expected decrease is below that threshold. The regulated system was established after then-finance minister Moshe Kahlon refused to sign a price-increase order, prompting dairy companies to petition the High Court of Justice, which led to automatic indexation without political pressure.
Israel produces about 1.5 billion liters of raw milk a year, and about half goes into regulated products such as 1% and 3% milk, 5% white cheese, whipping cream, 4.5% 'Eshl', 3% 'Gil', 15% sour cream, 28% Emek cheese, and 22% Gvina Givon in the deli counter. These items have recently risen by about 1%, while unregulated dairy products have increased by 4.5% to 16.2%, including butter and cottage cheese. The article says any retail relief may come only in the form of lower prices or more promotions, and a formal price cut for regulated products may arrive later through the formula’s retrospective adjustment.
