Expensive Apples: Why the Popular Fruit’s Price Has Jumped So Sharply
17.9 shekels, that is the price consumers are being asked to pay these days for a kilogram of imported Pink Lady apples from the United States in some supermarket chains, and in private stores the price even reaches 22 shekels per kilo. And it is not always Grade A produce, but large apples, for which the farmer is paid a lower price. Strangely, despite the dollar’s collapse over the past year, the price of apples imported from the U.S. has only continued to rise, and last week the price stood at 14.9 shekels per kilogram. This price increase is especially infuriating given that over the past year the dollar fell sharply by about 17% and traded around 2.8 shekels. Just last week the dollar rate rose slightly and today it is trading at 2.97 shekels, but that is still a low rate compared with last year. 1 gallery view archive (Photo: Meirav Kristal)
While manufacturers of dry and shelf-stable food products, such as coffee, chocolate, rice or soybean oil, have a standard excuse for not passing on the drop to consumers, financial hedging, which fixes the exchange rate six months to a year ahead, in the fresh produce market that excuse is not acceptable. Imported fruits and vegetables are purchased at their real value at the time of the transaction, and their price to the Israeli consumer was supposed to fall dramatically. The real reason imported apples and pears have not become cheaper lies in the fruits and vegetables department, considered one of the most profitable in retail chains, and in the enormous mediation gaps they extract. This year, through April, some 29,000 tons of apples were imported to Israel, compared with about 65,000 tons last year, due to severe damage to the local crop as a result of the war. Annual apple consumption in Israel stands at about 130,000 tons, and under normal conditions half of it is based on local cultivation.
Yochananof: “That’s how the market behaves”
“I chaired the mediation gaps table this week at the agriculture conference,” says Yaron Belhassen, CEO of the Fruit Growers Organization. “Although customs duties were previously reduced in two phases, and today only a tariff of 1.3 shekels per kilogram remains, the consumer price has not come down. The average apple price at the port gate was 6.4 shekels. There is a crazy mediation gap by the chains. Now a trade agreement is taking shape between Israel and the U.S. to reduce the tariff to zero. If a support package is not assembled for the local apple sector, which was badly hit in the north by the war, we will become completely dependent on imports.”
Gabi Kunial, CEO of Bereshit, the large packing and marketing house for apple growers in the north, reinforces the point: “The mediation gaps are with the importer. In the case of apples, the major supermarket chains import the produce themselves. The chain pays between 8 and 10 shekels per kilogram, and puts it on the shelf at 18 shekels. Our main problem right now is a severe shortage of fruit grown in Israel.”
By contrast, Bichurei Sadeh, one of the largest marketing and import companies in the country, presents a picture that illustrates the size of the gap: “We sell to wholesalers at a price of 7 to 8 shekels per kilogram, and from our side we lowered the price to the chains. Don’t forget that chains have shrinkage costs. The American farmer gets about 1.1 dollars per kilogram, equivalent to about 3 shekels only. Together with shipping and customs, the cost reaches about 2 dollars, meaning less than 6 shekels per kilogram. In the end, it is all a matter of supply and demand. Supply in Israel dropped sharply because of the war, demand remained rigid, so why should the chains lower the price?”
Most retail chains chose not to respond. Yochananof issued a brief response reflecting the state of the market: “It’s true the dollar fell, but what happens when the dollar rises? That’s how the market behaves.”
