If you’re a free market ideologue, this story will not make you happy. But if you are an Israeli consumer looking for lower-priced fresh meat, your response should be considerably happier.
For the first time ever, Israel’s Ministry of the Economy and Industry will introduce a competitive process in allocating fresh meat import quotas – based on a maximum consumer price – aiming to ensure that the benefit from duty-free imports is rolled from importers to consumers, the economic website Sponsor reported on Monday.
Minister of the Economy and Industry Eli Cohen (Kulanu), obviously not troubled by issues of market controls and social engineering, said in a statement: “We are working to deepen competition and bring about an additional reduction in the prices of fresh meat for consumers. The competition will benefit importers who are interested in benefiting consumers and will further reduce prices.”
So much for the Invisible hand of the market. Role over, Adam Smith.
The quota committee of the Ministry of the Economy and Industry is embarking on this new competitive process for the import of chilled, duty-free meat for 2018. In 2018, import quotas of 13,500 tons of chilled meat will be distributed, with the annual consumption of fresh meat in the retail market estimated at 20,000 tons.
According to the new procedure, the quotas committee will rate bids based on the Bidder’s commitment to a maximum consumer price of 1 kg of fresh minced meat—the most popular fresh meat category. The lower the price per kg of fresh minced meat, the higher the bidder’s rating and their chances of receiving a larger import allocation.
If you’re a European-style Social Democrat, you’ll probably rejoice. According to Sponsor, since government has begun the allocation of duty-free quotas, two years ago, there have been significant changes in the fresh meat market: the move lowered fresh meat consumer prices by an average of 10%; increased competition in the market as new suppliers have entered; and the status of the two dominant domestic suppliers that controlled more than 80% of the market has been eroded.
As a result, there has been a 20% increase in Israelis’ consumption of fresh meat, at the expense of a significant erosion in the consumption of aged meat, frozen meat, and processed meat.