Milk policy

Quotas

Dairy farming is regulated through a “quota” production limit on all existing dairy farm units.

Milk can be sold only to the dairies and farmers are not to allow selling their milk directly to any consumer. The amount of milk marketed by each farmer is controlled through the data received from each dairy.

The producer has a binding contract with his dairy for one year periods, where as he is allowed to choose the dairy with the renewal of the contract.

Whenever the market demand is projected to increase / decrease it is the I.D.B. which regulates / adjusts these quotas. Quotas can be change and or new quotas can be issued to new dairy farms. Following the Government policy of establishing new agriculture based settlements.

Today quotas are calculated on a half yearly basis, in order to balance some natural production fluctuations in each farm unit.

For over-productions farmers are fined with reduced payments for these liters of milk, which are above the quota of the farm.

Milk processing

Fluctuations in the milk supply are regulated by the I.D.B. through a budget for comparing the seasonal milk production.

Surplus winter milk is dehydrated and processed into powders, which are then reconstituted during the summer month, whilst there is a shortage between supply and demand.

The I.D.B. also promotes the export of the surplus of milk (seasonal / yearly) as finished dairy products on the international market within the guidelines of the GATT agreements.

Lack of milk is sometimes overcome through the issue of import licenses for milk powder and / or even dairy products such as butter / hard cheese / etc.

Milk pricing

The Israel Dairy Board is responsible for calculating the following prices:
• The target price paid by the dairy to the milk producer.
• Dairy’s cost price.
• Product price (of some basic products).

Target Price

The target price for milk to the producer is based on a calculation made every three months by the Ministry of Agriculture, the Ministry of Finance, the Dairy Board and the representatives of the farmers.

The price to be paid to the producers for each liter of milk is set on a standard level, based on a survey of production costs. Every expense that the dairy producer has, including his personal labor, goes into the calculation.

A breakdown of the target price is given in table # 1.

A sum is added or deducted to / from the above price according to the quality of the milk based on test results determining levels of fat, protein, somatic cell counts, bacteria, acidity, temperature of the raw milk received at the farm, etc..

Please note that this system of the target price paid per liter to the farmer, does not imply that all farmers have the same income correlated to the amount of milk they are allowed to market.

Through efficiency in his dairy farm, including acquisition of his inputs / etc., every farmers will be able to guarantee his optimal income.

Dairy’s Cost Price

The average cost of processing one liter of milk into various products is determined according to calculations made by the Ministry of Finance and the Ministry of Agriculture.

Product Price

The consumer price of a products determined by the dairy according to its own internal costing / calculation. However since some product prices are government controlled, there is a maximum price that the dairies can charge for these products.

The maximum price are calculated & determined according to the sum of the prices in para’s above (milk price to producer + dairy costs). The Ministry of Commerce controls prices.