Strauss Group Latest Israeli Company to Raise Dairy Product Prices

Strauss Group Ltd. (STRS.TV) will raise the prices of its cheese, puddings and other milk products because of the rising target price of raw milk, the Israeli food maker said Wednesday, just days after the government announced a preliminary agreement aimed at lowering dairy product prices.

The price of food, particularly dairy products, has been a contentious issue in Israel since the rising price of cottage cheese in 2011 triggered weeks of mass public protests against high living costs. High import tariffs and the domination of the market by only a few players have led to the rise in dairy product prices over the last several years, according to local economists.

Strauss said the price paid to dairy farmers for raw milk recently rose by 0.207 shekel ($0.054) to ILS2.34 per liter ($0.62), forcing it to raise its prices. The company said the price of most of its cheeses will increase by 5%, and the price of its milk beverages by 4%.

In a statement, Strauss said it wouldn’t have raised its prices had it not been for the increase in raw milk prices. It won’t increase the prices of its non-dairy products.

Strauss said it has made efforts, which have cut into its profits, to streamline production and cut costs over the last year and not raise prices, despite the growing cost of raw materials and energy.

Other food companies, including Osem Investments Ltd. (OSEM.TV), have also said they will raise the prices of their dairy products.

Earlier this week, Israel’s finance ministry announced a deal with the agricultural ministry that would lower consumer prices of dairy products by 10% over four years by lowering the target price of raw milk. But the Knesset, Israel’s parliament, must still approve the plan. The plan is based on recommendations of a government committee formed in the wake of last year’s mass protests. However, dairy farmers’ groups have told local media that the agreement will ruin their sector and they plan to oppose it.

At 1236 GMT, Strauss’ shares were down ILS0.24, or 0.53%, at ILS44.98, and Osem’s shares were up ILS0.42, or 0.73%, at ILS57.88, in a higher Tel Aviv market.

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