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Israel has reduced support to agriculture since 1995, but the share of most production and trade distorting forms of support remains very high.
Moreover, the level of market price support is still subject to strong fluctuations as domestic prices for selected commodities remain regulated by the government and their adjustments are either delayed or delinked from changes on international markets.
- Since 1995, Israel has reduced support to agriculture to the level that is about half the OECD average. This fall was partly driven by progress in domestic policy reform and by lower border protection resulting from bilateral trade liberalisation agreements. However, higher prices on world markets in recent years also contributed to the reduction in the relative importance of support.
- While the level of support to agriculture has been falling, its composition remains trade and production distortive. This mostly reflects continued high border protection for agricultural commodities pushing domestic prices above international levels and a relatively high share of support to farm inputs.
- The level of support, in particular the market price support component, is subject to strong fluctuations as domestic prices for selected commodities are administered by the government rather than following market developments. Thus, their adjustment to world market prices is delayed or works in an opposite direction.
- There is a wide range of policy reforms that could be undertaken to further improve the efficiency of the Israeli agricultural sector and its international competitiveness at lower costs to taxpayers and consumers. In addition to structural reforms, such as diminishing administrative burdens on agricultural land market transactions, Israel could reduce and simplify import tariffs on agricultural products and could take further steps in easing the production planning system in the livestock sector.
- The environmental performance of agriculture has been mixed and can be further improved, in particular in water use efficiency. In this respect, meeting the agreement conditions between the government and farmers in 2006 to further increase water prices to cover average costs of water production by 2015 is of key importance.
Israel: OECD Producer Support Estimates (PSE)
Level and composition by support categories, 1986-2010
*The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli auuthorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
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