Agricultural Policy Monitoring and Evaluation 2026

16. Israel

Main findings

Support to agriculture

The share of producer support (Producer Support Estimate, PSE) in gross farm receipts amounted to 12.7% in 2023-25, about two percentage points below the OECD average and a significant reduction from the 2000-02 level of 19%. At the same time, the 88% share of potentially most-distorting forms of support remained twice as high as the OECD average, contributing to high domestic prices relative to world prices by 12%. This can be explained by the persistence of domestic price support driven by border measures, including tariff and kosher restrictions, in favour of several meat and poultry products, and selected food and vegetables.

Single Commodity Transfers (SCT) accounted for 86% of the PSE in 2023-25. Market price support is the main component of SCT: poultry, tomatoes, grapes, wheat, sheep meat, bananas, and eggs have the highest SCT levels, ranging between 3% and 44% of commodity gross farm receipts. Poultry producers benefit from the largest share of market price support, accounting for 44% of the gross farm receipts for this product in 2023-25.

Public expenditures for general services (General Services Support Estimate, GSSE) amounted to 2.2% of the value of agriculture production in 2023-25. This is down from 3% in 2000-02 and well below the OECD average. These expenditures focused mostly on agricultural innovation and hydrological infrastructure.

The total support to the sector (Total Support Estimate, TSE) relative to GDP declined from 0.59% in 2000-02 to 0.29% in 2023-25, about half the share of the OECD average.

Key policy changes in 2025-26

In response to the ongoing conflicts in the Middle East, Israel continues to implement emergency support measures to the agricultural sector in impacted regions, mostly in the southern and northern borders. The rehabilitation efforts are strongly embedded with investment in research, development, and implementation of innovative agricultural methods.

In December 2025 Israel signed a new Agreement on Trade in Agricultural Products (ATAP) with the United States (US), replacing the framework in place since 2024. Under the agreement, set to enter into force during 2026, Israel will eliminate import duties on about 300 US food and agricultural products, including meat, dairy, eggs, oils, vegetable, juices, and a range of fresh and frozen products. As of May 2026, the full text of the agreement has not been made public.

In July 2025 Israel began to implement its water tariff reform, gradually reducing the reclaimed water tariff from the Shafdan system. For freshwater, a 10-tier reduction scale was introduced based on the utilisation ratio of marginal water sources, including effluents, Shafdan water, and brackish water, with the lowest rates applied to regions lacking alternative water sources.

Assessment and recommendations

• In light of the ongoing regional conflicts, Israel should ensure that its efforts to limit the impact on the agricultural sector and domestic food supply are time-limited, tailored to the specific needs of farmers, transparent and easy to access. Close co-ordination with farmers in affected regions and ensuring the continuity of agricultural activities as much as possible under the given circumstances are key in this context. Ongoing efforts related to infrastructure and regional research and innovation also remain important.

• Gradually reform border protection for certain commodities together with technical barriers to trade. When considering tariff reductions and the adoption of new free trade agreements covering agricultural products, affected producers may require transitional assistance. These changes need to be well defined and transparent to reduce uncertainty and facilitate adjustment. The government could also support favourable ecosystem for local producers, by creating robust and short supply chains, as well as facilitating market opportunities for small to medium agro-food retail chains.

• Improve the sustainability and flexibility of Israel’s agriculture water management system by aligning water prices charged to farmers with marginal costs of supplying water, by facilitating further trading in water allocations among farmers and with other water users, and by using optional compensations for unused water quotas in severely dry years. This would help valorise highly skilled farmers, and further contribute to the sector’s adaptation to water risks.

• Increase investments in storage facilities for treated wastewater and the expansion of the supply of treated water to new areas to facilitate water access under growing water constraints while lowering water costs for farmers who currently lack access to treated water supplies. With the rising costs of climate disasters, procedures for the official declaration of drought years should be streamlined, alongside well-defined compensation schemes for irrigated farming, to ensure a sound planning of related fiscal costs.

• Strengthen the agricultural knowledge and innovation systems by enhancing the diffusion of innovation across the agricultural sector and to support widespread adoption of new technology. Despite Israel’s efforts to support innovation, total factor productivity (TFP) growth has only averaged just 1% per year in the last decade. Redirecting market distorting subsidies towards knowledge transfer services would help reinvigorate productivity growth.

• Upscale regional agri-environmental programmes and introduce targeted and result based policies and regulations that incentivise better environmental performance, particularly in the case of nitrogen emissions. Research and development (R&D), and agriculture extension activities should encourage sustainable productivity improvements.

Key indicators on agricultural support

Table 16.1. Israel: Estimates of support to agriculture

Million USD

	2000-02	2023-25	2023	2024	2025p
Total value of production (at farm gate)	3 336	10 544	10 312	10 242	11 079
of which: share of MPS commodities (%)	58.28	62.74	62.43	62.04	63.75
Total value of consumption (at farm gate)	3 635	15 034	12 436	13 715	18 951
Producer Support Estimate (PSE)	680	1 371	1 293	1 398	1 420
Support based on commodity output	485	1 149	1 095	1 190	1 163
Market price support¹	475	1 136	1 082	1 177	1 149
Positive market price support	489	1 182	1 136	1 250	1 159
Negative market price support	-14	-46	-54	-74	-11
Payments based on output	10	13	13	13	14
Payments based on input use	160	104	99	99	116
Based on variable input use	106	60	55	61	63
with input constraints	0	0	0	0	0
Based on fixed capital formation	42	29	24	25	39
with input constraints	0	0	0	0	0
Based on on-farm services	12	15	20	13	13
with input constraints	0	0	0	0	0
Payments based on current A/An/R/I, production required	25	111	95	104	134
Based on Receipts / Income	21	83	73	73	102
Based on Area planted / Animal numbers	4	28	22	30	32
with input constraints	0	0	0	0	0
Payments based on non-current A/An/R/I, production required	0	0	0	0	0
Payments based on non-current A/An/R/I, production not required	8	6	5	6	8
With variable payment rates	5	6	5	6	8
with commodity exceptions	0	0	0	0	0
With fixed payment rates	2	0	0	0	0
with commodity exceptions	0	0	0	0	0
Payments based on non-commodity criteria	0	0	0	0	0
Based on long-term resource retirement	0	0	0	0	0
Based on a specific non-commodity output	0	0	0	0	0
Based on other non-commodity criteria	0	0	0	0	0
Miscellaneous payments	1	0	0	0	0
Percentage PSE (%)	19.01	12.72	12.29	13.36	12.51
Producer NPC (coeff.)	1.18	1.12	1.12	1.13	1.12
Producer NAC (coeff.)	1.23	1.15	1.14	1.15	1.14
General Services Support Estimate (GSSE)	100	232	230	216	250
Agricultural knowledge and innovation system	51	111	111	101	120
Inspection and control	16	23	26	24	21
Development and maintenance of infrastructure	10	80	79	77	85
Marketing and promotion	11	1	1	2	1
Cost of public stockholding	12	10	9	9	11
Miscellaneous	0	7	4	4	12
Percentage GSSE (% of TSE)	12.96	14.46	15.09	13.38	14.96
Consumer Support Estimate (CSE)	-612	-1 815	-1 520	-1 949	-1 977
Transfers to producers from consumers	-446	-1 098	-1 061	-1 151	-1 081
Other transfers from consumers	-172	-721	-464	-803	-896
Transfers to consumers from taxpayers	0	0	0	0	0
Excess feed cost	5	3	5	4	0
Percentage CSE (%)	-16.59	-12.12	-12.22	-14.21	-10.43
Consumer NPC (coeff.)	1.20	1.14	1.14	1.17	1.12
Consumer NAC (coeff.)	1.20	1.14	1.14	1.17	1.12
Total Support Estimate (TSE)	780	1 602	1 523	1 614	1 670
Transfers from consumers	617	1 819	1 525	1 954	1 977
Transfers from taxpayers	335	505	462	463	590
Budget revenues	-172	-721	-464	-803	-896
Percentage TSE (% of GDP)	0.59	0.29	0.30	0.30	0.27
Total Budgetary Support Estimate (TBSE)	305	467	441	437	522
Percentage TBSE (% of GDP)	0.23	0.08	0.09	0.08	0.09
GDP deflator (2000-02 = 100)	100	153	147	155	157
Exchange rate (national currency per USD)	4.34	3.61	3.67	3.70	3.45

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient.

A/An/R/I: Area planted/Animal numbers/Receipts/Income.

1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for Israel are wheat, cotton, groundnuts, peanuts, tomatoes, peppers, potatoes, avocados, bananas, oranges, grapefruit, grapes, apples, carrots, easy peelers, dates, milk, beef and veal, sheep meat, poultry and eggs.

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. 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.

Source: OECD (2026), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

The government in Israel is involved in allocating key factors of production, including land, water and foreign labour. Land and water resources are almost entirely state-owned. Land is allocated to farmers for a nominal fee for a fixed duration and is not tradeable. Water is allocated to farmers through a quota system and all water consumption is metred and charged. The government also applies a yearly quota of visas for foreign workers with permits to work in agriculture. The overall quota is agreed by the government, and allocation of foreign workers to individual farmers is regulated, based on an application scheme assessing the type and level of production.

In recent years the government increased the overall foreign labour quota for agriculture, which currently stands at 70 000. Not all visas are used, due to factors such as security constraints that make it more difficult for foreign workers to arrive in Israel, as well as administrative bottlenecks. Saying that, since 2009 several programmes have been in place to reduce demand for foreign workers in the agricultural sector including by investment in machinery, as well as incentives for farmers to hire local labour.

Some commodities are supported by guaranteed prices or production quotas. Guaranteed prices for milk are based on the average cost of production and, while updated regularly, they diverge considerably from international markets price levels. Minimum prices are also guaranteed for local wheat, based on Kansas market price, adjusted for quality and transportation costs. Licensed importers can import wheat duty-free. The license is granted upon commitment to purchase a defined quota of locally grown wheat at the minimum guaranteed prices. Egg production quotas are applied along with border protection, including a changeable tariff-free imports quota, which forms the basis for calculating maximum retail prices.

Consumer price controls are applied for a range of basic food products, including bread, milk and selected dairy products, and salt. Egg and poultry producers in “peripheral areas” at the northern border receive payments based on output levels for egg producers and a mixture of payments decoupled from production and output payments for poultry producers (OECD, 2024[1]). Farmers who participate in the investment support scheme receive capital grants for investment as well as income tax exemptions and accelerated depreciation.

The Insurance Fund for Natural Risks in Agriculture (Kanat) provides subsidised insurance schemes. The government covers 80% of the cost of the total insurance premium in the case of multi-risk insurance schemes, and 35% in the case of the insurance schemes against natural hazards. Since 2010, subsidised revenue insurance is available for rain-fed wheat and barley to protect against a loss of revenue caused by price falls, low yields or both. Government support for that insurance scheme ranges between 40% and 80% of the total premium.

In 2015, a credit fund was launched to help establish new farms or expand small farms that specialise in crop production. Since 2023, eligibility for the credit fund has been expanded to cover also plant and livestock production. The government guarantees 85% of the value of bank loans to ensure that small farms with insufficient collateral can access loans.

The 7 October 2023 attacks and the war and regional conflicts that followed have had a major impact on the agricultural sector. The prolonged duration of the war continues to impose significant uncertainty and challenges, with damages to agricultural land and evacuation of agriculture-oriented communities, requiring budgetary reallocations. To support the rehabilitation of the southern region, the government established a dedicated administrative body, “Tkuma”, which, in co-ordination with MOAG, developed a five-year agricultural rehabilitation strategic plan for the region with a dedicated budget. The rehabilitation of the northern region is covered under a four-year plan and the “Tnufa LaTzafon” administration body.

Israel’s economy is characterised by a transparent and relatively open trade regime overall, but with persistent protection for certain agricultural products. Border tariff protection on agri-food products remains an important tool to support agricultural producers. Israel’s average applied most-favoured nation (MFN) tariff on agricultural goods (WTO definition) was 8.1% in 2023, down from 27.7% in 2012 but higher than the 1.3% average for non-agricultural goods (WTO, ITC and UNCTAD, 2024[2]).1 Israel has WTO tariff rate quotas (TRQs) for wheat, fats and oils, walnuts, prunes, maize, citrus juices, sheep meat and various dairy products (WTO, 2019[3]). Most of Israel’s preferential trade agreements include tariff-quota commitments for agricultural products, often with reduced out-of-quota tariffs. In total, Israel implements over 400 preferential TRQs for agricultural goods.

Israel maintains high or prohibitive tariffs for goods including selected dairy products and eggs, and low or zero tariffs for other agricultural commodities such as certain coarse grains, sugar, oilseed, coffee and tea. The tariff system on agriculture is complex, involving specific, compound or mixed duties (WTO, 2019[3]). In 2023, 18% of imported agricultural products were subjected to non-ad valorem rates, down from 20% in 2022, but higher than 3% for all goods (WTO, ITC and UNCTAD, 2024[2]). At the same time, more than 60% of agricultural imports entered Israel duty free, mostly through MFN access and preferential agreements (notably with the European Union and the United States). Some commodities, notable eggs, are subject to ad-hoc increase in the imports quota when demand exceeds local production.

Imported beef, poultry, mutton, and products thereof are required by law to be Kosher under the supervision of the Chief Rabbinate of Israel. While there is no similar legal requirement for other imported food and agricultural products, market incentives apply. Moreover, a “Kosher” label can only be authorised by the Chief Rabbinate of Israel. This creates a certain surcharge on imported food and agricultural products that are effectively bound by Kosher rules, such as milk and dairy products.

Research and development accounts for over 20% of the annual agricultural budget over the years. This includes a competitive research fund and an effective public Extension Service, which operates as a unit in the Ministry of Agriculture and centralises and disseminates innovative agricultural methods, while keeping direct contact with famers. This unique institutional framework has allowed Israel to become a leader in agricultural technology, particularly for farming in semi-arid and desert conditions. This in turn contributed to an average annual growth of 1% in the overall productivity of Israeli agriculture in the last decade.

Israel has no sector-specific target for climate change mitigation in agriculture, which accounts for less than 3% of the country’s total GHG emissions. Agriculture does not feature in Israel’s Nationally Determined Contribution or national mitigation plan. However, the government has helped farmers to develop and adopt agricultural practices and technical measures to reduce GHG emissions and adapt to climate change (OECD, 2022[4]).

Recent policy developments

Domestic policy developments in 2025-26

Policy measures adopted to cope with the effects of the evolving conflicts in the Middle East on the agricultural sector in the northern and southern regions

The Tkuma administration body, in charge of overseeing the rehabilitation of the southern region of Israel, which was the most hit area of the 7 October attacks, has focused over the past year on special incentives for innovation and infrastructures improvements in the region, through several main projects:

• Creation of a regional agri-innovation hub. With a total allocated budget of ILS 15.4 million (USD 4.46 million) for five years, the hub aims to connect farmers from the region with startups, research centres, government bodies and industry partners to promote the adoption of innovative agricultural practices in the region.

• Modernisation and automation of packing houses. A budget of ILS 50.4 million (USD 14.6 million) was allocated to the purchase of new machinery for automation of agriculture packing houses across seven companies and co-operatives, based on the crop and the scale of activity.

• Incentives for the relocation of livestock and poultry facilities. A budget of ILS 37 million (USD 10.7 million) was allocated to localities in the regions that seek to develop new residential neighbourhoods in lieu of existing dairy farms and poultry houses. The budget would be used for the relocation of such facilities.

In the northern region (area within 9 km from the northern border), the government, via resolution 3679, approved the plan to grant a total of ILS 418 million (USD 121 million) for the years 2026-2029 for direct support to the agricultural sector in the region. The support, managed by “Tnufa LaTzafon” administration body, is divided into six areas:

• Long-term capital investment. ILS 180 million (USD 52.1 million) to farmers for the purchase of new machinery and equipment, construction of greenhouses, rehabilitation of damaged orchards and cultivation areas, establishment of new plantations. The direct financial support is accompanied by professional training provided by the extension service in MOAG, to ensure rapid return on investment and improve the local value chain.

• Damage restoration and sustainable agriculture. ILS 123 million (USD 34.7 million) for restoration and conservation of agricultural lands, including maintenance of access roads and drainage systems, and a construction of a runoff regulation site. This chapter also includes initiatives to optimise the use of fertilisers and pesticides, and supporting optimal management of agricultural byproducts.

• R&D and agricultural innovation: ILS 71 million (USD 20.56 million) for the establishment of a research centre for advanced agricultural practices (named “Indoor Agriculture”). It will focus on development of new crop varieties adapted to climate change, as well as operation of demonstration sites and ag-tech pilot projects in collaboration with local ag-tech companies.

• Agricultural tourism: ILS 25 million (USD 7.24 million) for investments in infrastructure for agro-tourism initiatives.

• Planning of agricultural infrastructure: ILS 7 million (USD 2 million) for planning programmes to support agri-tourism initiatives in the areas, as well as for restoring poultry‑farming complexes and poultry farms who were abandoned during the war.

• Youth in agriculture: ILS 12 million (USD 3.47 million) to support training and education programmes for a new generation of farmers, including professional training for new farmers, agricultural training for youth, and the establishment of a new educational centre for agri-technology.

Several measures were taken to mobilise different groups of potential workers to alleviate the impact of the large drop in the agricultural labour force, in the context of the ongoing regional conflicts:

• To provide short-term labour inputs in labour-intensive subsectors, particularly horticulture and livestock production, MOAG is promoting agricultural volunteering over a five-year period (2025‑29), supported by a budget of ILS 93 million (USD 27 million) dedicated to logistical support and trainings for volunteers.

• In addition to the total quota of 70 000 foreign workers for agriculture, the majority of whom are from Thailand and, since 2023, Sri Lanka, Israel signed a bilateral agreement with Cambodia to allow for additional workers to work in Israel’s agricultural sector.

• MOAG has also launched a campaign to strengthen local youth engagement in agriculture, via varied training programmes offered by MOAG’s Extension Service.2

Following the war with Iran in June 2025, and to support specific sectorial needs, MOAG administers compensation to farmers who have been impacted by the conflict with Iran that began in June 2025, in lieu of the usual channel of property tax claims via the Taxation authority. ILS 10 million (USD 2.9 million) was made available for farmers who experienced a decline in turnover of more than 25% and at least ILS 20 000 (USD 5 800) as result of the war with Iran in June 2025. Compensation was capped at 80% of the margin loss and up to ILS 200 000 (USD 58 000) per farmer.

Research and development

Funding for “model farms”, which are commercial farms used to implement advanced or emerging agricultural technologies and practices at scale and develop practical knowledge, increased in 2025 with additional ILS 26 million (USD 7.5 million) for establishing ten new farms, expected to be operational by the end of 2026.

Sector specific incentives were also allocated to individual researchers conducting research initiatives aimed at improving the quantity and quality of yields in selected agricultural sectors. For tomato and almond, budget allocations of ILS 15 million (USD 4.3 million) and ILS 6 million (USD 1.7 million), respectively, were granted over a five-year period. In addition, a budget allocation of ILS 6 million (USD 1.7 million) was granted over a three-year period for research in the wheat and chickpea sectors.

Water management

The year 2025 was announced as a severe drought year. In the northern region rainfall reached only 65% of the multi-annual average, while the national rainfall stood at 85%. The extreme aridity of the soil prevented effective absorption of the limited rainfall, exacerbating the crisis. In light of the drought, water allocation to farmers in the north was reduced by 25%, a measure for which agricultural producers were largely unprepared. In July 2025 the Minister of Finance officially signed a decree defining specific “drought-affected areas”, which allows for eligible farmers to file compensation claims under the property tax and Compensation Fund Law. The drought compensation scheme applies only to dryland farming.

In July 2025 Israel began to implement its water tariff reform, with the gradual decrease of reclaimed water tariff from the Shafdan system from ILS 1.464/m³ to ILS 1.44/m³ in July 2025, and further to ILS 1.38/m³ in January 2026, with a target rate of ILS 1.15/m³ by 2028. For freshwater, a weighted average reference price was introduced at ILS 2.93/m³, adjusted to ILS 3.02/m³ in January 2026. For freshwater, a 10-tier reduction scale was introduced based on the utilisation ratio of marginal water sources, including recycled effluents, Shafdan water, and brackish water, with the lowest rates applied to regions lacking alternative water sources.

Israel continues to improve its water supply infrastructures, with the “Reverse Water Carrier” beginning to operate in a pilot mode. The system is designed to convey desalinated seawater to the freshwater Sea of Galilee to maintain its operational level.

Trade policy developments in 2025-26

The Plant Protection and Inspection Services (PPIS) continued to enhance the issuance and reception of electronic phytosanitary certificates. In 2025, PPIS contributed for the first time to the IPPC e-Phyto solution, in line with the decision made by the Commission on Phytosanitary Measures in April 2024 (CPM‑18).

In December 2025 Israel signed a new Agreement on Trade in Agricultural Products (ATAP) with the United States, replacing the previous framework in place since 2024. Under the agreement, set to enter into force during 2026, Israel will eliminate import duties on about 300 US food and agricultural products, including meat, dairy, eggs, oils, vegetable, juices, and a range of fresh and frozen products. As of May 2026, the full text of the agreement has not been made public.

A new free trade agreement (FTA) with Costa Rica was signed in December 2025 and is pending approval. Negotiations on new FTAs with the People’s Republic of China and India, as well as a new comprehensive economic partnership agreement (CEPA) with Bahrain, are at varying stages of progress. Revised FTA with MERCOSUR is also under negotiation.

Policy context

Key economic and agricultural statistics

Israel’s economy is relatively small but has been growing rapidly and its GDP per capita more than doubled over the last two decades, even as the population increased by 66%. The share of agriculture in total employment has been halved to under 1%, while the share of agriculture in GDP declined to 1.4% during the same period.

Israel is unique among developed countries in that land and water resources are nearly all state-owned. Rural communities, principally the kibbutz and moshav, dominate agricultural production, accounting for about 80% of agricultural output. Partly due to this structure, and with limited land area, total agricultural area has moderately decreased over the past 20 years. While the agricultural sector is relatively diversified, most of the value of production and exports is generated by high value fruits and vegetables.

Table 16.2. Israel: Contextual indicators

	Israel		International comparison
	2000*	2024*	2000*	2024*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	162	573	0.4%	0.3%
Population (million)	6	10	0.1%	0.2%
Land area (thousand km2)	22	22	0.0%	0.0%
Agricultural area (AA) (thousand ha)	511	427	0.0%	0.0%
			All countries1
Population density (inhabitants/km2)	291	434	52	64
GDP per capita (USD in PPPs)	25 154	57 453	9 508	31 740
Trade as % of GDP	24.6	14.0	12.3	15.0
Agriculture in the economy			All countries1
Agriculture in GDP (%)	1.7	1.4	3.0	3.6
Agriculture share in employment (%)	2.2	0.8	-	-
Agro-food exports (% of total exports)	3.1	4.8	6.4	8.3
Agro-food imports (% of total imports)	5.3	9.6	6.1	7.5
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	54.7	56.5	62.1	60.4
Livestock in total agricultural production (%)	45.3	43.5	37.9	39.6
Share of arable land in AA (%)	66.3	42.0	33.0	34.0

Note: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; International Labour Organisation (ILO); UN Comtrade; World Bank, WDI; FAO database and national data.

Israel has maintained robust GDP growth exceeding 3% per year on average and close to full employment from 2019 to 2024. Its economy contracted in 2020 due to the COVID-19 pandemic and associated lockdown measures, but recovered quickly in 2021-22, while unemployment remained relatively low. At the same time inflation went up in 2021 to reach 4% in 2022 and 2023 after multiple years of fluctuations around zero. The 7 October 2023 terrorist attacks and the regional wars the followed it heavily influenced the economy. With supply constraints, the recovery was quickly followed by a pick-up in inflation up to 3.5% in September 2024, which have eased back to 3% in 2025. Despite an increase after October 2023, unemployment remains below its long-term trend (Figure 16.4).

Israel is a consistent net-importer of agro-food products, and the agriculture trade balance continued to decline in 2024, with the value of imports of mainly processed food products exceeding the value of exports of mainly primary products for consumption (Figure 16.5). This gradual shift since 2022 may be partly influenced by the relative appreciation of the Israeli currency compared to the US dollar and the Euro between 2015-21. The year 2024 saw a notable increase in the import of agricultural products. Nevertheless, this was more notable during the first months of the year, partly driven by the consequences of the war in the region following the 7 October attacks and its immediate impact on the agricultural sector and domestic supply.

With its profound investments in agriculture innovation, the overall productivity of Israeli agriculture, measured by total factor productivity (TFP), has been growing between 2014-23, accounting for 1% of agricultural annual growth in Israel, down from 2.3% in the years 1991-2000, but above the 0.7% of the world’s average. The average annual agricultural output growth remains below the world’s average, mainly due to a decreased use in inputs, particularly land and use of farm machinery, and intermediate inputs such as animal feed. Average annual growth reached to 1% (Figure 16.6).

Beyond a substantial reduction in freshwater use, the environmental performance of Israel’s agriculture has been mixed since 2000. Despite less than 5% increase in irrigation area, agriculture’s share of freshwater abstraction has declined by 10 percentage-points, largely due to changes in water management, encompassing the extensive use of recycled water, efficient irrigation technologies and water demand policies. Nitrogen surplus has slightly declined over time, possibly due to the decreased use of fertilisers, but still maintains a level over three times the OECD average level, while Phosphorus balance declined somewhat but remains excessively high; close to sixteen times the OECD average (Table 16.3).

Table 16.3. Israel: Productivity and environmental indicators

	Israel		International comparison
	1991-2000	2014-23	1991-2000	2014-23
			World
TFP annual growth rate (%)	2.3%	1.0%	1.8%	0.8%
			OECD average
Environmental indicators	2000*	2024*	2000*	2024*
Nitrogen balance, kg/ha	115.0	111.2	32.3	29.0
Phosphorus balance, kg/ha	34.3	33.5	3.3	2.3
Agriculture share of total energy use (%)	1.2	1.0	1.7	2.0
Agriculture share of GHG emissions (%)	3.4	3.1	8.7	10.3
Share of irrigated land in AA (%)	35.7	42.0	-	-
Share of agriculture in water abstractions (%)	40.6	30.5	46.1	47.7
Water stress indicator	61.0	49.0	..	..

Note: * or closest available year.

1. Share of agriculture fresh water abstraction in total fresh water abstraction.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Historical trends in agricultural policies

Agriculture policy in Israel during its early years was driven by three main factors. First, the state needed to settle undeveloped areas of the country for geopolitical security. Second it wanted to avoid food shortages, due in part to an inability to import agricultural products from surrounding countries. Third, it needed to provide employment and livelihoods for new immigrants to Israel (OECD, 2010[5]). Its main objectives are to improve food supply and self-sufficiency in agricultural products that can be produced locally, expand existing export markets, and maintain the rural population, particularly in the peripheral areas.

Over the past 30 years, Israel has reformed the way it provides subsidies, reduced central planning of agricultural industries, and changed the way production quotas, price controls and import protection are implemented. Major reforms in the agricultural sector began in the early 1990s with trade and market reforms to limit the role of the state in agricultural markets. Reforms continued into the 2000s with a focus on competitiveness and gradual efforts to limit interventions in the dairy and beef sectors. Over the course of 2021 and 2022 the government renewed its impetus to reform in order to lower food prices. In particular, in March 2022, a schedule of tariff reduction was approved for selected fruits and vegetables, in parallel to agreements on egg, dairy and beef, but without direct support to affected agricultural sectors. However, the plans for further reduction were halted in December 2023. Since the 7 October 2023 terrorist attacks and the regional conflicts that followed, the government has undertaken a broad set of measures to cope with the damages, and limit the effects on agricultural activities in affected areas (Table 16.4).

Table 16.4. Israel: Agricultural policy trends

Period	Framework	Changes in agricultural policies
1985-1990	Trade liberalisation General economic reforms	Economic stabilisation programme Privatisation of state-owned enterprises Dismantling of state grain trading (imports) agency Dismantling of regional co-operatives Debt restructuring and write offs Fruit and vegetable production quotas abolished
1991-1994	Market and trade reforms (export liberalisation)	Gradual abolition of state monopoly of fruits and vegetables exports State meat trading replaced with the Kosher Meat Import Law Consumer price controls removed (except milk, eggs and flour) Reform of agricultural production and marketing boards (diminishing functions) Changes in water pricing Uruguay Round Agricultural Agreement
1995-1999	Trade reforms (import liberalisation)	Non-tariff barriers removed and ceiling binding Broiler sector reformed Reduction of 40% of freshwater use for agriculture FTAs signed
2000- 2010	Focus on competitiveness	Foreign exchange controls abolished Dairy sector reform Abolished minimum prices and surplus removal for fruit and vegetables Abolition of broiler production quotas Farmers’ agreement on water charges and water supplies FTAs signed
2010-2023	Continued efforts to reform key sectors	Reform agreement in the beef sector opening import quotas Dairy sector planning law 2011, second dairy agreement in 2022 Egg sector agreement and reform Measures to improve the agriculture marketing systems Water price reforms for equity reasons Tariff reductions for specific fruits and vegetables from 2022-2023 (stopped in 2024) FTAs signed, use of electronic instruments to facilitate import inspections
2023-2025	Emergency response measures	Emergency measures to limit the effects of the evolving conflicts in the Middle East on agricultural activities in affected areas. Reallocations of budgetary transfers to support rehabilitation of agricultural sector in affected regions.

Over the last 20 years, the trend in producer support in Israel, expressed as percentage of gross farm receipts, unrolled in four main phases: (1) a steady reduction until the food crisis of 2007-08; (2) a rapid rebound in support after this crisis, leading to a plateau in 2008-11; then (3) a fall and new increase in support from 2012-16; and (4) fluctuating levels since 2016. Fluctuation in agricultural support are largely attributed to market price support (and to input support early-on corresponding to changes in water price support), as budgetary support to producers remained relatively stable. The market price support results mainly from guaranteed minimum prices and import tariffs, while budgetary support is mostly provided based on current production and input use (Figure 16.7).

References

[1] OECD (2024), Israel: Estimates of support to agriculture, https://www.oecd.org/content/dam/oecd/en/topics/policy-issues/agricultural-policy-monitoring/psecse-mon2024-cookbooks/cookbook-isr-2024.pdf.

[4] OECD (2022), “Israel”, in Agricultural Policy Monitoring and Evaluation 2022: Reforming Agricultural Policies for Climate Change Mitigation, OECD Publishing, Paris, https://doi.org/10.1787/7f4542bf-en.

[5] OECD (2010), OECD Review of Agricultural Policies: Israel 2010, OECD Review of Agricultural Policies, OECD Publishing, Paris, https://doi.org/10.1787/9789264079397-en.

[3] WTO (2019), Trade Policy Review: Israel 2018, Trade Policy Reviews, World Trade Organization, Geneva, https://doi.org/10.30875/5b4abf07-en.

[2] WTO, ITC and UNCTAD (2024), World Tariff Profiles 2024, https://www.wto.org/english/res_e/booksp_e/world_tariff_profiles24_e.pdf.

Notes

← 1.  Data for more recent years are not available.

← 2.  The Extension Service is a unit under MOAG, in charge of producing agricultural knowledge and disseminating it to the agricultural public in Israel, while training and guiding the agricultural public to meet the main task of increasing productivity for the agricultural sector. The unit also identifies challenges faced by farmers at the farm level and, in collaboration with research institutions, works to develop practical and effective solutions. It further aims at developing integrative knowledge infrastructure that combines applied research and training and provide it to farmers.