Agricultural Policy Monitoring and Evaluation 2025

16. Israel

Main findings

Support to agriculture

The share of producer support (Producer Support Estimate, PSE) in gross farm receipts amounted to 13.3% in 2022-24, slightly above the OECD average but a significant reduction from the 2000-02 level of 19%. At the same time, the 91% share of potentially most-distorting forms of support remained twice as high as the OECD average. This can be explained by the persistence of domestic price support driven by border measures in favour of several meat and dairy products. On average, border and price interventions raised producer prices by 12% relative to international prices in 2022-24.

Single Commodity Transfers (SCT) represented 86% of the PSE in 2022-24. Market price support is the main component of SCT: poultry, tomatoes, grapes, wheat, sheep meat, milk and eggs have the highest share of SCT representing between 4% and 47% of commodity gross farm receipts. Poultry producers benefit from the largest share of market price support, accounting for 46.5% of the total producer support in 2022-24.

The share of the General Services Support Estimate (GSSE) in total support amounted to 2.3% of the value of agricultural production in 2022-24, below the OECD average and a decline from 2000-02. These expenditures focused mostly on agricultural innovation and hydrological infrastructure. The Total Support Estimate (TSE) amounted to 0.31% of Gross Domestic Product (GDP) in 2022-24, half the share of the OECD average, and down from 0.59% at the beginning of the century.

Key recent policy changes

The Tkuma Administration, responsible for the recovery and rehabilitation of areas affected by the 7 October attacks that are located within 7 km of the Gaza strip, invested a large portion of its annual budget for 2024 in the recovery and development of the region’s agricultural sector. Beyond emergency responses, this involved investments in agricultural infrastructure development, such as irrigation and waste treatment facilities, aimed at increasing efficiency, as well as implementation of “Model Farms” to examine and demonstrate advanced and innovative farming methods.

The Ministry of Agriculture and Food Security (MOAG), in co-operation with additional ministries, has developed a strategic plan to reinforce food security at the national level. The plan outlines measures to strengthen the resilience of the national food supply, with a focus on increasing local agricultural production and investing in research and development. For contributing to these efforts, in March 2025 Israel passed a law to reduce water prices for the agricultural sector by changing the method used for calculating water prices, which could lower the cost to farmers of treated wastewater by 22% within three years.

The system of permits for foreign workers to agriculture was reformed, increasing the yearly quota from 30 000 to 70 000 workers. Alongside increasing workforce availability, the government also eliminated the ministerial allocation of foreign work permits for individual farmers.

Assessment and recommendations

• Policies are in place to alleviate the impact of damages to farmers and to the agricultural sector on agricultural production and food supply chains due to the 7 October 2023 attacks and the evolving conflicts in the Middle East. These efforts, which some are currently limited to areas up to 7 km from the Gaza strip, should be tailored, targeted, and temporary. The government should avoid shifting budget from the general agricultural sector to affected areas without appropriate compensation. It could also consider an extension of recovery support to farmers in the southern region beyond the 7 km limit, which is based on obsolete assumptions regarding what areas near Gaza strip may be affected.

• High tariffs for goods such as dairy products, eggs and certain fruits and vegetables could be gradually removed, while being accompanied by transitional assistance for affected producers. Tariff reform requires transparency and a clear policy approach to reduce uncertainty and accelerate adjustment. Meanwhile, the government could facilitate favourable ecosystem for local producers, creating robust and short supply chains, as well as supporting the market of small to medium agro-food retail chains.

• Investing in water infrastructure can help respond to extreme water risks in a changing climate. Expanding the supply of treated water to new areas can increase the utilisation rate of this important resource and reduce water costs for farmers who do not currently have access to treated water supplies. Further investing in storage facilities for treated wastewater remains crucial. Providing the physical and legal infrastructure needed to facilitate water trading among users will also increase water use efficiency.

• Limited production growth from 2013 to 2022 was driven by rising input use rather than innovation, as measured by Total Factor Productivity (TFP). Although a portion of this budgetary transfer is marked as temporary and related to the evolving conflicts in the region, it is not sustainable in the long term. Additional funding to promote innovation could be made available by redirecting market-distorting subsidies – which amounted to about ILS 280 million (USD 76 million) annually during 2022-24 – towards agriculture knowledge and information systems for sustainable productivity growth. Enhanced international co-operation could bring further benefits, including by sharing the costs for research and development with partners, and by sharing Israel’s advanced knowledge and climate adaptation methods with regional associates.

• More effort is needed to limit the sector’s greenhouse gas (GHG) emissions and reduce the high nutrient surpluses associated with agriculture production. Regional agri-environmental programmes should be scaled up and complemented by 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.

Development of support to agriculture

Table 16.1. Israel: Estimates of support to agriculture

Million USD

	2000-02	2022-24	2022	2023	2024p
Total value of production (at farm gate)	3 336	10 308	10 419	10 312	10 195
of which: share of MPS commodities (%)	58.28	61.35	60.60	62.00	61.44
Total value of consumption (at farm gate)	3 635	12 593	11 839	11 937	14 002
Producer Support Estimate (PSE)	681	1 400	1 366	1 347	1 486
Support based on commodity output	487	1 188	1 137	1 148	1 278
Market price support¹	477	1 173	1 120	1 135	1 265
Positive market price support	491	1 203	1 123	1 185	1 300
Negative market price support	-14	-29	-3	-50	-35
Payments based on output	10	14	17	13	13
Payments based on input use	160	101	106	99	99
Based on variable input use	106	62	70	55	61
with input constraints	0	0	0	0	0
Based on fixed capital formation	42	21	13	24	25
with input constraints	0	0	0	0	0
Based on on-farm services	12	19	23	20	13
with input constraints	0	0	0	0	0
Payments based on current A/An/R/I, production required	25	105	116	95	104
Based on Receipts / Income	21	80	93	73	73
Based on Area planted / Animal numbers	4	25	23	22	30
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	7	5	6
With variable payment rates	5	6	7	5	6
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 (%)	19.05	13.30	12.81	12.80	14.27
Producer NPC (coeff.)	1.18	1.13	1.12	1.13	1.15
Producer NAC (coeff.)	1.24	1.15	1.15	1.15	1.17
General Services Support Estimate (GSSE)	100	238	267	230	216
Agricultural knowledge and innovation system	51	108	113	111	101
Inspection and control	16	28	33	26	24
Development and maintenance of infrastructure	10	86	102	79	77
Marketing and promotion	11	1	1	1	2
Cost of public stockholding	12	10	11	9	9
Miscellaneous	0	5	8	4	4
Percentage GSSE (% of TSE)	12.94	14.46	16.37	14.58	12.68
Consumer Support Estimate (CSE)	-613	-1 885	-1 330	-1 854	-2 472
Transfers to producers from consumers	-447	-1 157	-1 081	-1 135	-1 255
Other transfers from consumers	-172	-730	-254	-719	-1 217
Transfers to consumers from taxpayers	0	0	0	0	0
Excess feed cost	5	2	5	0	0
Percentage CSE (%)	-16.63	-15.08	-11.23	-15.53	-17.66
Consumer NPC (coeff.)	1.20	1.18	1.13	1.18	1.21
Consumer NAC (coeff.)	1.20	1.18	1.13	1.18	1.21
Total Support Estimate (TSE)	782	1 637	1 633	1 577	1 702
Transfers from consumers	618	1 887	1 335	1 854	2 472
Transfers from taxpayers	335	481	553	442	448
Budget revenues	-172	-730	-254	-719	-1 217
Percentage TSE (% of GDP)	0.59	0.31	0.31	0.31	0.31
Total Budgetary Support Estimate (TBSE)	305	464	514	441	437
Percentage TBSE (% of GDP)	0.23	0.09	0.10	0.09	0.08
GDP deflator (2000-02 = 100)	100	147	140	146	154
Exchange rate (national currency per USD)	4.34	3.58	3.36	3.67	3.70

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 (2025), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

Main policy instruments

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; 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. Both the overall quota and the allocation of workers to individual farmers are regulated. After increasing the new visas between 2021 and 2023, the total number of foreign worker visas under quotas reached about 31 000 in 2023. In July 2024 the government decided to increase the quota to 70 000. In practice, not all visas are used due to varied issues.

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 the prices level of international markets. Minimum prices are also guaranteed for local wheat, based on Kansas market price, adjusted for quality and transportation costs. Licenced importers can import wheat duty-free. The license is granted upon commitment to purchase a defined quota of local-grown wheat at the minimum guaranteed prices. Egg production quotas are applied along with border protection. This 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. Since 2009, an investment support programme has been in place to reduce demand for foreign workers in the agricultural sector, with incentives for farmers to hire local labour. The budget for this programme has dropped in recent years, but increased in response to the war.

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, 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.

In 2015, a credit fund was launched to help establish new farms or expend small farms that specialise in crop production. The government guarantees 85% of the value of bank loans to ensure that small farms with insufficient collateral can access loans.

Israel’s economy is characterised by a transparent and open trade regime overall. However, 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]). 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 250 preferential TRQs for agricultural goods.

Israel’s tariff profile for agricultural products remains uneven. There are high or prohibitive tariffs for goods such as selected dairy products and eggs, and low or zero tariffs for other commodities such as certain coarse grains, sugar, oilseed, coffee and tea. The tariff system on agriculture is complicated, 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]). The 2022 reform to cut tariffs for an extensive list of fruits and vegetables was halted at the end of 2023 (OECD, 2023[4]), after partial implementation.1 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). Except for beef, poultry, mutton, and products thereof, there is no legal requirement that imported food and agricultural products be kosher.

Research and development accounts for over 20% of the annual agricultural budget. This includes a competitive research fund and an effective public extension service, which have allowed Israel to become a leader in agricultural technology, particularly for farming in semi-arid and desert conditions.

While it has been actively supporting climate change adaptation in agriculture (see sections below), Israel has no sector-specific target for climate change mitigation in agriculture, which accounts for a limited share of the country’s total GHG emissions (2.8% in 2022). 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 in addition to generating other environmental and economic benefits (OECD, 2022[5]).

Policies for trade and sustainability in agro-food markets

Sustainability plans for the agricultural sector are embedded in Israel’s new food security strategy (see section below). The strategy includes an analysis of international and bilateral trade co-operation to enhance food security. It also holds a key objective to reduce food losses across various stages of the agro-food supply chain as part of a more holistic and environmentally sustainable approach.

In 2024, the Ministry of Agriculture and Food Security (MOAG)2 initiated a climate-change risk and opportunity assessment exercise for the agricultural sector. It focuses on ten key products: wheat, chickpea, potato, carrot, banana, olive, avocado, apple, citrus, and dairy milk. The assessment further includes the impact of climate change on the production of key imported agricultural products. This would be the first time the government conducts a climate change risk assessment report for Israel’s agricultural sector, and it is expected to be completed by mid-2025.

A number of trade agreements to which Israel is a party contain provisions on environment protection. While these restrictions apply to the agricultural sector, there are no specific environmental or sustainability provisions on trade in agricultural products. For example:

• The modernised Canada-Israel FTA (signed in 2018, entered into force in 2019) contains a chapter on trade and environment.

• Colombia-Israel FTA (signed in 2013, entered into force in 2020) contains provisions on environmental protection.

• The EU-Israel Association Agreement (signed in 1995, entered into force in 2000) includes environmental protection measures (article 42).

Recent policy developments

Domestic policy developments in 2024-25

Policy measures to cope with the impacts of the 7 October attacks and limit the effect of the evolving conflicts in the Middle East on the agricultural sector

The 7 October 2023 attacks and the war that followed it throughout 2024 have had a major effect on the agricultural sector. The prolonged duration of the war continues to impose significant uncertainty and challenges on the agricultural sector, with damages to agricultural land and evacuation of agricultural oriented communities.

The southern region in Israel, which was the most hit area of the 7 October 2023 attacks, is Israel’s most important region for vegetables, mostly tomatoes, potatoes and wheat. It remained highly vulnerable to the implications of the evolving conflicts in the Middle East. For overseeing the southern region’s recovery and rehabilitation, with a focus on the area within 0-7 kilometres from the Gaza strip, the government established a dedicated administrative body, the Tkuma Directorate.

The agriculture department in Tkuma Directorate, in co-ordination with MOAG, developed a five-year agricultural rehabilitation strategic plan for the region. A total of ILS 481 million (USD 130 million) drawn from regional and federal budgets has been allocated to the plan, of which ILS 444 million (USD 120 million) has been used in 2024. The main pillars of the plan:

• Agri-tech innovation – with a total budget of ILS 66 million (USD 17.8 million), this pillar aims at fostering innovative, research and development programmes in the region, including support to AgTech companies.

• Attracting young farmers – a budget of ILS 28 million (USD 7.5 million) has been allocated to provide incentives for new farmers in the region, and for facilitating integration of young farmers into existing farms.

• Capital investment – direct investment of ILS 261 million (USD 70.5 million) in agricultural infrastructure in the region, including for constructing greenhouses, supporting mechanisation, and for dairy farms, orchards, and local packing facilities.

Other domestic policy developments

Food security

In June 2024, the government renamed the Ministry of Agriculture and Rural Development (MARD) to the Ministry of Agriculture and Food Security (MOAG), a change that reflects a shift in governmental priorities.

The government announced in November 2024 the development of a cross-ministerial National Plan for Food Security 2050, led by MOAG. This plan outlines key policies and initiatives to foster local agricultural production over the next 25 years, and takes means to ensure resilient food supply. As part of the efforts to increase agro-food security, the government set a goal to achieve a 33% increase in local agricultural production within 10 years, while taking into account climate change mitigation and adaptation policies, and reducing food loss and waste. The key initiatives include:

• Reducing irrigation costs to farmers by lowering treated wastewater tariffs, improving treated wastewater quality and availability, and upgrading treated water plants and pipelines.

• Expanding agricultural land availability through the National Outline Plan for Agricultural land.

• Reducing non-wage labour costs to farmers, such as taxes and permits associated with foreign workers. Separately, developing a programme to encourage young local population to participate in agriculture.

• Strengthening agricultural research and development by using advanced research infrastructure and increasing the revenue of Volcani Institute3 through commercialisation of its developments.

Indeed, in March 2025 the Knesset agreed on a law to reduce the price of treated wastewater for agriculture supplied by the Shafdan Wastewater Treatment Plant. In 2021, the Shafdan, which distributes water only to the western Negev region, accounted for 16.7% of total consumption of water for agriculture (35% of total wastewater for agriculture). The law also includes a 10-year investment plan for improvement of wastewater treatment infrastructures, with a total budget of ILS 3.5 billion (USD 0.95 billion). The budget aims at expanding regional capacity to handle growing volume of treated water, improving storage infrastructures, and building or extending pipeline to distribute treated water to additional areas.

In the last quarter of 2024, a new law was anchored for requiring regular reporting of wheat and animal feed stocks from all involved parties. It aims to create real-time inventory data to improve Israel’s food security and crisis preparedness.

Sector specific reforms

To limit the effect on the production of olive oil after tariffs were reduced by 90% in October 2023, the government allocated budgetary support to olive growers. ILS 39.6 million (USD 10.7 million) was allocated in 2024, with plans to allocate ILS 30 million (USD 8.1 million) annually thereafter. The support is given to farmers based on individual request, based on past production and acreage. Farmers who use irrigation, rather than relying on rainwater, are eligible for higher support per acre.

Following challenges in the imports of tomatoes due to consequences of the war, in August 2024 the government introduced direct support to tomato growers. A total of ILS 12 million (USD 3.2 million) was allocated to tomato growers who increased their supply to the local market in third quarter of 2024 compared to previous years. New farmers who meet a minimum production level in 2024 were also eligible.

ILS 10 million (USD 2.7 million) was also earmarked to enhance productivity for growers of tomatoes, cucumbers, capsicums, and eggplants. It is a direct support given on an individual request basis for farmers who grow one of the upper mentioned crops. The amount is then calculated based on the increased of greenhouse area, and for farmers using selected growth technologies which are aimed at productivity improvement.

In February 2025, the government finalised the “Beehive stationing, Pollination, and Honey Production Law” (hereinafter: The Honey Law). The new law imposed new regulation on the beekeeping sector, including:

• Allocation of designated areas for beehives placement according to agricultural and pollination needs.

• Clear regulation to prevent beehive overload and ensure bee health.

• Clear regulation on the co-operation between beekeepers and farmers for providing pollination services.

• Increased oversight on positioning beehives in sensitive agricultural areas.

The latest tranche of support for the egg sector was announced in August 2024. This is done as part of the interministerial agreement with the egg growers’ organisation which includes the elimination of production quotas by June 2033, as well as upgrade of egg-laying poultry systems and transition to cage free coops (OECD, 2024[6]). ILS 20 million (USD 5.4 million) was available for investment support to upgrade coops’ infrastructure such as drainage, access roads, fence, pipelines. This support is only available for co-operatives in the egg sectors with a minimum production quota of 70 000 laying hens. Additional ILS 80 million (USD 21.6 million) was available in 2024 for egg growers’ investment in cage-free coops. This cost-sharing grant, covers up to 50% of the investment, is calculated based on the number of hens.

In December 2024 the Ministry of Finance reverted a tariff reform that was in place since 2014 for two agricultural products, soy and sunflower oil cake, used for animal feed. Accordingly, it increases tariff rates from 4% to 7.5% for soy oil cake, and from 2% to 2.8% for sunflower oil cake to protect local production.

Research and development

The government has established a comprehensive support framework to promote agricultural innovation and agri-tech in the Golan Heights in the northern region. With a budget of ILS 2.6 million (USD 700 000), it will cover up to 60% if approved investments of local Golan Heights farmers in new technologies, new crops, resource efficiency, or used of evidence-based knowledge.

Additional ILS 16 million (USD 4.3 million) was available as a caped, cost-sharing grant for purchasing agricultural machinery from a list of approved technologies aims at increasing production. The share of support is made higher for individual farmers based in the northern border of Israel, as well as for the purchase of Israeli-made machinery or technologies.

As part of government decision 1699, which addresses the recovery of the Tkuma Region, ILS 12 million (USD 3.2 million) was allocated to promote integration of advanced agricultural technologies and knowledge in the area by establishing four “Model Farms”. Those will be example units, built in existing commercial farms, which will implement advanced agricultural techniques. The project will be used to monitor and evaluate new practices and developments in agriculture and to showcase the advantages of new growing techniques to farmers, thereby accelerating adoption.

Sustainability

In 2024, MOAG and the Ministry of Environmental Protection announced an ILS 42.5 million (USD 11.5 million) allocation for the years 2024-26 for investments in treatment facilities for agricultural waste. It aims at individuals, co-operatives, corporations, or local authorities who are dealing with agricultural waste. Only projects that are not in risk of causing environmental damage, according to the Ministry of Environmental Protection decision, may be considered. Sustainability criteria, such as distance from the waste source, and recycling methods are associated with higher share of support. This programme is part of a national programme to regulate agricultural waste management.

Since 2022, direct support has been provided to farmers who transition from conventional practices to soil conservation and sustainable agriculture practices. The programme’s focus is on promoting soil health, minimising soil disturbance, fostering biological diversity, and enhancing the microclimate to strengthen the resilience of agricultural production and food security. In 2024, ILS 14 million (USD 3.8 million) was transferred to farmers as part of this support programme.

In 2024, a new regional sustainability project was completed. The project provides regional financial support to promote integrated pest management while reducing pesticide use, and currently covering 3 000 ha.

Planning, insurance, guaranteed fund and regulation requirements

Israel’s agricultural workforce is based on foreign workers on long-term visas and Palestinian workers. Many of the foreign workers fled Israel at the outbreak of the war, while the entry of Palestinian workers has been prohibited. During 2024, 25 000 foreign workers entered Israel, mostly from Thailand. In 2024 the government increased the quota for agricultural foreign workers from 30 000 to 70 000. With this decision, MOAG also announced the elimination of governmental allocation of foreign workers quotas per farmer, which was in place due to workforce shortage, announcing that farmers could now request quotas according to their production needs. In practice, farmers need to request quotas for foreign workers through a digital governmental platform. The request is then assessed based on cumulative conditions of acreage and production.

In 2024, a new insurance policy became available under the agricultural insurance system (Kanat) to compensate for losses resulting from a bird flu outbreak. The government covered 80% of the premium cost and offered reinsurance for the policy.

Land is allocated to farmers for a nominal fee for a fixed duration and is not tradeable. At the beginning of 2025, the Authority for Planning the Agricultural and Rural Development, in charge of agricultural land allocation, was returned to MOAG after two years. The Authority represents MOAG in Israel Land Authority which manages most of the lands in Israel, as well as allocating permits for building additions, leases and lease of agricultural land.

Water management

Water allocations were reduced in 2024 due to severe drought, officially declared in July 2025, with average precipitation reaching only 51% of the multi-year average. The most significant impact observed in the north, northeast, and the Negev regions. In light of the low rainfall, water allocation to farmers in the north were reduced by 22%. If the precipitation for the year 2025 continues to be below the multi-year average, the amount of water for farmers will be decreased proportionally. With prediction for the year 2025-2026 to be exceptionally dry, the reduction is expected to continue with further 22% and 31% reduction in the North and Central region respectively.

Israel continues to improve its water supply infrastructures. The connection of the Sea of Galilee to the upgraded national water carrier system has been completed, with infrastructure in place for future use as well as the addition of reservoirs for local water storage. The new Sorek Desalination Plant has begun operating in March 2025, whilst the establishment of a new desalination plant in the Galilee is still in progress.

Water prices for farmers increased by 2% in 2024, in line with household sector pricing. The National Water Authority is updating the water prices twice a year, in January and July. In January 2025 it introduced a further 2% increase across all sectors, including for agriculture.

Trade policy developments in 2024-25

The Ministry of Finance extended for another year the temporary law granting annual tariff free quotas for selected agricultural products: eggs, honey, pickled cucumbers, raisins, almonds, peeled ground nuts, tomato paste and orange juice. The provisions are subject to local production and were announced to be in place until the end of 2024.

In April 2025, the Ministry of Finance ordered the elimination of tariffs on imports from the US. Due to the existing US-Israel FTA, which grants tariff free imports for most traded goods, this order affects mostly agricultural products. However, it is pending the Knesset approval before coming into force.

The free trade agreements (FTAs) with Guatemala and Viet Nam, which were signed in 2022 and 2023 respectively, entered into force in March 2024 and in November 2024 correspondingly. Both agreements include special tariff rates for some agricultural products, and eliminates tariffs for other. SPS provisions are also included in both.

Negotiations on new FTAs with Costa Rica, the People’s Republic of China, India, and a new comprehensive economic partnership agreement (CEPA) with Bahrain are at varying stages of progress. Revised FTAs with MERCOSUR is under negotiation.

The FTA with Türkiye (1996), which provided unlimited tariff elimination or reduction for some agricultural products has been suspended since May 2024. The FTA allowed Türkiye to become a major source of tomato imports to Israel in recent years. To mitigate the supply issue caused by the trade suspension, Israel opened a quota for tariff-free tomato imports between August and September 2024 from 29 countries.

Policy context

Key economic and agricultural statistics

The Israeli economy has been resilient to the shock of the 7 October terror attacks and subsequent war, thanks to its sound fiscal position before the war, deft monetary management, a resilient financial system and strong growth potential owing to high employment rates and a vibrant high-tech sector. The war however has prompted a jump in military expenditure that has widened the fiscal deficit, while also hurting investment and exports.

The economy is relatively small but has been growing rapidly. Living standards have improved substantially over the past two decades, and its GDP per capita more than doubled, even as the population increased by 66%. During the same period, the share of agriculture in total employment has been more than halved to under 1%, while the share of agriculture in GDP declined to 1.3% (Figure 16.2).

Israel is unique among developed countries in that land and water resources are nearly all state-owned. Jewish rural communities, principally the kibbutz and moshav, dominate agricultural production, accounting for about 80% of agricultural output. Partly due to this structure, total agricultural area has moderately increased 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*	2023*	2000*	2023*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	162	528	0.40%	0.34%
Population (million)	6	10	0.15%	0.18%
Land area (thousand km2)	22	22	0.03%	0.03%
Agricultural area (AA) (thousand ha)	566	639	0.02%	0.02%
			All countries1
Population density (inhabitants/km2)	282	432	52	64
GDP per capita (USD in PPPs)	25 724	54 129	9 368	29 013
Trade as % of GDP	24.7	13.9	12.3	14.9
Agriculture in the economy			All countries1
Agriculture in GDP (%)	1.7	1.3	2.9	3.5
Agriculture share in employment (%)	2.2	0.8	-	-
Agro-food exports (% of total exports)	3.1	4.5	6.4	8.1
Agro-food imports (% of total imports)	5.3	9.4	5.8	7.3
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	59.0	56.4	-	-
Livestock in total agricultural production (%)	41.0	43.6	-	-
Share of arable land in AA (%)	59.7	58.3	31.8	33.3

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 2018 to 2023. 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 heavily influenced the economy. With supply constraints, the recovery was quickly followed by a pick-up in inflation from 2.5% in February 2024 to 3.5% in September 2024. 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 declined in 2023, 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 until 2022 may be partly influenced by the relative appreciation of the Israeli currency compared to the US dollar and the Euro between 2015-21, and most recently the tariff reductions to specific commodities. In 2023, supply constraints might have contributed to the decline in imports.

Despite investments in agriculture innovation, the overall productivity of Israeli agriculture, measured by total factor productivity (TFP), has been declining between 2013-22. The modest agriculture output growth in this period can be attributed to the increased use in inputs, particularly the use of farm machinery, and to a lower extent, intermediate inputs such as animal feed and fertilisers (Figure 16.6).

Beyond a substantial reduction in freshwater use, the environmental performance of Israel’s agriculture has been mixed since 2000. Despite a 24% increase in irrigation area, agriculture’s share of freshwater abstraction has declined by more than 30 percentage-points, largely due to changes in water management, encompassing the extensive use of recycled and desalinated water, efficient irrigation technologies and water demand policies. Nitrogen surplus has grown over time, to reach a level over six times the OECD average level. It can be particularly due to the increase in the use of fertilisers, as well as the intensive production of fruit and vegetables. Phosphorus balance declined somewhat but remains excessively high; close to thirty times the OECD average (Table 16.3).

Table 16.3. Israel: Productivity and environmental indicators

	Israel		International comparison
	1991-2000	2013-2022	1991-2000	2013-2022
			World
TFP annual growth rate (%)	2.2%	-0.5%	1.7%	0.8%
			OECD average
Environmental indicators	2000*	2023*	2000*	2023*
Nitrogen balance, kg/ha	184.6	197.7	32.0	29.7
Phosphorus balance, kg/ha	64.1	62.6	3.3	2.5
Agriculture share of total energy use (%)	1.2	1.3	1.7	2.0
Agriculture share of GHG emissions (%)	3.4	3.0	8.7	10.1
Share of irrigated land in AA (%)	43.4	67.2	-	-
Share of agriculture in water abstractions (%)¹	64.0	33.4	47.0	49.5
Water stress indicator	61.0	53.1	8.7	..

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[7]). 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. However, the plans for further reduction were halted in December 2023. Since the 7 October 2023 terrorist attacks and the wars that follow, 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
2010-2024	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 (halted in 2024) FTAs signed, use of electronic instruments to facilitate import inspections Emergency measures to limit the effects of the evolving conflicts in the Middle East on agricultural activities in affected areas.

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. Fluctuations in agricultural support are largely attributable 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

[6] OECD (2024), “Israel”, in Agricultural Policy Monitoring and Evaluation 2024: Innovation for Sustainable Productivity Growth, OECD Publishing, Paris, https://doi.org/10.1787/74da57ed-en.

[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 (2023), “Israel”, in Agricultural Policy Monitoring and Evaluation 2023: Adapting Agriculture to Climate Change, OECD Publishing, Paris, https://doi.org/10.1787/b14de474-en.

[5] 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.

[7] 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.  According to the 2022 Reform, customs duties were abolished with immediate effect for certain vegetables and fruits (e.g. garlic, pineapple, avocado, mango) and agricultural inputs (plant propagation material, fertilisers and pesticides). Should the reform continue, custom duties for selected additional fruit and vegetables would be decreasing gradually by 10% a year for five years, while custom duties for eight major vegetables and fruits would be lowered slower over time (OECD, 2023[4]).

← 2.  Israel renamed the Ministry of Agriculture and Rural Development (MARD) to the Ministry of Agriculture and Food Security (MOAG), see “Other domestic policy developments, Food Security”.

← 3.  The Volcani Institute - Agricultural Research Organisation is the largest agricultural research centre in Israel, with its primary role being conducting advanced research in agriculture and food sciences. The Institute takes part in planning, organising, and implementing outcomes of agricultural research amongst Israeli farmers.