The Israeli economic slowdown, a strong dollar, and a reduction in U.S. corn exports combined with a good grain harvest in the countries of the Former Soviet Union have slowed imports.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
Jonathan P. Gressel
Agricultural Minister Counselor
U.S. Embassy, Cairo
Gilad Shachar and Mariano J. Beillard
This report provides updated information for U.S. companies exporting food and agricultural
products to Israel. The report highlights import custom duties changes signed into effect in July
2012, which may benefit a number of U.S.-origin products. However, where the United States has
a tariff-rate quota these changes may erode trade preferences granted under the U.S.-Israel Free
Trade Agreement. Best prospects for U.S. exports include grains, oilseeds, dried fruits, all kinds of
tree nuts, and prepared food products. Israel’s imports of U.S. agricultural products may fall in
2012 to $560 million, a drop of 27 percent. The Israeli economic slowdown, a strong dollar, and a
reduction in U.S. corn exports combined with a good grain harvest in the countries of the Former
Soviet Union have slowed imports.
Section I: Market Overview
Economic and Demographic Situation
Israel is a parliamentary democracy of 7.7
million people, of which 75 percent are Jewish
(5.8 million) and 20 percent Arab (mainly Muslim).
Israel hosts some 200,000 Southeast
Asian guest workers. Israel’s population growth
rate is 1.8 percent.
Israel is a sophisticated, industrialized country
with a diversified manufacturing base. However
the global economy’s weakness and economic malaise in
the European Union (EU), Israel’s
main export market are contributing to an economic
slowdown. The recession in the EU
has slowed demand for Israeli exports and
contributed to an increase in Israeli
unemployment (currently 6.5 percent). Sources indicate
that the global economy’s sluggishness
will not undermine Prime Minister Benjamin
Netanyahu (Likud) and his coalition of right-wing
and religious parties going into the January
2013 Knesset elections. Netanyahu enjoys a
comfortable lead despite Israel’s EU trade ties leaving it
vulnerable to European financial difficulties.
The EU and the United States account for one-third and one-quarter of Israel’s trade activity.
Israeli policymakers are estimating gross domestic product (GDP) growth of 3.3 percent in 2012
and forecasting 3 percent growth in 2013 (see, table 1). Israel’s GDP real growth rate is
retreating from the 2011 level of 4.7 percent, due to EU economic and financial problems. Current
growth assumptions are premised on the EU succeeding in pulling itself out of the current
Table 1: Main Economic Indicators, Israel, Percentage
Actual 2011 2012 2013 Forecast
GDP 4.7 3.3 3.0
Civilian Imports 8.9 3.8 5.9
(excl. diamonds, ships, and aircraft)
Private Consumption 3.7 1.6 3.2
Public Sector Consumption 3.4 1.5 3.1
(excl. defense imports)
Exports (excl. diamonds and start-ups) 4.6 1.7 6.0
Unemployment Rate 5.7 6.8 6.7
Inflation Rate 2.5 2.8 2.2
Bank of Israel Interest Rate 2.9 2.25 2.25
Source: Bank of Israel
High international commodity prices, along with an increase in the value-added-tax (VAT) to
17 percent (up 1 percent) as of September 2012, are exerting inflationary pressure on the Israeli
economy. Israeli policymakers are attempting to hold inflation at 2.8 percent in 2012 with varying
degrees of success. Although the New Israeli Shekel (NIS) has weakened against the U.S. dollar
by 13.3 percent since January of 2012, it has now strengthened by 3.3 percent versus the euro
(see, chart 1 and 2). Post finds that while this makes imports of U.S. agricultural and food
products more costly, it also undermines the competitiveness of Israeli exports to the EU member
states. ($1 = ~NIS 3.868 and €1 = ~NIS 5.004).
Chart 1: U.S. Dollar to Israeli Shekel Exchange Rate
Source: Bank of Israel
Chart 2: Euro to Israeli Shekel Exchange Rate
Source: Bank of Israel
The Israeli Market, Food and Agricultural Products
Israel is a modern, technologically advanced market economy. Over the past decade Israel has
undergone major structural changes, shifting from a traditional manufacturing base to an export-
driven high-technology base. Similarly agricultural production now accounts for only about 2.5
percent of GDP; employing 2 percent of the labor force compared to industry (16 percent) and
services (82 percent) sectors.
The Israeli agricultural sector remains dominated by the cooperative movement. The agricultural
sector has sought to develop niche exporting capacities for avocados and exotic fruit along with cut
flowers. While this has transformed Israel into a net importer of food, its food security is ensured
by a combination of domestic production and trade with reliable commodity suppliers such as the
Best prospects for U.S. exports include grains, oilseeds, dried fruits, all kinds of tree nuts, and
prepared food products. Israel’s imports of U.S. agricultural products may fall in 2012 to $560
million, a drop of 27 percent. Exports of U.S. agricultural products to Israel totaled $875 million in
2011. Leading categories include: coarse grains ($170 million), wheat ($146 million), and feeds
and fodders ($106 million). United States imports of food and agricultural products from Israel
totaled $284 million in 2011. Leading categories are Israeli snack foods (including chocolate) ($60
million) and processed fruits and vegetables ($25 million).
Agricultural production is concentrated in the northern coastal plain, the central highlands, and the
Jordan River Valley region. Sources estimate that roughly 20 percent of the land is cultivated.
Israel’s agricultural potential is limited by water and weather pressures in addition to limited
amounts of arable land. Agriculture subsequently has become more mechanized and intensive
over the years. The Israeli agricultural sector however benefits from the Dead Sea’s salinity which
contributes to substantial fertilizer reserves of potash and phosphate.
Key Economic Developments in 2011
The Central Intelligence Agency (CIA) indicates that Israel has weathered better the global
financial crisis (2008-09) and subsequent economic recession (2010) than most advanced,
comparably sized economies. This is due to a combination of significant foreign investment inflows
with tourism revenues and other service sector exports.
Inflows in 2011 help to compensate for Israel’s large trade deficits that result from crude oil,
coarse grains, raw materials, and military equipment imports. Israel grew at 4.8 percent in 2011
with a relatively low unemployment level of 5.7 percent. The Israeli economy benefits from strong
fundamentals, prudent fiscal policies, and a resilient banking sector. Natural gas fields discovered
off Israel’s coast in the past two years are brightening the country’s energy security outlook.
Israel however experienced a number of public protests in mid-2011 over growing income
inequality and rising commodity prices and housing costs. Israeli consumers compared to their
counterparts in the other Organization for Economic Cooperation and Development (OECD)
economies pay on average 10 to 20 percent more for food. Although the Israeli government has
formed committees such as the Kedmi Committee to address some of these grievances, it refuses
to engage in deficit spending to satisfy populist demands. Israel acceded to the OECD in 2010.
The Kedmi Committee Report
Israeli consumer protests in 2011 against high living costs, including basic foodstuffs such as
cottage cheese, spurred the formation of the inter-departmental Kedmi Committee. The Ministry
of Industry, Trade, and Labor (MITL) and the Israeli Treasury are joint members of this
committee. The Kedmi Committee reviews prices and competition in Israel’s food and consumer
goods industries. It has published several recommendations on regulation and competition in the
Israeli food market.
The Kedmi committee finds that Israel’s food and consumer industries are centralized, non-
competitive, as well as generally consumer unfriendly. Reportedly high food prices are due to a
combination of problematic supplier-retailer ties along with the over concentration of the supply
and retail segments. A general lack of price transparency further compounds this situation.
The Israeli Finance Minister on July 11, 2012, signed orders to reduce or eliminate customs duties
and purchase taxes on hundreds of commodities, including food, electronics, and textiles
products. This ministerial order adopts three of the Kedmi Committee’s January 2012
recommendations for the food industry:
The gradual reduction of customs duties, over a four-year period, on products for which
there is local production but for which duties are relatively high, such as, mutton, fresh and
frozen poultry, sausages, and juices (see, GAIN Report Israel - Reduced Import Duties on
Certain Food Products).
Immediate reduction of customs duties on fresh-food products that are not manufactured
locally, such as specific types of fish, flowers, herbs and nuts, dried fruits, seeds,
mushrooms, and certain types of jams.
Differential reduction of duties, over a three-year period, on a range of processed food,
some of them raw materials used by local industry and some of them completed products
used by consumers, such as starch, canned fish, halva, sweets, biscuits, ice cream, baking
powder, bulgur and buckwheat.
The Kedmi Committee report finds that Israeli consumers compared to counterparts in the OECD
economies paid on average 10 to 20 percent more for food in 2008-2010. The report highlights
that Israelis paid 10 to 20 percent less for food than the OECD average in 2005. However, local
food prices have risen more rapidly since 2005 than in the other OECD developed economies. The
Kedmi Committee concludes that this price escalation results from the lack of competition within
the local food industry.
The committee recommends a 40 to 100 percent reduction on import duties on food products for
which no domestic competition exists. It calls for lowering duties on agricultural products for
which current rates are excessive (e.g., fresh beef) and reducing duties on packaged goods such
as tuna and fruit juice. Some of these recommendations are included in the new ministerial order.
The report also proposes a series of measures for dealing with the over-concentration of the supply
and retail sectors. These include removing barriers to market entry and encouraging existing small
businesses. The Kedmi Committee report besides recommending reducing import tariffs, also
counsels adopting U.S. and EU standards for import licenses.
The Kedmi Committee report recommends instructing the country’s antitrust authority to review
whether the acquisition of smaller food manufacturers by larger suppliers reduces competition.
Israel has the OECD’s most over-concentrated supply sector in 16 out of 22 food categories. The
report stresses that Israel’s two largest retailers hold a 64 percent market share since Shufersal’s
2009 purchase of Club Market – making the retail sector the fifth-most concentrated in the OECD.
Private labeling, the branding of retailers’ food product purchases with their own label, affords
small-to-medium size U.S. food exporters enhanced opportunities. The Kedmi report recommends
that retailers with a market share of 25 percent or greater not be allowed to source product for
their private labels from local food manufacturers commanding a market share of 30 percent or
greater. The Kedmi Committee report concludes that retailers’ private label products typically cost
consumers 5 to 10 percent less than national brand name products. This recommendation, if fully
implemented could increase the competitiveness of U.S. food manufactures produced in
accordance with Israeli private labeling requirements.
Consumer Behavior, Tastes, and Preferences
The 2011 consumer protests over high living costs are forcing local food companies and
retail chains to cut prices.
Consumers identify private labeling with lower prices, but nonetheless guaranteed product
Annual household consumption expenditure in 2011 totaled about $ 1,093 (up 1 percent
from 2010), 16.3 percent or $6,713 is allocated for food purchases.
Where do Israelis buy food? About 56 percent of Israelis recur to supermarket chains, 19
percent to grocery stores, 6 percent to open markets, and 20 percent make their purchases
at other venues.
Israeli consumers have become extremely health-conscious. Israelis are adopting a more
balanced diet and increasing exercise levels.
Kosher food products offer the greatest potential for U.S. exporters.
Rising Food Prices
The Ministry of Agriculture (MOAG) reported in August 2012, that the prices for basic food products
will rise by the end of the year. Prices for dairy products are forecast to soar by 6 to 13 percent.
While egg prices are expected to increase by 8 to 17 percent. Poultry will see price hikes ranging
between 6 and 14 percent.
Price increases are due to rising international commodities prices. Prolonged droughts in the U.S.
Midwest, Russia, the Ukraine, Kazakhstan, Australia, and India are increasing prices for wheat,
corn, soybean, sorghum, and feed stuffs. High international commodity prices, along with an
increase in the VAT to 17 percent (up 1 percent) as of September 2012, will exert inflationary
pressure on the Israeli economy. We foresee 2013 being a tough year for Israelis in terms of food
Competition: Israeli Imports of Agricultural and Food Products
Israel’s import of agricultural and food products in 2011 totaled $5.4 billion, up $1.07 billion or 25
percent compared to the previous year (see, table 2). Improving local economic conditions in the
first three quarters of 2011 strengthened Israeli demand for imports of agricultural and food
United States exporters benefited throughout 2011 from the shortage of exportable grains from
Russia and Ukraine, and a continued weak dollar along with good economic growth in Israel.
Imports of U.S.-origin agricultural and food products reached $761 million, up 40 percent
compared to 2010 levels. Similar imports from the EU increased at a slower pace of 12 percent,
but still reached $1.89 billion.
However, Post now estimates that imports from the United States in 2012 will drop to $560 million
or by 27 percent. The anticipated drop is due to the Israeli economic slowdown combined with the
strengthening of the U.S. dollar along with a reduction in U.S. corn exports and a good grain
harvest in the countries of the Former Soviet Union (mainly Russia, Ukraine and Kazakhstan).
Higher international commodity prices, combined with less competitive shipping rates from U.S.
ports, will weaken demand for U.S.-origin commodities through 2012.
Table 2: Israel Imports of Agricultural and Food Products, $ Million, CY
US EU Total
2009 2010 2011 2009 2010 2011 2009 2010 2011
Live 15 31 47 115 192 193 544 712 1,003
Vegetable 263 346 526 448 481 450 1,381 1,640 2,064
Animal and 4 4 4 61 59 78 137 142 186
Prepared 145 164 183 893 949 1,170 1,613 1,832 2,147
Total 428 545 761 1,517 1,681 1,891 3,676 4,327 5,400
Source: Central Bureau of Statistics, Israel.
The U.S.-Israel FTA and the ATAP
This year, 2012, marks the twenty-seventh year of the U.S.-Israel Free Trade Agreement (FTA),
which was the first FTA entered into by the United States. It continues to serve as the foundation
for expanding trade and investment between the United States and Israel by reducing barriers and
promoting regulatory transparency.
The Agreement on Trade in Agricultural Products (ATAP) between the United States and Israel
offers good export opportunities for U.S. agricultural and food products. However, the United
States and Israel are renegotiating the current ATAP agreement to increase U.S. product
competiveness in the Israeli market.
The ATAP provides U.S. food and agricultural products access to the Israeli market under one of
three different categories: unlimited duty free access, duty free tariff-rate quotas (TRQs), or
preferential tariffs, which are set at least 10 percent below Israel’s Most Favored Nation (MFN)
rates. Approximately 90 percent of U.S. agricultural exports (by value) enter Israel duty and
quota free as a result of Israel’s implementation of its commitments under the World Trade
Organization (WTO), the U.S.-Israel Free Trade Agreement (FTA), and the ATAP.
Israeli Imports of U.S. Agricultural and Food Products
Ninety percent of U.S. agricultural exports by value enter Israel duty- and quota-free due to
Israel’s adherence to its WTO, U.S.-Israel FTA, and ATAP commitments. Unfortunately, the
remaining U.S. agricultural export tariff lines (largely value-added consumer products) continue to
face a complicated TRQ system and high tariffs. Israel’s TRQ system is non-transparent. Problems
include the lack of quota fill-rate and license allocation data. Israel fails to provide information on
small, non-commercially viable quota quantities. It also holds back issuing of within-quota
Under the 2004 ATAP, Israel committed to improve the administration of TRQs, including engaging
in regular bilateral consultations. However, the mid-year reallocation of unutilized quotas by the
Israeli Quota Administration has so far failed to solve this problem. Negotiations on the new ATAP
agreement are expected to be completed by the end of 2013.
Israeli import requirements are relatively stricter compared to other developed countries. In
addition, Israel is increasingly adopting EU standards and requirements on imports, which
sometimes differ compared with the U.S. standards.
Coarse grains and oilseeds, nuts, dried fruits, and prepared food products remain the key U.S.
agricultural exports to Israel. Milling wheat, soybeans, and feed grains enter Israel duty-free. The
U.S.-Israel FTA requires that most U.S. tree nuts and dried fruits located in Chapter 8 of the
Harmonized Commodity Description and Coding System (HS) enter duty-free or under reduced
tariff rates. Shelled walnuts and pistachios from the United States enjoy duty-free access.
Exports of U.S.-origin beef face a difficult environment. Beside kosher restrictions there is beef
ban due to veterinary restrictions. Lifting the ban on imports of live cattle, beef, and beef products
is under advanced discussions.
1. Israel-EU FTA Agreement on Agricultural Products and Processed Food Products:
In November 2009 Israel and the European Commission signed a renewed and expanded
FTA on agricultural products and processed food products. Under the proposed framework
of the agreement, 97 percent of processed foods, imported and exported, are exempt from
levies and quotas. Israel exports 75 percent of its fresh and processed agricultural products
to the EU market. The agreement came into effect in January 2010.
1. Israel-India FTA: Israel is currently negotiating an FTA with India. India and Israel
ended their fifth round of negotiations in August, 2012 in India. From 1992 to 2012
bilateral trade between the two countries experienced exponential growth, going from $180
million dollars to more than $5 billion. The bulk of trade is in chemical products,
machinery, information, agricultural technology, and diamonds. India is one of Israel’s
major trading partners. There is increasing interest from both states to extend cooperation
to other sectors, including water, energy, information technology, and agriculture.
1. Israel-Mercosur FTA: Israel is the first country outside South America to implement a
free trade agreement with the regional trade bloc. Brazil is Israel’s largest trade partner in
Latin America. With the approval of this agreement, trade is expected to increase in
agriculture, education, science, and
Mercosur-Israel agreement also contemplates animal and plant health measures, customs
cooperation, safeguards and mechanisms to solve disputes, plus cooperation and
1. Israel-European Free Trade Association (EFTA): The FTA between the EFTA member
states and Israel entered into force on January 1, 1993. The Agreement covers trade in
industrial products as well as fish and marine products. Bilateral agricultural agreements
concluded between the individual EFTA countries and Israel form part of the measures
creating the free trade area. Total merchandise trade between EFTA and Israel amounted
to $1.5 billion in 2011.
Table 3: Advantages and Challenge for U.S. Exporters to Israel
The Israeli economy grew at a rapid pace in Since the end of 2011, the pace of growth in
2011 (4.7 percent up) relative to other Israel has slowed. Israel's food and
developed countries. The growth rate of per beverages market has shrank by 1.7 percent
capita GDP was higher than the average in in the second quarter of 2012 compared to
recent decades. the same period last year.
Israel’s GDP is forecasted to grow by 3
percent in 2013, slowed by its trade
partners’ economic and financial problems
The security situation remains precarious.
Israeli consumers’ eagerness to pay a premium Israel is a small market, only 7.7 million
for brand-name imports. consumers.
Israeli protests in 2011 over high living costs, The reduction or elimination of duties may
including the high price of basic foodstuffs led benefit a number of U.S.-origin products.
to the formation of the Kedmi Committee. One However, for products where the United
of the committee’s key recommendations, the States has a tariff-rate quota this ministerial
reduction or elimination of customs duties and order may erode trade preferences granted
purchase taxes on hundreds of commodities under the United States – Israel Free Trade
(including food), was approved by the Israeli Agreement. We anticipate increased
Finance Minister on July 11, 2012. competition from the EU, Eastern Europe,
the Former Soviet Union, Turkey, South
America, and the Far East.
The current exchange rate of the U.S. dollar The distance to market keeps U.S. shipping
versus the euro still largely favors U.S. export costs high. Competition from Eastern
sales. Europe, the Former Soviet Union, Turkey,
and the Far East is fierce.
The standard of living in Israel is expanding Israel is increasingly adopting EU standards
rapidly, increasing the demand for high quality and requirements on imports. The Food
food products. Service – Hotel Restaurant Institutional
sector mainly buys kosher food products.
About half of institutional customers require
the “Mehadrin” or “Badatz” high-kosher
certification. For most other markets, OU
kosher certification is sufficient. Even
though half of all Israelis do not regularly
maintain kosher, most supermarkets and
institutional customers demand the high-
kosher certification to accommodate more
religiously observant Jews.
Strong consumer interest in new food products. Import requirements are strict, and new-to-
About 3,000 new products are introduced to market products are sometimes detained at
the local food market annually. port. Access for U.S.-origin beef and poultry
products face SPS and non-tariff barriers
Negotiations on the ATAP are expected to be In the past three years new agricultural
completed in 2013. agreements were signed between Israel, the
EU, and MERCOSUR, increasing their market
access. India and Israel are also negotiating
Israel is a net food importer. Israel is highly As a result of the U.S. drought, corn exports
dependent on grain and oilseed imports. to Israel have decreased significantly
compared to 2011. Also the good grain
harvest in the countries of the Former Soviet
Union in 2011 has lowered demand for
imports of U.S.-origin milling wheat.
Section II: Exporter Business Tips
Except for beef and beef products, kosher certification is not an obligatory requirement for
importing agricultural and food products into Israel. However, non-kosher products have a much
smaller market share as the large supermarket chains, hotels, and institutional services refuse to
carry them. Kosher requirements are becoming increasingly strict as the Israeli consumers
demand high-level “Mehadrin” or “Badatz” kosher certification for their food products. Israel
counts with about 300 (kosher and non-kosher) food and agricultural product importers.
General Customs Procedures: Valuation and the VAT
1. Customs Valuation and Taxes: Israel has implemented the WTO Customs Valuation
Agreement. Under WTO regulations, the basis for valuation is the transaction value, in
most cases the cost, insurance, and freight (CIF) price.
Israel's tariff classification is based on the Harmonized System (HS) Code. Israel’s Customs and
Purchase Tax Tariff is the main instrument used for the classification of imported goods. The
correct classification of goods is the key to determining correct duty rates. It is also utilized for
obtaining authorizations, permits, licenses, and meeting all other conditions for the import of
1. Value Added Tax: Israel increased its VAT rate on September 1, 2012, from 16 percent
to 17 percent. The VAT is imposed on all products and services, with the exception of fresh
vegetables and fruits.
Venues and Consumer Trends
The food service industry is expanding and consumers’ habits are changing. Israelis are
increasingly opting to dine out more frequently and choosing premium food products.
Approximately 20 percent of Israel's 7.6 million people are clustered in the Tel Aviv district,
Israel's commercial and financial hub. Other major urban concentrations include the Haifa area
(15 percent), a major port city and center for the petrochemical industry, and Jerusalem (12
percent). Most companies are headquartered in the Tel Aviv or Haifa metropolitan areas.
Nonetheless a growing number of firms maintain branches, showrooms, or service facilities in
Jerusalem and Beer Sheva.
Israel does not have specific regulations applicable exclusively to foreign companies. Nevertheless
there are important cultural and religious factors which foreign firms must consider, including
kosher and Sabbath regulations. Sources indicate that Starbucks and Dunkin Donuts have met
with limited success in Israel due to differences in consumer tastes and pricing issues. Locale
ambiance is extremely important. An establishment’s management and product variety must be
tailored to blend in with the local environment and consumers’ preferences.
Consumer malls and shopping centers are popular in Israel. Over 200 malls exist and others are
planned. American specialty shops, chain stores, and franchises have outlets in malls and
shopping centers. When marketing to these venues, the key to success is offering a variety of new
products that meet Israeli taste preferences.
The institutional services, including the military, hospitals, hotels, restaurants, banquet halls and
places of employment, account for 30 percent of the total market share (households and
institutional). Over 50 percent of the total food supply directed at non-institutional consumers is
sold through supermarkets and retail chains. Shufersal Ltd., (Super-Sal) and Alon Holding–Blue
Square Ltd., are the two largest retail supermarket chains with hundreds of outlets throughout the
country. Israel’s other major supermarket retail chains include Rami Levy Hashikma, Hatzi Hinam,
and Tiv Ta’am (Israel’s largest retail producer and seller of pork and non-kosher products).
The average floor size of a supermarket is 600 square meters. Some of the larger stores have
areas of 1,000 - 2,000 square meters. Typical Middle Eastern-style open-air markets and small
groceries serve the remainder of the food market. In recent years, specialty food stores have
developed in all of the main metropolitan centers.
Food Standards and Regulations
See, GAIN Report – Israel FAIRS Country Report
In the current report the following sections have been updated:
Request for permission to import biotic material and heavy metals in foodstuffs
New Ingredients that were approved/not approved by the Israeli Ministry of Health
(MOH) for use in dietary supplements
In 2011, the following food color additives have been forbidden for use in morning
cereals (E127) Erythrosine and Indigo carmine (E132)
New amendment to Mandatory Standard SI 373, honey and honey products
Draft on the restriction to advertising and marketing of alcoholic beverages law,
initiated by the MOH
List of the requirements for importing medical food
Updated import list of “sensitive” food products
Updated import requirements for organic food and agricultural products
Summary of all technical barriers to trade (TBT) notifications that Israel submitted to
Approved plants and mushrooms for use in food and food additives
Labeling regulations for food products containing genetically modified (GM)
ingredients are expected to be implemented by the end of 2012. According to the
proposed law, it is suggested that labeling will be only required for food products that
exceed the 0.9 percent of the food ingredients considered individually or of the total
Sanitary and Phyto-Sanitary and Regulatory Systems
Four agencies oversee Israel’s animal, plant, and food safety issues. These include: 1) the
National Food Control Service (FCS), which is a part of the MOH; 2) the Standards Institution of
Israel (SII); 3) the Israel Veterinary and Animal Health Services (IVAHS), and; 4) the Plant
Protection and Inspection Services (PPIS). The latter two are agencies of the MOAG. Israel’s FCS
is notorious for the requirements it places on high-value food products. Plant quarantine
authorities have been slow to conduct their pest risk assessments (PRA) for U.S. requested
products. Depending on the product, both the MITL and the MOAG may share responsibility for
managing quota allocations under the United States – Israel FTA.
The Standards Institute of Israel is responsible for product standards development, compliance
testing, product certification, and industry quality assurance systems. The National Food Control
Service enforces the food and food labeling standards.
Israel is increasingly turning to EU standards and requirements to guide its food and food
supplements legislation (see, GAIN Report IS1106 - FAIRS Country Report). We find that this
action is causing United States and Israeli food regulations to diverge. The consequence of this is
growing import licensing difficulties for U.S. processed food products and needless port-of entry
detentions. The import of some U.S. product is now prohibited (e.g., beef and poultry products
and a number of fresh fruit and vegetables). Post estimates losses to U.S. exporters and Israeli
importers at $50 to $70 million per year. Israel is modeling its food legislation and standards on
the European system due to: 1) the EU is Israel’s main trade partner; 2) Israeli regulatory
agencies view EU legislation and inspection systems as more transparent than the U.S. system,
and; 3) the substantial degree of Israel and EU regulatory agency interaction.
After identifying a market opportunity, Post recommends that a U.S. company contact an
experienced importer, an agent or a wholesaler. This entity will facilitate custom clearance
procedures. The same will also advise the exporter on ways of complying with product specific
regulations, such as labeling, packaging, import duties, and sanitary and phyto-sanitary (SPS)
regulations. Most Israeli food distributors acquire imported products through an importer or an
agent. Specialized importers and agents are often also distributors who count with warehousing
and transportation operations. Some supermarket chains and large Food Service - Hotel
Restaurant Institutional (HRI) chains may import directly.
The Government of Israel requires that food and health products be registered with the MOH
before they can be sold in the country. Food and Drug Administration (FDA) approval for food and
health care products is not mandatory, but Israeli importers prefer it as it accelerates the product
registration process and import license approval. Product registration normally takes from 4-6
weeks if all documentation is in order.
With the exception of most agricultural and food products, all administrative import licensing
requirements for U.S.-manufactured consumer and industrial goods have been eliminated under
the U.S.-Israel FTA. In the case of products for which there is a TRQ, the MOAG or the MITL issues
a license, which either totally exempts the bearer from duty or grants a reduction in customs duty
on the quantity indicated in the license. Importers wishing to bring in goods without availing
themselves of the TRQ are not required to obtain a license. All imported agricultural and food
products must carry a health certificate or an import license for veterinary, phyto-sanitary or public
health reasons. The Israel Veterinary and Animal Health Services, the PPIS, and the FCS of the
MOH issue these licenses.
Israeli law requires that all beef and poultry imports be certified kosher by the Rabbinical Council
of the Chief Rabbinate.
Exporter Business Tips
Exporters that adhere to following recommendations will stand a better chance of success in the
Israeli imported agricultural and food products market:
1. Obtaining a Certificate of Free Sale in the United States may ease the MOH import licensing
2. Given that Israel is adopting EU standards, U.S. exporters already familiar with the EU
import requirements will have a better likelihood of success in gaining entry to the Israeli
3. Products certified as being manufactured under Good Manufacturing Practices (GMP) or
HACCP will have greater ease of access to the Israeli market.
4. Listing on the FDA’s list of registered facilities is viewed favorably by Israel’s import
licensing authority. It provides confirmation that the exporting manufacturer’s facility has
been inspected by the FDA and or USDA.
5. Products must have a minimum shelf life of 6 months.
6. Only facilities exceeding a minimal production capacity and export experience should
consider exporting to Israel.
7. Kosher certification is an advantage in the local market.
8. Communicate with potential importers of your product. Contact FAS Tel Aviv to obtain a list
of local importers; Tel: 972-3-519-7588/7324/7686; Fax: 972-3-510-2565; E-mail:
email@example.com; firstname.lastname@example.org ; http://www.fastelaviv.co.il/.
Israeli Food and Agricultural Trade Shows
1. ISRAFOOD: International food and beverages exhibition for professionals in the
catering and food wholesale, retail, restaurants, hotels, institutional, and food
business. November 20-22, 2012 – Tel Aviv
1. AGRO-MASHOV: Agro Mashov is Israel’s largest international agriculture exhibition.
June 11-12, 2012 – Tel Aviv (http://agro.mashovgroup.net/en).
1. WATEC: The WATEC exhibition is Israel’s main trade show for showcasing
technologies and expertise in water and environment technology fields. November
5-7, 2013 – Tel Aviv (http://www.watec-israel.com).
Foreign Food and Trade Shows Frequented by Israeli Buyers
1. Kosherfest is the world’s largest kosher certified products trade event serving the retail and
foodservice industries. Many Israeli buyers attend this show (http://www.kosherfest.com).
1. Israeli importers, distributors, and food manufacturers attend the main European food
shows (i.e., ANUGA, SIAL) food trade shows in Europe (ANUGA
http://www.anuga.de/de/anuga/home/index.php and SIAL
Section III: Market Sector Structure and Trends
The Israeli Food Association reports that Israel's food and beverages market shrank by 1.7 percent
in the second quarter of 2012 compared to 2011. This contraction is due to this year’s general
slowdown in the Israeli economy. As the market shrank in the second quarter, the Israeli food and
beverages market grew even slower. The same grew only by 1.1 percent in the first half of 2012,
reaching NIS 16.2 billion ($4 billion). We estimate that through 2012 the Israeli food and
beverages market will grow at the slower pace of about 0.5 percent.
Food Processing Industry
The Israeli food processing industry counts with a number of technologically sophisticated
companies. Many of these have joined forces with international companies to improve access to
raw materials and overseas markets. Many also operate in foreign markets on their own.
Multi-national food manufacturers like Nestle, Unilever, Danone, and Pepsi partner with well-known
Israeli food companies such as Osem and Strauss. These partnerships capitalize on the size and
sophistication of the Israeli market. They utilize the local market and its manufacturing practices
for gauging the commercial viability of new product and health developments.
The local food processing industry is dominated by four groups (Tnuva, Osem-Nestle, Unilever, and
Straus). This has contributed to reduce competition and increased consumer food prices.
Chart 3: Food Processing Industry Value, by Sub-Sectors, Percent, CY 2011
Source: The Food Industries Association, The Manufactures’ Association of Israel, Post estimates.
Israeli Market Trends
Israel’s food culture is as diverse as its inhabitants. The country is a “melting pot” of different
culinary traditions. Demand ranges from Eastern European to North African traditional Jewish
cooking. Additionally there are strong Arab and Mediterranean influences. Middle Eastern foods
are very popular in Israel
Israelis are increasingly demanding high-quality beef and seafood products when dining out. This
has spurred the opening of more high-quality beef and seafood restaurants. Many of these
restaurants can be located through Israel’s Restaurant Guide, the country’s restaurant and food
sectors’ major internet portal. The online guide has the most up-to-date information on
restaurants, bars, cafes, and kosher restaurants in Israel.
Israeli consumers are increasingly health-conscious and better aware of the need to eat a balanced
diet. However, many people still struggle finding the right balance between health and indulgence,
unwilling to compromise on taste. Many local manufacturers are pitching the notion of balanced
health and indulgence in their marketing campaigns.
Fruit yoghurt led foodservice volume growth in 2011, with sales increasing by 12 percent. Good
performance is due to the fact that Israeli consumers are seeking more products that satisfy health
and taste requirements simultaneously. In 2011, breakfast cereals fell out of favor with
consumers after receiving negative press on its health aspects. Yoghurt is Israel’s main breakfast
alternative to breakfast cereals. Much like breakfast cereals, pastries are falling out of favor with
consumers. Pastries were the weakest performers in 2011, with foodservice volume sales
declining by 4 percent compared to 2010.
Kosher food products will continue to retain the biggest potential in the Israeli market for the
foreseeable future. However, one of the areas where inroads can be made is with private
labeling. Adoption of private labels is increasing as consumers demand lower retail prices with
guarantees of product quality.
Baby food sales increased by 10 percent in 2011, rising to NIS 691 million ($173 million). Baby
food remains a recession proof product. We do not see higher unit prices becoming a barrier to
achieving market success.
Marketing Channels in Israel
Retail Supermarket Chains: In 2011, retail food and beverages sales by value increased by 1
percent compared to 2010. Previously sales by value had increased by 2.3 percent. The slower
pace is due to price competition between the retail supermarket chains.
Today Israeli retail supermarket chains are confronting: 1) a slowdown in the Israeli economy; 2)
the increase in international commodity prices, and; 3) the impact of the VAT increase on
consumer spending. We estimate that 2012 retail food and beverages sales value will remain
largely flat compared to 2011.
Shufersal has a market share of 38 percent. Its 248 stores and over 12,400 employees make it
Israel’s leading retail supermarket chain. Alon Holding-Blue Square follows with 22 percent market
share and 215 stores. These two chains dominate food retailing, accounting for 60 percent or $5.6
billion of the market.
About 90 percent of the retail channel buys only kosher food products.
Large supermarket retail chains import, as well as purchase from importers and
wholesalers. Smaller retailers purchase through importers and wholesalers.
Shufersal’s 2011 decision to scale back its hypermarket chain presence in favor of
increasing discount store outlets has motivated Blue Square to do the same.
There are 5,500 grocery stores and 1,700 convenience stores in Israel.
Service stations with convenience stores attached are driving growth. Some 710
convenience stores are located at service stations in Israel.
Food Service - Hotel Restaurant Institutional: Large hotel chains and large caterers often
have central purchasing offices. The HRI sector mostly buys kosher food products. The Israeli
Defense Force (IDF), the Israeli Police, and Israeli Prision Service are a significant component of
the HRI sector. The Food Service – Hotel Restaurant Institutional sales are estimated at $1.7
billion per annum. Over the past few years the sector has shown good growth. We estimate that
the HRI sector will continue growing at a rate of about 2 per cent per year.
A key driver of growth in the HRI sector is the Israeli tourism industry. The Central Bureau of
Statistics (CBS) informs that through the third quarter of 2012 some 2.6 million tourists visited
Israel, a 7 percent increase compared to the same period in 2011. The Ministry of Tourism (MOT)
reports that 3.4 million tourists visited Israel in 2011. Some 540,000 tourists, or 16 percent of all
visitors, are single day cruise ship visitors from Eastern Europe. Tourism revenues reached a
record high of NIS 35 billion ($8.8 billion) in 2011, up 2 percent compared to 2010. Sources
indicate that the Israeli HRI sector produces about one million meals daily.
Food service volumes in 2011 increased thanks to improved economic conditions.
Demand for healthy and indulgence foods is driving food service outlet sales.
The HRI is demands mostly kosher products.
Animosity between Israel and Turkey is forcing Israelis to forgo travel to latter. Domestic
tourism and the Israeli HRI sector are benefitting at Turkey’s expense.
Roughly one million meals per day are provided.
The HRI sector is characterized by significant competition combined with a high degree of
concentration. Smaller companies specialize in single product market niches.
Tnuva-Chef is the largest food service provider in Israel. It provides customer-specific solutions
for clients’ vegetable, dairy, beef, fish, and bakery product needs. Nestlé Food Service is the
second largest provider.
Consumer Foodservice Outlets
Large HRI firms have their own purchasing or importing division to handle food imports directly.
Suppliers from the United States should initially contact the purchasing or importing divisions of
these large hotel and restaurants chains.
Most consumer food service outlets are franchises. Local players use the franchise model to
expand firm presence, profits, and bargaining power. Franchising is utilized by foreign and local
players. Shefa Franchisers has had good success with its Aroma Espresso Bar franchise. It
surpassed McDonald’s in 2010 in sales volume.
Franchisees of international brands are corporate entities. Most of franchisees of Israeli brands are
smaller franchise holders. Foreign consumer food service operators often enter the Israeli market
through franchise agreements. Major global brands such as Yum! Brands Inc., Domino’s Pizza
Inc., McDonald’s Corp., Burger King Holdings Inc., and Sbarro Inc., operate in Israel through local
Israel has not enacted anti-foreign regulations. There are however kosher and Sabbath
regulations. Indications are that Starbucks and Dunkin Donuts had limited success due to
differences in consumer tastes and pricing issues. Locale ambiance is extremely important. An
establishment’s management and product variety must be tailored to blend in with the local
environment and consumers’ preferences.
Section IV: Best Consumer-Oriented Product Prospects
Non alcoholic drinks
Organic and health/natural food products
Dry grocery food products
Specialty gourmet foods
Frozen and canned vegetables and fruits
Food industry ingredients
Baking industry ingredients
Frozen fish fillets
Almonds, Pistachios and all kind of nuts
DDGS and Corn Gluten Feed (animal feed)
Market nstraints Market
Ca Imports Growth Ta
tegory Size Over Market for USA
(Volume) ($Sales) 5-Yr. Rate Avg. Development
Pistachios $25 Mil $25 Mil Growth of U.S.- and Competition Demand
3 percent EU-origin mainly from for U.S.-
per product Turkey. origin
annum. face no pistachios
import is strong
duties. due to
has a 100 imports
tons TRQ, facing
and above high
that it import
faces a 23 levies.
duty of pistachio
not less enters
than NIS Duty free.
Corn $346 Mil $346 Mil Dependent Duty free Strong Attractive
(Feed) on supply treatment competition to large
levels of for all from the U.S.
other origins. Former Soviet suppliers
grains Union (ADM,
(feed countries. The Cargill,
wheat and sector prefers CHS,
barley). to import from etc.).
growth is countries. The
1.8 U.S. market
percent. share is 20-60
levels in the
Wine $83 $25 Mil Imports The About 70 This
have been United percent of market is
consistent State and consumption likely to
in recent the EU is from local become
years. enjoy production, more
TRQs of and the rest is dynamic
200,000 mainly from as
and France, Italy, consumers
430,000 South prefer
liters. America, and local and
Above the the U.S. EU wines.
TRQ the market share
United is about 5
Frozen $250 Mil $154 Mil Growth of 0 percent Importers The United
Fish about 3 to NIS 15 prefer to States
Fillets percent /kg import from enjoys a 5
per depending South ton TRQ
annum. on America, for frozen
product. African carp fillet.
the far east
Fresh Local $17 Mil Growth of The The EU enjoys The United
Apples production about 5 United a 3,200 TONS States has
was percent States TRQ and 4000 tons
record per and the shipping costs TRQ (duty
high in annum. EU have a are lower free).
2012 and TRQ, and compared to Israeli
totaled above it the United importers
about they face States. like U.S.-
120,000 a MFN origin
tons, in (NIS apple
addition 2/kg). All varieties.
Israel and other
about face MFN
14,000 as well.
Imports of U.S. Agricultural and Food Products to Israel
Code Product Category Total Total
1 Live animals 989 2,097
2 Meat & edible meat offal 697 5,630
3 Fish, crustaceans and mollusca 4,379 5,559
4 Dairy produce; eggs, natural honey; edible
products of animal origin 24,241 32,813
5 Products of animal origin n.e.c 703 490
6 Live trees and other plants, bulbs, roots and
other garden plants 98 101
7 Edible vegetables, roots and tubers 3,896 5,391
8 Edible fruits and nuts; peel of melons
and other citrus fruit 99,206 118,276
9 Coffee, tea, mate and spices 2,253 2,034
10 Cereals 99,455 219,379
11 Products of milling industry; malt and
starches; wheat gluten 19,811 29,594
12 Oil seeds, grains, fruits, industrial and
medical plants. Straw and feed 117,511 148,242
13 Tree gum; resins, other vegetable saps and
extracts 3,760 3,396
14 Vegetable plaiting materials; vegetable
products n.e.c 12 28
15 Animal or vegetable fats and oils; animal or
vegetable waxes 3,491 4,430
16 Preparation of meat, fish, or of other aquatic
invertebrates 7,800 6,166
17 Sugar and sugar confectionery 3,450 5,675
18 Cocoa and cocoa preparations 1,144 1,094
19 Preparations of cereals, flour starch or milk;
pastry products 13,228 14,361
20 Preparations of vegetable, fruits, nuts and
other plants 30,716 38,340
21 Miscellaneous edible preparations 59,136 56,692
22 Alcoholic beverages and vinegar 7,482 10,996
23 Residues and waste from the food
industries; prepared animal feed 33,848 49,393
24 Tobacco and tobacco substitutes 7,304 509
Grand total $545
mil 60 million lion $7
Source: Central Bureau of Statistics, Israel.
Section V: Post Contact and Additional Information
Office of Agricultural Affairs, U.S. Embassy Tel Aviv, Israel
Web site: http://www.fastelaviv.co.il
Tel: 972-3-5197588 ● Fax: 972-3-5102565
E-mail: email@example.com; firstname.lastname@example.org; email@example.com;
The Central Bureau of Statistics (CBS)
Web Site: http://www.cbs.gov.il/reader/?MIval=cw_usr_view_Folder&ID=141
66 Kanfei Nesharim Street
P.O.Box 34525, Jerusalem, Israel 91342
Tel: 972-2-6592666 ● Fax: 972-2-6521340
Food Control Service - Ministry of Health
Web Site: http://www.health.gov.il/english/Pages/HomePage.aspx
12 Ha’arba’a Street
64739, Tel Aviv, Israel
Tel: 972-3-6270100 ● Fax: 972-3-5619549
Israel Veterinary and Animal Health Services (IVAHS)
Web Site: http://www.vetserveng.moag.gov.il/vetserveng
Ministry of Agriculture
P.O. Box 12
50250, Bet Dagan, Israel
Plant Protection and Inspection Service (PPIS)
Web Site: http://www.ppiseng.moag.gov.il/ppiseng/
P.O. Box 78
50250, Bet Dagan, Israel
Tel: 972-3-9681560 ● Fax: 972-3-9681582
Standards Institution of Israel
Web Site: www.sii.org.il
42 H. Levanon Street
69977, Tel Aviv, Israel
Tel: 972-3-6465154 ● Fax: 972-3-6419683
Major Newspapers and Business Journals
- Ha’aretz (daily English version) http://www.haaretz.com
The Jerusalem Post (daily newspaper) http://www.jpost.com
The Marker http://www.themarker.co.il/eng /
USDA'S Global Agriculture Information Network (GAIN) provides timely information on the
agricultural economy, products and issues in foreign countries since 1995 that are likely to have an
impact on United States agricultural production and trade. United States Foreign Service Officers
working at posts overseas collect and submit information on the agricultural situation in more than
130 countries to USDA's Foreign Agricultural Service (FAS), which maintains the GAIN reports
Additional Web Sites
Agriculture in Israel
The Agricultural Research Center of Israel - http://www.agri.gov.il/
Ministry of Agricultural and Rural Development - http://www.moag.gov.il/english/
The Centre for International Agricultural Development Cooperation (CINADCO)
Faculty of Agricultural, Food and Environmental Quality Sciences http://www.agri.huji.ac.il/index-
Bank of Israel - http://www.bankisrael.gov.il/firsteng.htm
Table A: Key Trade & Demographic Information, 2011
Agricultural Imports From All Countries ($Mil) / U.S. Market Share (%) $5,400/14.1%
Consumer Food Imports From All Countries ($Mil) / U.S. Market Share (%) $2,147/8.5%
Edible Fishery Imports From All Countries ($Mil) / U.S. Market Share (%) $294/1.6%
Total Population (Millions) / Annual Growth Rate 7.7/1.8%
Number of Major Metropolitan Areas 3
Per Capita Gross Domestic Product (U.S. Dollars) $31,000
Unemployment Rate (%), in the second quarter of 2012 6.5%
Per Capita Annual Food Expenditures (U.S. Dollars) $4,634
Annual Average Exchange Rate for 10/2012
($1 = X.X local currency) $1 = ~NIS 3.868
Source: Central Bureau of Statistics, Israel; Economist Intelligence Unit
Map of Israel
Source: Central Intelligence Agency
This report was prepared by the Foreign Agricultural Service in Tel Aviv for exporters of U.S. food
and agricultural products, as well as U.S. regulatory agencies. While care was taken in the
preparation of this report, information provided may not be completely accurate either because
policies have changed since its preparation, or because clear and consistent information about
these policies is unavailable. It is highly recommended that U.S. exporters verify the full set of
certificate requirements with their foreign customers prior to the shipment of goods. Final import
approval of any product is subject to the importing country’s rules and regulations.