Israel is a net food importer and a good market for U.S. grains, oilseeds, dried fruits, and prepared food products.
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
GAIN Report Number:
Israel is a net food importer and a good market for U.S. grains, oilseeds, dried fruits, and prepared
food products. The population reached 7.7 million in 2010. The current exchange rate of the U.S.
dollar versus the Euro, which continues to favor U.S. sales, combined with the expected 4.8, and
3.2 percent GDP growth for Israel in 2011 and 2012, respectively, along with the Agreement on
Trade in Agricultural Products (ATAP) between the U.S. and Israel, offer good opportunities for
American agricultural and food products in Israel. Agricultural and food imports in 2011 reached
$5.4 billion, up 25 percent from 2010. Food and beverage products account for 42 percent of
imports. A weak dollar combined with grain shortages from Russia and Ukraine, increased U.S.
exports? competitive advantage. Data for 2011 point to agricultural and food imports from the
U.S. increasing by 40 percent compared to 2010 or from $545 million to $761 million.
This report was prepared by the Foreign Agricultural Service in Tel Aviv for U.S. exporters of
domestic food and agricultural products and 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 was unavailable. It is highly recommended that U.S. exporters verify the full set of
certificate requirements with their foreign customers before any goods are shipped. Final import
approval of any product is subject to the importing country?s rules and regulations.
Section I: Market Overview
Economic and Demographic Situation
Israel is a parliamentary democracy of 7.7 million people: 75 percent Jewish (5.8 million) and 20
Arab (mainly Muslim). Israel hosts 200,000 foreign guest workers from Southeast Asia. Population
growth is at 1.8 percent.
Israel?s economy is in better shape today than in 2010, as well as vastly improved compared to
The economy benefitted from the global economic recovery, growing by 4.5 percent in 2010. The
of Israel is forecasting a 4.8 percent GDP growth in 2011 and slower GDP growth of 3.2 percent in
During the period being surveyed, May-August 2011, growth rate has shown a slowdown in
to increased economic uncertainty. This occurred against the background of a debt crises in Europe
volatility in the financial markets, the fear of a major slowdown in global growth, continuing
instability in our region and the effects of the 2011 social protests in Israel.
With a GDP of $200 billion and a GDP per capita of $30,000, Israel is on par with the EU member
of Greece and Portugal. Prior to the global economic recession (2008-09), Israel grew at an
average rate of 5 percent. Growth almost halted during the crisis, leading to a spike in
Israel?s unemployment rate declined to 5.5 percent in the second quarter of 2011, the lowest level
at least 1985, as the economy expanded. Unemployment averaged 6.7 percent (2010), below the
Organization for Economic Cooperation and Development (OECD) average of 8.3 percent. Between
1992 and 2010, Israel's unemployment averaged 8.6 percent;
The main economic challenges confronting Israel are: 1) uncertainty regarding the impact of U.S.
EU fiscal deficits on global economic growth and its effect on foreign demand for Israeli
exports and 2) the inflation inducing upward trend in commodity prices.
Sociopolitical unrest in the MENA region highlights the importance of Israel as a stable,
advanced market economy and democracy. Nevertheless, financial markets are increasing Israel?s
country risk rating due to continued regional uncertainty.
Israeli economic policy combines responsible budgetary policy with a credible, consistent monetary
policy. It aims to ensure economic stability through price stability.
Chart 1: GDP, Annual Growth Rate, Israel
Source: Bank of Israel
Israel?s main industrial sectors include electronics, chemicals, machinery, metal, plastics and
Inflation: The Bank of Israel forecasts a 2.6 percent inflation rate in 2011. Inflation may
inch upwards to 3.3 percent in the last quarter. Inflation in Israel derives from developments
and the valuation of the local housing market. Rising commodity prices will boost inflation
resulting in higher energy and food costs. Inflation reached 2.7 percent in 2010, remaining well
the price stability target range. Excluding the housing sector, inflation increased by 1.9 percent in
Food Prices: Food prices in Israel increased more than in other countries. Food prices were the
reason for the social unrest during the summer of 2011. Global agricultural commodity prices
by an average of 53 percent in 2010 compared to 2009.
This suggests that food prices in Israel will again increase. The last time agricultural commodity
rose this sharply was in May 2008, when they increased by 54 percent. Four months later, food
in Israel increased by 13.4 percent.
Aggressive competition between Israeli retail chains, combined with favorable exchange rates,
Israel?s food prices in 2008 to rise slower than the increase in agricultural commodity prices.
For example, Shufersal, Israel?s largest retailer, converted some of its stores into discount Deal
branches in order to keep prices low. Israeli analysts estimate that even if commodity prices do
food prices will still increase by 8 percent in 2011.
Should commodity prices continue to trend upwards at the current pace food prices in Israel could
increase by 15 percent in 2011.
Foreign Exchange Rates: In 2010, the NIS strengthened against the U.S. dollar by 5.3 percent,
by 10.4 percent against the euro.
Compared to the British pound, the NIS rose by 6.4 percent. However, when compared to the
franc the NIS only rose by 1 percent and compared to the Japanese yen it dropped by 1.3 percent.
The 2010 average exchange rate of the U.S. dollar was NIS 3.733 (NIS 3.932 in 2009) while the
average exchange rate for the euro was 4.953. In 2010, the U.S. dollar strengthened in
to the euro by 4.8 percent and by 1 percent compared to the British pound.
The U.S. dollar compared to the Japanese yen and the Swiss franc dropped by 6.3 percent and 4.1
Chart 2: U.S. Dollar to Israeli Shekel Exchange Rate
Chart 3: Euro to Israeli Shekel Exchange Rate
New Natural Gas Resources: Recently discovered natural gas fields off the Israeli coast are
the most significant global finds in the past decade. While the Tamar and Leviathan gas fields are
others in their vicinity are much smaller. Tamar and Leviathan are expected to contribute
1-1.5 percent to Israel?s GDP. Israel currently depends on Egypt for 40 percent of its natural gas
Trajtenberg Committee Report Likely to Enhance Export Opportunities
During summer 2011, hundreds of thousands of Israelis, mainly middle class, protested against
the government, demanding improved standards and quality of life. It is common wisdom in Israel
the middle class carries most of the economic, social and security burdens, while other sectors,
gained political power during the last two decades are exploiting the benefits granted by the state
expense of the middle class and others. According to the OECD, Israel has the second highest
poverty rate in the OECD after Mexico, and is well above the OECD average of 11.1%. Some 39%
Israelis find it difficult or to live on their current income, well above the OECD average of 24%.
The protests started in June 2011 with the ?cottage cheese protest? in which consumers boycotted
cottage cheese after it was found that the price was raised significantly by the dairy companies
the retail chains with no justification.
The second sector, that followed the ?cottage protest? was the housing renters, who claimed that
and housing in Israel became unaffordable to most of the young, even those who earn higher than
average salaries. The housing protesters established tent camps all over the country, the biggest
Tel Aviv with more than 1,000 tents.
The Trajtenberg Committee has been appointed by the government as response to the social
The Trajtenberg Committee presented its recommendations to Prime Minister Benjamin Netanyahu
on Oct 9th and the Israeli Government approved the report.
The Trajtenberg Committee report is 267-page long, outlining a wide array of policy
in 4 main areas: Housing, Competition and Cost of Living (including food and agricultural
Social Services and Taxation. These recommendations are expected to bring significant change in
economic agenda in Israel during the coming years, including reduced trade barriers for imported
and agricultural products into Israel.
Netanyahu addressed the Trajtenberg Report as follows "Approval of the report will allow for a
cost of living and substantially ease parental education spending and lower the properties values.
My government is committed to taking the necessary actions for Israeli citizens to lower their
cost of living.?
Trajtenberg and Custom Tariff Policy
In January 2012 custom tariffs and purchase tax will be removed from a list of imported industrial
products that have no competition from local production, e.g. washing machines, air conditioners,
electronics and raw materials for local industry. A second stage, concerning industrial products that
are locally produced depends on GOI?s success in signing further new Free Trade Agreements
If GOI succeeds in signing additional significant FTAs the custom tariff will be reduced by 15%,
each year until 2017, when the custom tariff goes to 0%. If the GOI fails to sign additional FTAs,
the tariff will be reduced by 25% in January 2012, by 15% in January 2013 and another 15% in
January 2014. Total reduction will be 50%. The government, which is under heavy pressure from
the agriculture lobby, made no decisions regarding food products taxation and is still waiting for
second committee?s recommendations (the Kedmi Committee). The expected improvements for
products in the near future will focus on expanded Tariff Rate Quotas (TRQ) for a selected list of
The list of processed food products and agricultural products that will benefit from the recent
of the Trajtenberg Report has not yet been approved. Post expects that GOI will publish the list of
approved products within the next few months.
In addition, it is estimated that due to the recent approval of the Trajtenberg Report, some
and Phyto-Sanitary (SPS) and Technical Barriers to Trade (TBT) issues relating to the import of
processed food products and agricultural products into Israel will be eased, making it easier for
American exporters to enter the Israeli food and agricultural market and lowering costs.
Food prices, including staples, have become a flash point. Here and elsewhere, the answer lies in
competition from imports, says the Trajtenberg Committee.
Privately owned monopolies that do most of their business within Israel must be forced to publish
financial statements like publicly traded companies, determined the panel. This would force fresh-
giant Tnuva (among others) to reveal its financials, if the government accepts the idea. Tnuva is
controlled by international investments fund Apax Partners, which has been adamant that the
which has the biggest dairy business in Israel, keep its figures confidential. Tnuva was also a
behind the "social protest," which began when the company (and its two main rivals) raised the
of cottage cheese once too often.
The Committee states that the food industry is the sector with the biggest lack of competition.
According to the Committee, this is due to the high dominance of a few companies controlling
the local food market which include both producers and retails chains.
The Committee recommends a supervised reduction in the price of basic food products including
eggs and milk.
Israel Food Processing Industry
As a result of the continued improved economic activity in 2010 and 2011, both globally and in
the food and drink industry turnover increased by about 2 percent in 2010 compared to 2009, and
expected to grow by about 1.5 percent in 2011.
The local food and drink industry is one of the largest manufacturing industries in Israel, with a
of $15.4 billion in 2010.
As a result of the improved and projected global economic situation the expected local HRI market
growth rate in the next few years
will remain 2-3 percent annually.
The HRI market, including the army, hospitals, hotels, restaurants and other places of
is valued at about $7.4 billion. Over 50 percent of the total food supply directed at non-institutional
consumers is sold through supermarkets and retail chains. Two major supermarket chains with
hundreds of outlets throughout the country dominate the retail food market.
For further information, see Israeli Food Processing Sector Report:
Chart 4: Food Processing Industry Value, by Sub-Sectors, Percent, CY 2010
Source: The Food Industries Association, Manufactures? Association of Israel
Consumer Buying and Eating Habits
Annual household consumption expenditure in 2010 totaled $ 3,000 (2.5% up from 2009),
of which . % ($ ,450) was directed to food purchases (for many years household
for food totaled 13%).
Where do they buy food? 56% - Supermarket chains, 1 % - Grocery shops, 6% - open
and 20% - other shops.
66% of the Jewish sector buys food products through supermarket chains, while only 11%
Arab sector buys products through supermarket chains.
Nearly 70% of consumers prefer kosher food products.
1.4 million (19%) Israelis are above age of 50, and 2.1 million (28.7%) Israelis are under
age of 14. The average household size is 3.7 people.
Israelis are quality oriented and are ready to pay a premium for quality food products.
Shoppers are eating out more frequently and in 2010 spent more than $2.8 billion on meals
away from home.
Table 1: Food- Household Purchase by Outlet Type - % of Total Expenditure
(Excl. Meals Away From Home), 2009
Grocery Open Supermarket Others
Stores Markets Chains
Food - Total 18.8 5.7 56.0 19.5
Bread, Cereals and Pastry 22. 18.
Meat, Poultry and Fish
Soft Drinks 1. 8.
Fresh Fruits and Vegetables
Source: Household Expenditure Survey, 2009, CBS.
Trade and the Market for U.S. Products and Services
Israel joined the World Trade Organization (WTO) in 1995. Israel supports the liberalization of
international trade, investments and world markets. It believes that these play a vital role in
global economic growth, stability and increase in welfare. Israel is committed to the multilateral
system, its core principles and to the Doha development agenda.
Israel?s implementation of the Uruguay Round Agreement on Agriculture has made it a more
and open trade partner. However, Israel?s agricultural products? tariff profile is uneven.
It retains very high, sometimes prohibitive, tariffs for sensitive products such as dairy, meat,
eggs, and some fruits and vegetables. Israel at the same also has low tariffs, or even duty-free
for commodities such as coarse grains and oilseeds.
The simple average most-favored-nation (MFN) tariff for agriculture is about three times higher
that for non-agricultural products. The OECD recommends that Israel should further reduce
trade barriers and simplify its highly complex tariff profile.
Israel?s first Free Trade Agreement (FTA) was with the European Community in 1975. The United
and Israel signed an FTA in 1985. Subsequently, Israel signed FTAs with Turkey, Jordan, Mexico
Overview of Israel?s Two Main Free Trade Agreements:
1. Agreement on Trade in Agricultural Products between the U.S. and Israel:
In 1996, the United States and Israel signed a five-year Agreement on Trade in Agricultural
(ATAP), which permits Israel to protect a number of sensitive crops and livestock products through
combination of tariff rate quotas and relatively high duties. In 2004, the agreement was extended
2008. Negotiations on the next extension started in February 2008. The new agreement has yet
signed. Both countries have agreed to extend year-by-year the current agreement until a new
agreement is signed.
2. 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
Israel exports 75 percent of its fresh and processed agricultural products to the EU market.
The agreement came into effect in January 2010.
Foreign Trade: Israel ran a trade deficit of $7.7 billion in 2010, up from $4.9 billion in 2009.
Total imports grew by 25 percent; only 19 percent if imports of aircraft, vessels, diamonds, and
are excluded. By value imports exceeded $58.6 billion compared to $50.9 billion in exports.
Imports from the EU and the United States increased by almost 17 percent and 14.5 percent.
Imports from Asia increased 32 percent. Israeli exports (excluding aircraft, vessels, and
grew by $ 5.9 billion, or 16.3 percent. Exports to the EU grew by over 24 percent in 2010,
while exports to the United States increased at a slower pace of 10.5 percent. Exports to Asia
Table 2: Main Trading Country Groups, Millions of US Dollars
Imports Exports Trade Balance
2010 2009 2010 2009 2010 2009
Total 59,122.4 47,368.2 58,430.6 47,935.5 -691.8 567.3
EU 20,401.8 17,491.7 15,390.5 12,389.8 -5,011.3 -5,101.9
US 6,698.2 5,849.1 18,530.7 16,774.1 11,832.5 10,925.0
Asia 13,316.5 10,082.1 13,822.0 9,520.5 505.5 -561.6
Other Countries 18,705.9 13,965.3 10,687.4 9,251.1 -8,018.5 -4,694.2
** Imports are valued c.i.f., and exports are valued f.o.b.
Israel?s import of agricultural commodities and foo3d prod0ucts in0 2010 totaled $4.3 billion, up $650 1,381
million or 18 percent compared to the previous year. Improving global economic conditions is
d 1,398riving 1003
renewed Israe 2500li demand for imports of food and beverage products, which account for $1.83 billion
42 percent of its agricultural and food products imports. The United States exporters continued to 634
bene 2000fit through 2010 from a weak dollar that along with improved economic growth in Israel, 544
increasing Israeli demand for U.S. agricultural and food products imports.
These imports reached approximate 815 455ly $534 million, growing by 27 percent compared to 2009
Similar imports from the EU increased at a slower pace of 11 percent, exceeding $1.68 billion
by value. 1000 284 2,147
Chart 5: Israeli Imports of Ag 1,613ricultural, Processed Foods and Beverages Products 1,444
2002 2007 2008 2009 2010 2011
Prepared Food Products Live Animals & Animal Products
Animal & Veg. Oils Vegetable Products
Source: Central Bureau of Statistics
Table 3: Trend in Israeli Imports of Agricultural and Food Products, $ Million, CY
Total US EU
2009 2010 2011 2009 2010 2011 2009 2010 2011
Live animals 544 712 1,003 15 31 47 115 192 193
Vegetable 1,381 1,640 2,064 263 346 526 448 481 450
Animal & Veg. 137 142 186 4 4 4 61 59 78
Prepared foods 1,613 1,832 2,147 145 164 183 893 949 1,170
Total 3,676 4,327 5,400 428 545 761 1,517 1,681 1,891
Source: Central Bureau of Statistics
Table 4: Israeli Imports of American Products to Israel, $ Million, CY
2009 2010 2011
Total imports into Israel (all products) 5,849 6,701 8,707
Of which: Agricultural and food products 428 545 761
M il li on $
Agricultural and food products as percentage of total imports 7.3% 8.1% 8.7%
Source: Central Bureau of Statistics
Israel imports a significant amount of cereals, bovine meat, oilseeds, sugar, tobacco, fish, and
products (i.e., cocoa). Imports reflect the country?s deficiency in farm acreage. Imports of cereals
and sugar represent 90 percent of domestic use of these commodities; imported beef accounts for
50 percent of local consumption.
U.S. Ag Exports: Ninety percent of U.S. agricultural exports by value enter Israel duty and quota
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 tariff-rate quota (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 licenses.
Under the 2004 ATAP agreement, Israel committed to improve the administration of TRQs,
engaging in regular bilateral consultations. However, the mid-year reallocation of unutilized
the Israeli Quota Administration has so far failed to solve this problem. ATAP agreement
negotiations aim to address this U.S. concern.
Coarse grains and oilseeds, dried nuts, 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. dried nuts and fruits located in Chapter 8 of the
Harmonized Commodity Description and Coding System (HS) enter duty-free or under reduced
rates. However, the TRQs on almonds, raisins, and prunes sharply limit imports.
Shelled walnuts and pistachios from the United States enjoy duty-free access; pistachios from
sources pay a 36 percent import duty. Non-U.S. shelled walnuts are assessed a $500/mt levy plus
a 20 percent duty (16.5 percent for EU product).
Exports of U.S. prepared vegetables, fruits and nuts, and miscellaneous edible preparations
trend upward. Israel bans the import of U.S. beef due to bovine spongiform encephalopathy (BSE)
and Kashrut Law restrictions. Israel?s Veterinary Services published in January 2011 its new BSE
regulations. The new regulations and new health certificates for beef meat and live cattle for
fattening are in advanced phase of discussions and should be resolved during the first half of 2012.
Quota and SPS Restrictions however remain on U.S. dairy products, fresh fruits and vegetables,
and processed foods, all commodities important to the Israeli agricultural sector.
Coarse Grains: Israel is almost completely dependent on imports to meet its grain and feed
Feed wheat and corn are the main ingredients of feedstuffs used in local poultry, dairy, cattle and
aquaculture farms in Israel. The Israeli feed milling industry shifts easily from corn, barley and
to feed wheat, depending on price ratios.
Many Israeli traders consider the Black Sea Basin (BSB) a ?natural? source for grains due to its
and the convenience of small shipments. However, whenever there is a shortage of grains from the
the market share of U.S. grains increases significantly.
Due to the ban on grain exports from Russia, combined with Ukraine grain export quotas in 2010
part of 2011, the Israeli feed milling industry shifted from barley and feed wheat to corn and
As a result, the U.S. market share of corn and sorghum in Israel increased significantly in MY
(Oct 2010-Sep 2011) to about 60 percent and nearly 100 percent, respectively.
In addition, since two of Israel?s main milling wheat suppliers are Russia and Ukraine, the U.S.
share of milling wheat in Israel increased to about 50 percent in MY 2010/11, compared to 23
in MY 2009/10. As a result of Russia and Ukraine lifting their grain export bans from
July 1 2011, the U.S. market share of milling wheat, corn and sorghum is likely also to decrease
significantly in MY 2011/12, with Eastern Europe and Argentina supplying the remainder.
CY 2011 - As a result of the continued improved economic activity during the first half of 2011,
both globally and in Israel, total agricultural and food imports in 2011 reached $5.4 billion,
up 25 percent from 2010. Food and beverage products account for 42 percent of imports.
A weak dollar combined with grain shortages from Russia and Ukraine, increased U.S.
competitive advantage. Data for 2011 point to agricultural and food imports from the U.S.
by 40 percent compared to 2010 or from $545 million to $761 million.
As a result, CY 2011 was a very good export year for U.S. Agricultural & food products into Israel.
Table 5: Opportunities and Challenges for U.S. Exporters to Israel
In 2010, and 2011 Israel?s economy has remained The security situation in Israel and in
strong, boosting demand for agriculture products. the region remains precarious.
Economic growth in 2011 and 2012 is expected at 4.8
and 3.2 percent, respectively. Continued concerns about the
economic situation in Europe and the
The recent approval of the Trajtenberg report by the Growing competition from Eastern
Israeli Government will allow the decrease of import Europe, Former Soviet Union, Turkey,
tariffs on some processed food products and South America and the Far East. This
agricultural products as well. In addition, some sector generally only imports from
current Tariff Rate Quotas (TRQ) will likely be nearby countries.
increased. It is expected that some new food and
agricultural items will be added as TRQs. The actual
list of processed food products and agricultural
products has not yet been approved. Post expects
that the GOI will publish the list within the next few
months. All in all, more opportunities for American
food and agricultural products are expected to be
available in the near future.
The current exchange rate of the U.S. dollar versus
the Euro continues to favor U.S. sales.
The standard of living in Israel is expanding rapidly, Israel is increasingly adopting EU
increasing the demand for high quality food products. standards and requirements on
Israel?s and Palestine?s economies are interlinked. U.S. suppliers lack knowledge of the
U.S. exporters can use Israel as a gate to the Israeli and Palestinian markets and its
Palestinian market with its rapidly growing population opportunities.
and potential increase in standard of living in the
In 2009, the GDP growth rate of the West Bank
totaled 7.2 percent. In addition, the Palestinian
economy in the West Bank is estimated to have
grown 9 percent in the first half of 2010, according to
the International Monetary Fund.
High consumer interest in new food products. About Import requirements can be quite
3,000 new products are being introduced into the strict, and new-to-market products are
local food market annually sometimes detained at port.
Negotiations on the Agreement on Trade in Israel is unlikely to agree to the U.S.
Agricultural Products (ATAP) will continue in 2012. request for a complete phase-out in
New agricultural agreement was signed
between Israel and the EU in
November 2009, resulting in greater
market access on both sides.
India and Israel are presently working
towards signing an FTA.
The Israeli consumer is knowledgeable of American Kosher requirements are becoming
products, and is receptive to additional information. increasingly strict and consumers
require high-level kosher certification
for their food products.
Increasing water shortages in Israel afford the U.S. Israel has a strong domestic food
an opportunity for increased exports of U.S. processing manufacturing system. EU
agricultural commodities. agricultural and food products are very
competitive because of proximity and
an increased trend toward sharing
Israeli agriculture is particularly vulnerable to climate
change, and will therefore be more reliant on
Israel is a net food importer. Israel is highly
dependent on grain and oilseed imports.
There is a continued growth in the number of food
stores (supermarkets, grocery stores, 24-hour
convenience stores), and restaurants.
Section II: Exporter Business Tips
Except for meat, kosher certification is not an obligatory requirement for importing food into
However, non-kosher products have a much smaller market share as the large supermarket chains
hotels refuse to carry them. In addition, in recent years kosher requirements are becoming
strict as the Israeli consumers require high-level kosher certification for their food products
Local Business Customs:
1. Customs Valuation and Taxes
Israel has implemented the WTO Customs Valuation Agreement. Under WTO regulations, the basis
valuation is the transaction value, in most cases the CIF price.
2. Value Added Tax and Purchase Tax
Israel decreased its VAT rate on January 1st, 2010 from 16.5 percent to 16.0 percent.
The VAT on imports is levied on the CIF landed cost plus purchase tax. VAT is recovered by the
upon resale of the goods and is ultimately paid by the consumer. Israel levies purchase taxes on
consumer goods. The GOI reduced or eliminated the tax on more than 600 items in 2000,
televisions, washing machines, electrical appliances and cosmetics. Rates that had ranged from 25
percent were reduced to 5 to 45 percent. Purchase taxes of up to 90 percent on motor vehicles,
tobacco were left unchanged.
In May 2010 the taxing system for spirits has been changed. The change is implemented
gradually and at the end of the process (January 2014) the tax on expensive spirits (all US
spirits belong to that group) will decrease significantly.
Consumer Taste and Preference
The food service industry is expanding and consumers? habits are changing. Over the last few
Israelis have begun to dine out more frequently and chose premium foods when doing so.
Approximately 20 percent of Israel's 7.6 million people are concentrated in the Tel Aviv district,
Israel's commercial and financial center. Other major concentrations of the population are the
area (15 percent), a major port city and center for the petrochemical industry, and Jerusalem
(12 percent). While most companies are headquartered in the Tel Aviv or Haifa metropolitan areas,
a growing number of firms maintain branches, showrooms, or service facilities in Jerusalem and
Consumer malls and shopping centers are popular in Israel. Over 200 malls exist and others are
American specialty shops, chain stores, and franchises have outlets in malls and shopping centers,
while others like Starbucks and Dunkin Donuts failed to succeed in the Israeli market. The key to
success is offering an increased variety of new products meeting the Israeli taste preferences and
service to the consumer.
The institutional services, including the army, hospitals, hotels, restaurants, banquet halls and
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. Two major supermarket chains with hundreds of outlets
throughout the country dominate the retail food market. 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 grocery stores serve the remainder of the
food market. In recent years, specialty food stores have sprouted in the main metropolitan
Food Standards and Regulations
See Gain Report IS1106 ? FAIRS Country Report
In the current report the following sections have been updated:
Heavy Metals in Foodstuffs - The Israeli Ministry of Health has increased monitoring
on imported food products in recent months (page 15).
The maximum limits of the following food color additives E1520, E1518, and E1505
were changed (page 11).
Import Procedure paragraph was modified (page 22-26).
New requirements for the export of pet food from the United States to Israel (page
Inspection of Animal Feed paragraph was modified (page 35-39).
Fish and Fish Products Import and Distribution system (page 43-47).
SPS and Regulatory Systems:
Four agencies oversee Israel?s animal, plant, and food safety issues.
1) National Food Control Service (FCS), which is a part of the Ministry of Health
2) Standards Institution of Israel (SII)
3) Israeli Veterinary and Animal Health Services (IVAHS)
4) Plant Protection and Inspection Services (PPIS).
The latter two are a part of MOAG. Israel?s FCS is notorious for the requirements it places on high-
food products. Plant quarantine authorities have been slow to conduct their pest risk assessments
for U.S. requested products. Depending on the product, both the Ministry of Trade and MOAG may
responsibility for managing quota allocations under the U.S.-Israel FTA.
Israel is turning to EU standards and requirements to guide its own food and food
supplements legislation. This action is causing U.S. and Israeli food regulations to differ.
The consequence of which has been growing import licensing difficulties for U.S. processed food
and needless port-of entry detentions. The import of some U.S. products is now banned.
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
those of the U.S.
3) the substantial degree of Israeli and EU regulatory agency interaction.
The Standards Institution of Israel (SII) is the agency responsible for the development of most
standards, compliance testing, and certification of products and industry quality assurance
The FCS enforces food and food labeling standards. For further information, interested firms should
The Standards Institution of Israel, 42 Levanon Street, Tel Aviv 69977;
Tel: 972-3-6465154; Fax: 972-3-6419683; E-mail: firstname.lastname@example.org.
The Government of Israel requires that food and health products be registered with the Ministry of
Health before they can be sold in the country. FDA approval for food and health care products is
mandatory, but Israeli importers prefer it as it accelerates the product registration process and
license approval. Product registration normally takes from 4-6 weeks if all documents are in order.
To encourage the free international flow of goods, the Israeli cabinet passed decision No. 2191,
which is titled ?Improving the Terms of Trade Standardization? on August 12, 2007. The decision
determines that by June 30, 2010 at least 65 percent of Israeli?s mandatory standards
will be based on international or regional standards.
All import licensing requirements for U.S. made consumer and industrial goods have been
under the United States ? Israel Free Trade Area Agreement (FTAA) of 1985 and World Trade
Organization (WTO) agreements. Imported food items require the approval of the Ministry of
Food Control Administration (FCS), which is also responsible for the approval of labeling
and packaging. All plant material (including dried fruits and nuts) require import approval from the
Plant Protection and Inspection Service (PPIS). Unprocessed and unpackaged imported meat must
licensed by the Israel Veterinary Services (IVS) and originate in a plant which has been certified as
approved by the IVS. Packed meat and poultry for retail sale are subject to licensing by the
Food Control Administration of the Ministry of Health. Israel law requires that all meat and poultry
imports be certified kosher by the Rabbinical Council of the Chief Rabbinate or a body authorized
Council. As an exception, it is possible to import non-kosher beef offal. Israel?s veterinary
imports of bone-in beef from countries where there is risk of transmitting Foot and Mouth Disease
(FMD) or Bovine Spongiform Encephaly (BSE).
General Tips for Exporters
Consider participating in FAS Tel Aviv organized sponsored events.
Consider exhibiting at Kosherfest in New York (November 8-9, 2011) as many Israeli buyers
attend this show. Kosherfest is the world's largest kosher certified products trade event
the retail and foodservice industries. http://www.kosherfest.com
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; Yossi.firstname.lastname@example.org.
The FAS office in Tel Aviv has listed a few requirements to improve new product
success in the local market (see annex 4).
FOOD AND AGRICULTURAL TRADE SHOWS IN ISRAEL
An International Food & Beverages Exhibition for professionals from the catering, food wholesalers,
restaurants, hotels, institutional buyers and food shops.
Nov 29- Dec 1st, 2011 ? Tel Aviv
Agro Mashov is Israel?s greatest annual international all agriculture exhibition.
Feb 29- March 1st 2012 ? Tel Aviv
For the past three decades, Agritech has served as a platform to bring together more than 7,000
visitors from 115 countries to interact with leading agriculture technology companies from around
15-17 May, 2012 ? Tel Aviv
WATEC exhibition is Israel?s prime event for showcasing technologies and expertise in water and
15-17 November, 2011
Section III: Market Sector Structure and Trends
Retail Chains ? Two supermarket chains dominate Israeli food retailing and account for 60%
($5.6 billion) of the market, the rest belongs to other private supermarket chains, grocery
stores, drugstores and convenience stores. Most of them buy only kosher food
The large supermarkets chains import directly and also buy from importers and
Smaller retailers usually buy only via importers/wholesalers.
Hotel, restaurants and institutional food sectors (HRI). The Israeli army (IDF) and the
Israeli police are
Make up a large part of the institutional sector. Only large chains such as hotel chains or
caterers have a central purchasing office. Most HRI imports are for kosher food products.
Food Importers, there are about 300 importers. They buy kosher and non kosher food
1. Retail Food Sector
As a result of the continued improved economic activity in 2011, both globally and in Israel, the
food market (food retail chains and minimarkets) was valued at $9.6 billion, a 2.5 percent increase
from the previous year. About 60 percent ($5.75 billion) belongs to the two major retail food-
The leading retail chain in Israel with a market share of 37 percent is Shufersal, operating over
stores nationwide and employing over 11,000 people. The entire physical store area total is
In addition to the retail chains, there are approximately 5,500 grocery stores and 1,700
Israel. Due to the intense competition in the Israeli food sector, the grocery stores and
are operating at very small profit margins. More than 150 convenience stores, which are open 24
were established in recent years.
For further information, see Israeli Retail Food Sector Report:
2. HRI Sector
Israel?s HRI sector is complex and very diverse, with large commercial and institutional
The improved tourist industry will continue to fuel demand for hotels and restaurants.
Understanding import regulations and distribution channels, as well as making local contacts, are
essential to entering this market. Nuts, salmon and dairy products are among the best U.S.
in the market.
The HRI market was estimated to be valued at about $7.3 billion in 2010, 2 percent increase
to 2009. In 2007, the HRI market grew by 5 percent. As a result of the continued improved
activity in 2011, both globally and in Israel, it is expected that HRI market will grow by 3 percent
Food service is divided into two categories: commercial and institutional. The commercial sector is
divided into hotel and restaurant sectors. The commercial sector comprises an estimated 360
hotels (46.500 rooms), 1,174 rural tourism houses, 4,399 food business (restaurants, coffee
fast food, pubs and bars), of which 1,539 (35 percent) are kosher certified. Some of the
are not kosher certified still use only kosher ingredients. In addition, there are about 900 banquet
The most popular food business formats include coffee shops, Mediterranean, Italian, Thai and
restaurants. In 2010, sales at restaurants, coffee shops, kiosks pubs and bars were estimated at
about $2.75 billion. Approximately 45 percent of the bars and 23 percent of the pubs are located in
central and northern Israel. Approximately 1,600 restaurants, coffee shops, pubs and bars are
in the Tel Aviv area.
Tourism - As a result of the improved global economic situation combined with the improved
situation in Israel, from September 1st, 2010 to September 1st, 2011, 3.6 million visitors came to
a 17% increase compared to the same period one year ago. Of those visitors, three million stayed
more than one night, which is a 21 percent increase compared to the same period a year ago.
Over the course of the last year, the busiest tourism month was October, with 404,000 visitors.
The most impressive growth belongs to the cruise ships, with 208,000 visitors, a 68 percent
compared to the previous year total of only 124,000 visitors. Income from inbound
tourism was 14.3 billion NIS ($3.95 billion), an 11 percent rise compared to the previous period
of 13 billion NIS. The highest number of tourist arrivals was from the United States (630,000),
Russia (560,000) and France (290,000) the rest were mainly from Germany, Italy and the UK.
The institutional food service companies include approximately 4,000 kitchens. The Israeli Defense
Forces (IDF) are the largest institutional food consumer. The IDF alone buys about 4 percent of all
Israeli food through its purchasing channels. IDF outsourced a part of its food supply chain
(150,000 meals/day). In addition, the Israeli police force joined the IDF adding another
For further information, see Israeli HRI Food Service Sector Report:
As a result of the recent social protests in Israel, food product price cuts have been
by the local food companies and retail chains.
Demand for healthy/natural foods is increasing; organic food, reduced in fat, lower salt, low
sugar, more grains and fibers or that contain added vitamins, pro-biotic and health benefits.
Niche products that target a specific health issues such as diabetes, celiac disease
(gluten free food).
Increased consumption of non alcoholic and alcoholic drinks.
Adoption of private labels; Objectives: lowering retail price, guarantee quality and increase
After several recent food safety scandals, food safety has also become increasingly
As a result of the increasing number of women in the workforce, there is an increased
for nutritional and ready-to-eat meals and other foods that have low preparation time.
Section IV: Best High Value Products Prospects
Non alcoholic drinks
Organic and health/natural food products
Dry grocery food products
Ready meals (premium quality only)
Soft skimmed cheese
Specialty gourmet foods
Processed and frozen fish and sea food
Frozen and canned vegetables and fruits
Food industry ingredients
Baking industry ingredients
Section V: Key Contacts and Further Information
Local Mailing address: Office of Agricultural Affairs , U.S. Embassy Tel Aviv ;
Tel: 972-3-5197588, Fax: 972-3-5102565; E-mail: email@example.com ;
Food Control Service
Ministry of Health
12 Ha?arba?a St.
64739, Tel Aviv, Israel
Web site: http://www.health.gov.il/english/
Contact: Import Officer, Mrs. Ruthy Shinberg: Tel: 972-3-6270107
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
Import & Export Veterinary Division
Chief Import & Export Veterinary Officer Dr. Med. Vet. Shlomo Garazi
Tel: 972-3-9681649, Fax: 972-3-9605194. E-mail: firstname.lastname@example.org
Plant Protection & Inspection Service (PPIS)
P.O. Box 78
50250, Bet Dagan, Israel
Contact: Ms. Miriam Freund, Director
Tel : 972-3-9681560
Web Site: http://www.ppiseng.moag.gov.il/ppiseng/
Standards Institution of Israel
42 H. Levanon St
69977, Tel Aviv, Israel
Web Site: www.sii.org.il
General Information: E-mail: email@example.com
Tel: 972-3-6465154; Fax: 972-3-6419683
Major Newspapers and Business Journals
- English Language:
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 /
More Useful 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
Central Bureau of Statistics - http://www.cbs.gov.il/engindex.htm
Bank of Israel - http://www.bankisrael.gov.il/firsteng.htm
USDA'S Global Agriculture Information Network (GAIN) -
Annex 1: Key Trade & Demographic Information, 2010
Agricultural Imports From All Countries ($Mil) / U.S. Market Share (%) $4,327/12.5%
Consumer Food Imports From All Countries ($Mil) / U.S. Market Share (%) $1,832/9.0%
Edible Fishery Imports From All Countries ($Mil) / U.S. Market Share (%) $229/1.2%
Total Population (Millions) / Annual Growth Rate 7.7/1.8%
Number of Major Metropolitan Areas 3
Per Capita Gross Domestic Product (U.S. Dollars) $29,800
Unemployment Rate (%), in the second quarter of 2011 5.5%
Per Capita Annual Food Expenditures (U.S. Dollars) $1,960
Annual Average Exchange Rate for 2010 (US$1 = X.X local currency) US$1=3.73 NIS
Source: CBS, Israel
Annex 4: Criteria for Selection of an Exporter /Food Product with Better Opportunity in
1. Obtaining a Certificate of Free Sale in the United States may ease the import licensing
by the Israeli Ministry of Health.
2. Obtaining a document approving the production under Good Manufacturing Practices (GMP)
HACCP will increase the product?s chance for an easy introduction to the Israeli market.
3. Being listed on the FDA?s list of registered plants and carrying a registration number from
FDA is good approval for the Israeli import licensing authority that the exporting
is inspected by the FDA or the USDA.
4. Shipment from the US to Israel and selling time may last a few months, therefore only
with at least 9 months of shelf life can be considered for exports to Israel.
5. Only facilities exceeding a minimal production capacity and export experience can be
for export to Israel. Post is looking for big buyers in the Israeli retail market.
This segment includes the biggest retail chains who buy in relatively big quantities.
6. Carrying a Kosher certificate is an advantage in the local market. Some surveys claim that
between 60% - 70% of the Jewish population consume Kosher products. The biggest retail
chains, the hotels and the institutional markets are buying only Kosher products.
Annex 5: Map of Israel