The tomato crisis: farmers and professionals warned for years, the decision makers ignored

The tomato crisis that has been felt in Israel for the past month did not fall upon us by surprise. The farmers and the professionals warned the decision makers and the treasury officials about it, but they consciously chose to ignore it. It was only a matter of time, until the confluence of the dangers they warned of would reach a crisis.

The tomato stars in almost every meal on the Israeli dinner table. From salad, through Shakshuka to ketchup, it’s hard to imagine Israeli cuisine without it. In the last month, many Israelis have difficulty finding it in networks and markets, and find, at best, overpriced and low-quality tomatoes.

The stoppage of imports from Turkey in April and the stoppage of supplies from Jordan during the month of August caused a 40% shortage of tomatoes in the markets, but the process that led to the shortage did not start this year. A combination of several factors led to a dismal result, which is the beginning of a crisis with no end in sight.

The forces of nature, the forces of the market

Climate change is encouraging the development of viruses and plant diseases around the world. A violent virus discovered in 2016 gave its signals in tomato cultivation. It quickly became clear that he could easily eliminate entire greenhouses, especially in the summer months. Regrettably, some growers have decided to reduce or stop growing tomatoes after a shorter period than usual. The damage to the crops is manifested in a decrease in the amount of production per acre, and leads to a shortage and an increase in the price during the least favorable period – the Tishrei holidays.

The forces of nature were joined by the forces of the market. In those years, the “Khalat” forum strengthened its power and accessibility in the government districts. The members of the forum were welcomed with open arms by Knesset members and ministers. Very quickly the members of the forum became members of the Knesset committees and actively participated in the discussions.

Position papers of the forum, ostensibly based on research, intended to promote ultra-liberal policies, were presented in government offices and submitted to Knesset members. In all of them there was a clear statement: where there is no relative advantage for local cultivation, imports must be allowed unconditionally. A tailwind for an unrestrained opening of imports. One thing was clear to everyone: among the authors of the studies and position papers, there was not a single professional from the field of agricultural economics, and not one who understood the difference between an agricultural farm and a shoe factory.

The local growth has been trampled for generations, for a momentary title

These papers fell into the hands of the Ministry of Agriculture management in 2016, which engraved a new agenda on its banner: the cost of living is the new ruler. Trying to address the cost of living in the short term and unconditionally is a populist move to sacrifice the future for the sake of the here and now. It means trampling the local growth for generations for a momentary title.

The budget department, which has stuck to its economic positions for decades, realized that it was lucky: the management of the Ministry of Agriculture shares its positions and will not stand in its way. The professionals and farmers shouted that the writing was on the wall, that the tomato crisis was around the corner, but the knights of the free market were not interested in anything. Imports of tomatoes were opened without restriction and grew from 1,000 tons per year to 18,000 tons in 2016. Since then, a clear trend has emerged: increasing reliance on imports has led to a reduction in local production. The amount of imports is increasing and the local production is falling. Today, local production is at an all-time low: 114,000 tons, compared to 43,000 tons of imports in 2023.

The first significant shortage was felt in 2016. Prices in the markets jumped accordingly. In such cases, the accepted solution at the Ministry of Agriculture was the controlled opening of imports of the product in short supply. Controlled opening means: a limited quantity at adjusted customs levels, for a limited period.

But in 2016, under the illusion of the advantage of the free market, the timing of the opening of imports was long before the shortage, and the import window closed long after the shortage. The quantity that was once controlled by a cap has been opened up to an unlimited quantity. The amount of the customs duty was not dependent on the import costs in the country of origin, and in practice it was possible to import from very few countries. The main country of origin for importing tomatoes was Turkey. The policy was to lower the customs duty to a full exemption, even though the price of tomatoes in Turkey was very low (NIS 1.5-1.8 per kg). It is not difficult to guess who the factors pocketed the difference.

Imports opened, farmers stopped growing

The policy of opening imports in an uncontrolled manner, whenever there is a suspicion of a shortage, was implemented without question until the beginning of 2023, with a very short break during the days of the Minister of Agriculture Alon Shuster. During the period of the change government, this policy gained tremendous momentum, and was expressed in the signing of a decree that lowered all tariffs on fresh and processed agricultural produce “on the heads” of the farmers and the professionals in the Ministry of Agriculture, as part of the economic plan of Ministers Lieberman and Porer on March 16, 2022.

What did the farmers do during these seven difficult years? The answer is simple: since the local tomato cultivation could not compete with the import prices from Turkey, where the cost of water for cultivation is significantly cheaper, some have reduced tomato cultivation in the farm. Some farmers converted the farm to other crops and others retired from agricultural work.

Bottom line, as the illegal imports grew, so did the shortage. Imports from Turkey, which in 2016 stood at single-digit percentages and adjusted themselves in quantities and prices to local production, reached more than 40% of local consumption.

No one thought what would happen if Erdogan got fed up. Professional officials in the Ministry of Agriculture came back and warned: it would not be right to rely on Turkey alone. Jordan is also prone to disasters (some water is infected with cholera) and the weather there is similar to that of Israel, so the virus is celebrated there as well. The prices in Europe, in countries like Spain, Italy and Greece, are similar to the prices in Israel. Either way, importing cannot be the solution.

In my understanding, a significant part of the public realized only after October 7 that there are quite a few agricultural products, especially fresh products, in which we must not rely only on one or another import. All over the world it is called food security. With a little help, Israeli farmers can supply most of the local consumption, with most of the fresh products, and at fair prices.

Happily, precisely at this difficult time, the combination of the factors I have listed has less impact. With the exception of the budget department, which does not seem to change its mind even when reality repeatedly proves otherwise.

It’s not too late to fix it

What should be done now? The solution is not complicated. The two main vectors must be addressed: one – strengthening an efficient and high-quality tomato growing industry, and the other – certainty and stability.

Efficient and high-quality tomato cultivation requires grants to increase areas and establish climate-controlled greenhouses, introduce new technologies to greenhouses, renovate growth houses, increase subsidies for agricultural insurance, and invest in long-term research. In my understanding, all the parties in the field know exactly what needs to be done, starting with the management of the Ministry of Agriculture and Food Security, through the instructors of the Ministry of Education (the training and profession service) and the plant council, and ending with the farmers, and it seems that some of the things are starting to be implemented in the field.

The second vector is the one that is missing the most: certainty. With all due respect to the grants, most of the required financial investment is the farmer’s. Without certainty, very few sane farmers will invest their best money in the restoration of the tomato industry, when they know that with a wave of Erdogan’s hand he can end the embargo on exports to Israel. In order to ensure the certainty of the farmers and encourage them to act to increase production, the customs mechanism must be fixed in a similar way to the existing mechanism in Europe, called “entry prices”. On one leg: This is a mechanism that sets a higher customs rate the lower the entry price (import price), and a lower customs rate (up to duty-free) as the entry price approaches the local production cost. It seems that the implementation of this part still does not penetrate enough to the relevant parties in the government, who claim that what is good for Europe is good for Israel.

These two steps are the minimum required in order to produce tomatoes in Israel and not be subject to the whims of world leaders. If you also want to encourage the farmers and “put” them on top of our happiness, it would be right to add a tool of direct support for the calculation per dunam, in amounts that correspond to the cost of growing in Israel.

Zvika Cohen is senior vice president former for investments and financing in the Ministry of Agriculture