Israel’s dairy sector has plunged into a full-blown crisis as farmers staged nationwide strikes to protest sweeping government reforms, slashing nearly 20% of national milk production and triggering widespread shortages across supermarkets.
Retailers reported empty shelves and imposed purchase limits on staple items such as fluid milk, butter and cottage cheese after supply chains were disrupted. The protest saw dramatic scenes, including farmers dumping milk on highways and tractor convoys heading toward Jerusalem, highlighting escalating tensions between producers and policymakers.
Reform Plan Sparks Political Battle
At the centre of the standoff is Finance Minister Bezalel Smotrich’s proposal to overhaul Israel’s tightly regulated dairy sector. Since the country’s founding, the market has operated under a quota system, state-controlled pricing and high import tariffs designed to protect domestic production.
The reform package — now linked to the national 2026 budget — proposes eliminating protective dairy import tariffs of up to 40%, reducing annual milk production quotas from 1.5 billion litres to 1.0 billion litres, and cutting the price paid to farmers for raw milk by roughly 15%.
Supporters argue the changes will increase competition and reduce consumer prices in a market often criticised for high retail costs. Opponents counter that dismantling the system threatens rural livelihoods and national food security, particularly in regions still recovering from recent conflict.
Supply Disruptions Persist
Although the formal strike lasted only a few days, logistical bottlenecks continued to disrupt deliveries. Major supermarket chains introduced rationing measures to stretch limited inventory as regulated dairy products remained scarce even after some supply resumed.
Farm leaders, including representatives from the Israel Cattle Breeders’ Association, warned that eliminating quotas and price supports could force hundreds of farms out of business. Compensation packages offered to farmers willing to surrender quotas have been criticised as insufficient to rebuild long-term production capacity.
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The legislative package has advanced through early budget readings, but political divisions have intensified, with some coalition lawmakers representing agricultural constituencies expressing reservations about the reform.
Alternative Dairy Gains Momentum
Amid the uncertainty, interest in precision-fermented and lab-grown dairy alternatives appears to be accelerating. Israeli food-tech companies such as Remilk, in collaboration with Gad Dairies and Strauss Group, are expanding offerings of animal-free dairy proteins.
These products, molecularly identical to cow’s milk proteins but produced without livestock, are gaining traction among consumers — particularly in kosher-pareve categories that offer broader dietary flexibility.
While still a niche segment, analysts suggest the current reform battle could reshape Israel’s dairy market in the long term, potentially accelerating structural change and technological innovation alongside policy reform.
As the 2026 budget debate continues, Israel’s dairy industry finds itself at a crossroads — caught between liberalisation, food security concerns and the emergence of next-generation alternatives.
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