World Grain - December 2006 - 21

countryfocus
ity improvements have helped existing
mills stay viable. About five mills have
had to close in the 15 years since the
start of deregulation.
An outcome of the Oslo Accords in
1993 was the construction with international development aid of large mills in
Ramallah in the West Bank and in Gaza,
resulting in a loss of 25% to 30% of the

flour market for Israel's mills, though
wheat for these Palestinian mills still
must pass through Israeli ports.
FEED AND OILSEEDS
In contrast to flour milling, the feed
industry is fairly concentrated. The
largest player, Ambar Feed, has annual
production of 750,000 tonnes at its two

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for valuing domestic wheat. The country's wheat growers are paid a price
pegged to the Galveston price of U.S.
hard red winter plus the shipping cost
to Israel at the time of harvest. Leading
milling companies have challenged this
system in court three times, claiming
the existing pricing system for domestic
wheat no longer reflects the true international market price for deliveries to
Israel. A ruling is still awaited from the
Supreme Court on the most recent case.
The mill owners hope that the court will
appoint a panel of experts from outside
the country to create a fairer index for
pricing Israeli wheat.
The courts are not an unfamiliar place
for Israeli millers. Prior to 1992, flour
mills were granted production quotas
based on the total length of installed
rollers, normally an accurate measure
of production capacity, except that roll
stands were put on the second and third
floors of some mills. A legal challenge
brought by certain companies resulted
in a Supreme Court ruling to appoint a
German milling expert to independently assess mill capacity for allocation of
quotas.
The mill quota system was eliminated
in 1992 and flour prices were completely deregulated in 2004, but five types
of bread remain subject to government
price controls. One is the very symbolic
Challah bread often eaten on religious
and other traditional occasions. Others
include white and brown bread. Among
them they account for about 35% of
bread consumption.
Due to court battles and ongoing
deregulation, the country's milling industry is subject to strong competition.
There are 17 operating mills. One milling group, Stybel Flour Mills, controls
four of these mills and 25% of installed
capacity. The other 13 mills are independent companies usually in the second or third generation of family ownership. In some cases, private investors
have minority shares in multiple mills
but no management control. A steady
rise in the country's population combined with modernization and capac-

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World Grain - December 2006

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