The Israeli dairy market has long been characterized by higher consumer prices compared to the European Union (EU) average, reflecting structural and regulatory challenges.
Further, the EU framework agreement, which is highly disadvantageous for Israel, further worsens the position of consumers. This agreement solidifies the oligopolistic structures in Israel and results in massive annual trade deficits for Israel, as well as a disproportionate dependence on the EU.
Finally, the agriculture of Israel can be made more sustainable by transforming Israel’s agriculture into an organic agriculture which will have a massive impact on reducing the daily costs of life and, as a side effect, will improve the quality of diary products and soil quality and provides new impetus for tourism and the export industry (organic products achieve up to 30% higher sales).
At the end, the Israeli consumer pays a very high price for this socialist-styled economy which actually is dominated by a Chinese owened company.
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Price Comparison of Dairy Products: EU Average vs. Israel (2020-2025)
This section compares retail prices for key dairy products—milk, butter, and yogurt—between the EU and Israel from 2020 to 2025, using available data in absolute terms (in euros per liter or kilogram) and percentage differences.
Prices are based on average consumer retail figures where possible, converted to euros for consistency (using average annual exchange rates; e.g., NIS 1 ≈ €0.25-0.27). Note that EU data represents a weighted average across member states, while Israeli figures are drawn from regulated and market reports.
Milk Prices
EU average retail milk prices have shown steady increases due to inflation and supply chain pressures, while Israel’s regulated prices remain higher due to socialist-styled import restrictions, and production costs. The following table summarizes the annual averages:
| Year | EU Average (€/L) | Israel (NIS/L) | Israel (€/L) | Percentage Difference (%) |
|---|---|---|---|---|
| 2020 | 0.90 | 5.50 | 1.43 | 59 |
| 2021 | 0.95 | 5.80 | 1.51 | 59 |
| 2022 | 1.05 | 6.20 | 1.61 | 53 |
| 2023 | 1.10 | 6.50 | 1.69 | 54 |
| 2024 | 1.15 | 6.70 | 1.74 | 51 |
| 2025 | 1.20 | 7.09 | 1.85 | 54 |
Butter Prices
Butter prices in the EU fluctuated with global commodity trends, peaking in 2024, while Israel’s prices are influenced by local oligopoly and import tariffs. The table below provides yearly estimates:
| Year | EU Average (€/kg) | Israel (NIS/kg) | Israel (€/kg) | Percentage Difference (%) |
|---|---|---|---|---|
| 2020 | 3.80 | 20.00 | 5.20 | 37 |
| 2021 | 4.00 | 21.50 | 5.59 | 40 |
| 2022 | 4.50 | 23.00 | 5.98 | 33 |
| 2023 | 5.00 | 25.00 | 6.50 | 30 |
| 2024 | 6.00 | 28.00 | 7.28 | 21 |
| 2025 | 4.29 | 27.00 | 7.02 | 64 |
Yogurt Prices
Yogurt prices in the EU vary by country but average lower than in Israel, where non-regulated products allow for premium pricing. Here’s the comparative table:
| Year | EU Average (€/kg) | Israel (NIS/kg) | Israel (€/kg) | Percentage Difference (%) |
|---|---|---|---|---|
| 2020 | 1.50 | 10.00 | 2.60 | 73 |
| 2021 | 1.60 | 10.50 | 2.73 | 71 |
| 2022 | 1.70 | 11.00 | 2.86 | 68 |
| 2023 | 1.80 | 11.46 | 2.98 | 66 |
| 2024 | 1.90 | 12.00 | 3.12 | 64 |
| 2025 | 2.00 | 12.50 | 3.25 | 63 |
Main Factors Contributing to Higher Prices in Israel
Israel’s dairy prices are elevated due to a combination of regulatory, gepolitical, and economic factors:
- Market Oligopoly and Regulations: Dominated by three producers (Tnuva, Strauss, Tara) controlling 85-92% of the market, with production quotas limiting competition and imports.
- Import Restrictions: Strict tariffs and quotas on dairy imports.
- External Pressures: Geopolitical disruptions add about 2% to logistics.
These factors result in dairy baskets 44-79% more expensive than EU/OECD averages.
The Value Chain of Milk in Israel: Who Gets What? (based on figures from 2024)
The Israeli dairy sector operates under a highly regulated framework overseen by the Israeli Dairy Board (IDB) and the Ministry of Agriculture, with milk production quotas (phased out by late 2025) ensuring supply stability.
Raw milk prices are set quarterly as a “target price” (machir mata) based on production costs, feed indices, and inflation adjustments. In 2024, the average target price for raw milk was approximately NIS 2.47 per liter (up ~1.3% from 2023 due to feed cost rises and a 7 agorot hike in March). This price is what processors must pay farmers, covering ~95% of production costs (with a 2-5% efficiency buffer).
The value chain transforms this raw input into consumer-ready products like pasteurized milk. For simplicity, we’ll focus on a standard 1-liter carton of 3% fat pasteurized milk, the most common regulated product.
In May 2024, its maximum retail price rose 4.48% to NIS 6.70 (from NIS 6.41), reflecting automated adjustments tied to raw milk costs, CPI, and wages. By December 2024, minor inflation pushed it to ~NIS 6.80, but we’ll use the May figure for consistency.
The chain breaks down as follows: Farmer → State (levies/subsidies) → Dairy Processor → Retailer → Consumer. Total value added: ~NIS 4.23 per liter (consumer price minus raw cost). This includes processing (pasteurization, packaging), transport, margins, and taxes.
Farmers receive ~37% of end value, processors ~23%, retailers ~25%, with the rest covering state levies, transport, and waste.
Breakdown per 1-Liter Carton of 3% Milk (NIS, 2024; Exclusive of VAT Unless Noted)
| Stakeholder | Amount (NIS, Excl. VAT) | Share of Pre-VAT End Price (%) | Description (Excl. VAT) |
|---|---|---|---|
| Farmer (Raw Milk Producer) | 2.47 | ~37% | Regulated target price paid by processors (excl. VAT; farmers may charge VAT if registered, but often offset in co-op structures). Covers production costs; no VAT burden here as input-exempt. |
| State (Government Levies & Adjustments, Excl. VAT) | 0.20 | ~3% | IDB marketing levy (NIS 0.10-0.15/liter) and minor subsidies/tariffs. VAT handled separately below. |
| Dairy Processor (e.g., Tnuva, Strauss, Tara) | 1.55 | ~23% | Processing, packaging, transport, and margin (excl. VAT; they pay VAT on farmer input but credit it). Sells to retailer at ~NIS 4.22 excl. VAT total so far. |
| Retailer (e.g., Shufersal, Rami Levy) | 1.70 | ~25% | Logistics, shelf space, and gross margin (excl. VAT; credits VAT paid to processor). Final pre-VAT price: NIS 6.70. |
| Subtotal (Pre-VAT End Price) | 6.70 | 100% (Pre-VAT) | Regulated maximum; includes ~NIS 0.85 waste/unsold factored in. |
VAT Layer: Added and Remitted to the State
| Stage | VAT Charged (17%) | VAT Credit Claimed | Net VAT to State (NIS) | Cumulative |
|---|---|---|---|---|
| Processor (on farmer input) | 0.42 (17% of 2.47) | N/A (input VAT) | 0.00 (credited forward) | 0.00 |
| Processor (value added: NIS 1.55) | 0.26 | Credits 0.42 from input | -0.16 (net credit, rare but possible) | ~0.00 |
| Retailer (on processor input: NIS 4.22) | 0.72 | N/A (input) | 0.00 (credited) | 0.00 |
| Retailer (value added: NIS 1.70) | 0.29 | Credits 0.72 from input | 0.00 (net credit) | 0.00 |
| Consumer (Final Payment) | 1.14 (17% of full 6.70) | No credit | 1.14 (full remitted via chain) | 1.14 |
- Total to State from VAT: NIS 1.14 per liter (~17% of pre-VAT price). This is the net after all B2B credits; the slight “negative” at processor stage is offset in aggregates (e.g., via levies). Annual dairy VAT revenue: ~NIS 2B.
- Grand Total Paid by Consumer: NIS 7.84 (6.70 pre-VAT + 1.14 VAT). Avg. actual: ~NIS 7.60-7.90, with promotions.
Key Dynamics and Trends in 2024 (VAT Context)
- Farmer’s Perspective: Receives NIS 2.47 excl. VAT; VAT on inputs (feed) is creditable, but feed inflation (up 20%) hit margins despite the 1.3% target price hike.
- State Cut: Collects full VAT (NIS 1.14) + levies (NIS 0.20), totaling ~NIS 1.34 (17% of consumer price). Regulates pre-VAT prices to control inflation; 2025 imports (tariff-free) added ~200M liters, indirectly easing VAT on imports. For example, in Germany, a reduced VAT rate of only 7% is levied on milk, butter, and yogurt.
- Processor Cut: ~23% pre-VAT; VAT-neutral due to credits, but oligopoly margins stable at 8-10%. Non-regulated items (e.g., yogurt) saw 4.45% hikes, including VAT.
- Retailer Cut: ~25% pre-VAT; absorbs/credits VAT seamlessly, but war logistics added ~2% costs. Private labels (27% share) often sold below max pre-VAT.
- Consumer Impact: Full VAT burden raises effective price ~17%; dairy budget ~3% of food spend (NIS 12B total). 2025 VAT hike to 18% added ~NIS 0.10/liter, pushing carton to ~NIS 8.00 total.
VAT as an add-on to the regulated chain is ensuring the state’s ~17% cut without distorting B2B flows. This peace of chain is paid by the customer. Critics note the VAT amplifies high costs vs. EU, favoring reforms like reduced rates on essentials.
Overview of the Israeli Dairy Market
The Israeli dairy industry is highly concentrated, with the top three producers controlling approximately 85-92% of the market from 2020 to 2025. The market has remained oligopolistic, dominated by Tnuva (the largest by far), followed by Strauss Group (which includes Yotvata Dairy) and Tara Dairy.
Market shares have been relatively stable over this period, with minor fluctuations due to regulatory changes, consumer shifts toward plant-based alternatives, and the end of milk production quotas in 2025. Data is primarily based on value shares (e.g., revenue from dairy sales), as volume shares (e.g., milk processed) align closely but are less frequently reported. Thus all figures are approximations.
Tnuva has consistently held over 50% share, though it has slightly declined from historical highs (e.g., 70% pre-2010s). Strauss and Tara have maintained 20-25% and 10-13%, respectively. Smaller players like Gad Dairy (3-5%) and Golan Heights Dairy (2-3%) fill the rest. Ownership has been unchanged since 2014-2017, with no major shifts reported through 2025.
Top Three Producers: Ownership and Market Shares (2020-2025)
| Producer | Ownership (Stable 2020-2025) | Market Share (Value, Approx.) | Notes on Trends |
|---|---|---|---|
| Tnuva | Bright Food (China; 56% controlling stake since 2014); Bright Dairy (China; 24% since 2014); Ladder Group (China; 10%); Kibbutzim/Moshavim cooperatives (Israel; 10%) | 50-55% (e.g., 55.2% in 2020; ~50% in 2024; over 50% in 2025) | Dominant in milk, cheese, and yogurt; slight decline due to competition from plant-based lines and discounters. Processes ~850 million liters of milk annually. |
| Strauss Group (incl. Yotvata Dairy) | Publicly traded (Israeli; majority held by Strauss family and public shareholders); 50% stake in Yotvata Dairy (joint with Kibbutz Yotvata since 1997) | 20-25% (e.g., 21.3% in 2020; ~20-22% in 2024-2025) | Strong in premium yogurt, cheese, and plant-based (e.g., CowFree line launched 2025); Yotvata focuses on regional milk production. |
| Tara Dairy | Central Bottling Company (CBC; Israel, Coca-Cola bottler; full ownership since 2004) | 10-13% (e.g., 11.3% in 2020; ~10-13% in 2024) | Largest private dairy; popular for kosher/Sabbath observance; produces ~135 million liters annually. Stable share with growth in flavored/functional milks. |
Key Insights
- Total Top-Three Share: ~85% in 2020, rising to ~92% by 2024-2025 due to consolidation and discounter partnerships (e.g., Shufersal with smaller dairies).
- Market Dynamics: Growth in plant-based alternatives (e.g., almond/soy milks) capped traditional dairy expansion, but overall dairy sales rose 3-4% annually through 2025, driven by population growth and exports ($250M/year).
Final note: Compared to Austria, which is considered a highly concentrated market in the EU, there are 71 companies that process approximately 89% of the raw milk (around 3.6 million tons) instead of 3 as in Israel.
Disclaimer: This article is based on publicly available data and estimates as of December 01, 2025. Prices and market conditions may vary by source, location, and time due to fluctuations in exchange rates, inflation, and regulatory changes. The information provided is for informational purposes only and should not be considered financial advice. Data from Ministry of Agriculture, CBS, and IDB reports; VAT mechanics per Tax Authority guidelines. Shares derived from Euromonitor (2025 data), Who Profits (2020 breakdown), Dairy Reporter (2024 trends), and MSU Extension (2020 concentration stats). Ownership confirmed via Wikipedia, Times of Israel, and Dairy School reports—no changes post-2017. Data fetched with search engines and LLM.