The Treasury Wanted to Cut What Dairy Farmers Are Paid for Raw Milk by 15% to Open the Market to Competition. The Reform Was Buried in March — and the Raw Price Fell Anyway. Just Not for You.

By מערכת סופרקליר · 2026-08-07 · 5 min read

51% — The gap between the cheapest and priciest listing for the same 200g Tnuva butter, on the same day — ₪7.88 vs. ₪11.90, across 549 price points in 28 chains, per Superclear data, August 2026

On July 7, 2026, TheMarker published a finding that's hard to square: the raw milk price dairies pay farmers fell roughly 7% over the past year — and shelf prices for dairy products rose anyway, in the two months before the story ran. A farmer from southern Israel told the paper: "Israeli consumers are suckers: there's no logical explanation for why dairy product prices went up. Raw material is no longer a factor in the supermarket price." A farmer from the north added: "There's a market failure here: the consumer pays more, and the ones who benefit are the big corporations, not the farmer." That report landed roughly four months after the one government reform designed to fix exactly this disconnect had already been buried.

The reform that was supposed to lower your basket

In December 2025, Calcalist revealed the plan: the Finance Ministry, led by Bezalel Smotrich, wanted to replace the decades-old "target price" for raw milk with a "protection price" 15% lower, for a transition period running from April 2026 to June 2028. The state would allocate roughly ₪1 billion to buy out production quotas from farmers who chose to exit the industry, aiming to shrink domestic production from 1.5 billion to 1 billion liters of milk a year, with the gap filled mainly by imported hard cheeses. Industry sources estimated at the time that 80% of dairy farmers wouldn't survive the move. The official rationale: dismantle the centrally planned quota system and open the market to real competition — which, the plan promised, would eventually bring consumer prices down (Calcalist).

Farmers cut off the milk, and the reform got buried

On February 3, 2026, dairy farmers across the country stopped supplying milk to processing plants in protest. Within days, small grocers saw shortages, and Carrefour capped purchases at two units per customer. Israel Toti, head of the Cattle Farmers' Union, told the paper: "Anyone who depends on milk should take care of themselves," describing farmers' position bluntly: "We're desperate, our backs are against the wall with a gun to our head" (Ynet). The protest paused, but the political pressure didn't: on March 10, 2026, Calcalist reported that the milk reform had been pulled out of the Economic Arrangements Law — the fast-track process meant to pass it alongside the state budget — and would instead move, if at all, through the far slower ordinary legislative process. Agriculture Minister Avi Dichter, who led the coalition opposition to the plan, reiterated at the time that this reform would not pass (Calcalist). In practice, it was dead.

The price fell anyway — just not for you

And that's exactly what makes the July finding so uncomfortable. The reform meant to tie what a farmer is paid to what a shopper pays never passed. But the ordinary, decades-old formula that sets the raw milk target price — which has nothing to do with the buried reform — was already trending down over the course of the year: heading into the May 1, 2026 update to regulated prices, the raw milk figure that fed into the formula had fallen about 0.6%. At the same time, TheMarker reported back in April 2026 that a retroactive component in that very formula — an agreement Smotrich signed to compensate dairies for years in which previous finance ministers had delayed approving price updates — pushed the regulated price up anyway: a liter of 3% milk that should have gotten cheaper rose instead, from ₪7.28 to ₪7.35 (TheMarker). In other words, even when the underlying numbers point down, there's a channel built into the formula itself that pulls them back up. By July, per TheMarker, the gap was no longer a matter of a few agorot in a formula — it was a 7% drop in raw material cost against real hikes on the shelf, with no formula obligating anyone to pass the savings to either side.

What Superclear's own data shows

There's something else the public fight over the target price never touches: the entire debate is about "price-controlled dairy products" — a short list built mainly around basic milk and white cheese. A large share of other dairy products, including butter, are sold at a fully free price, with no formula at all, flawed or otherwise, protecting what you pay for them. We checked what that looks like today in Superclear's own data, on one specific product: a 200g bar of Tnuva butter, Badatz Eda Chareidit certified — the exact same barcode, the exact same manufacturer. The product currently shows up at 549 price points across 28 different chains. The cheapest listing, ₪7.88, is at Shuk HaIr and City Market branches. The priciest, ₪11.90, appears at Yellow and City Market as well — sometimes within the very same chain. The median price sits at ₪10.70. The gap between the extremes: 51%, on the identical butter bar, on the same day.

What that means: with no reform, no target price, and no connection whatsoever to the standoff between farmers and the Treasury, the fully free market for butter alone already produces a wider gap than anything the buried reform ever promised to save. The question isn't just whether the raw price is going up or down — it's which specific branch you happen to be standing in when you buy.

What this means for your next shopping trip

Whether or not the reform comes back after the next election, neither of the two sides it was meant to protect — the farmer and the shopper — is currently seeing the money. Farmers say in interviews that they're the biggest losers from a raw price that only keeps falling. Shoppers, per the data, aren't seeing a consistent drop on any dairy product, controlled or not. The one tool that already works today, without waiting on any legislation, is comparing chains before you put butter in your cart — because on this exact product, the gap between the cheapest and priciest listing can be wider than anything happening in the Knesset.