The OECD's first Review of Agricultural Policies in Israel says government support to farmers accounts for 17% of total farm receipts, below both its 24% share in the mid 1990s and the current OECD average of 23%. However, high border protection for a number of agricultural commodities is keeping domestic prices above international market levels.
Recent reforms in Israel have substantially increased efficiency of agriculture and its environmental performance, especially water use efficiency, but have nevertheless left a large part of the production planning system intact. In particular, the state remains strongly involved in the allocation of key factors of production such as land, labour and water.
The report says further reforms to Israel's agricultural and water policies are needed to reduce costs to consumers and taxpayers and to improve agriculture's environmental performance. Improvements such as lowering and simplifying import tariffs; reducing administrative costs linked to farmland transactions; improving enforcement of labour market laws; and allowing water quota trading are all needed.
The report adds that Israel has achieved self-sufficiency in many agricultural products that can be produced within the country and has successfully promoted exports of some higher value products, such as fruits and vegetables. Israeli agriculture has benefited from high levels of investment in research and development and is a world leader in certain technologies linked to farming in arid conditions, especially drip irrigation.
A key challenge for Israeli agriculture will be reconciling the growing pressures of climate change and population growth on already scarce land and water resources.
To obtain a copy of the OECD Review of Agricultural Policies: Israel 2010, visit the Organisation for Economic Co-operation and Development website.