Required Report - public distribution

**Date:** 9/26/2006

**GAIN Report Number:** IS2026

IS2026

**Israel**

**Exporter Guide**

**Annual**

**2006**

**Approved by:**

![](media/image1.wmf)Chris Rittgers

U.S. Embassy

**Prepared by:**

Gilad Shachar

**Report Highlights:**

A thriving retail sector and strong institutional buyers makes Israel a
promising market for U.S. exporters of high-value food products. In
addition, solid economic growth is maintaining firm overall demand. To
take advantage of these opportunities, U.S. exporters should consider
participating in food exhibitions in Israel, and also be familiar with
import regulations and guidelines.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Tel Aviv \[IS1\]

\[IS\]

+------------------------------------------------------------+---------+
| Section I Market Overview                                  | Page 3  |
+------------------------------------------------------------+---------+
| Economic and Demographic Situation                         | Page 3  |
+------------------------------------------------------------+---------+
| Consumer Buying & Eating Habits                            | Page 3  |
+------------------------------------------------------------+---------+
| Table 1 -- Monthly Household Consumption Expenditure, \$   | Page 4  |
+------------------------------------------------------------+---------+
| Table 2 -- Food -- Household Purchase by Outlet Type, %    | Page 5  |
+------------------------------------------------------------+---------+
| Trade and the Market for U.S. Products                     | Page 5  |
+------------------------------------------------------------+---------+
| Table 3- Opportunities and Challenges for U.S. Exporters   | Page 6  |
+------------------------------------------------------------+---------+
| Table 4- Imports by Main Country Groups, Million \$        | Page 6  |
+------------------------------------------------------------+---------+
| Chart 1- Imports by Main Countries                         | #       |
|                                                            |  Page 7 |
+------------------------------------------------------------+---------+
| Chart 2, Import by Main Country Groups                     | Page 7  |
+------------------------------------------------------------+---------+
| Section II- Exporter Business Tips                         | Page 8  |
+------------------------------------------------------------+---------+
| Local Business Customs                                     | Page 8  |
+------------------------------------------------------------+---------+
| Customs Valuation and Taxes                                | Page 8  |
+------------------------------------------------------------+---------+
| Value Added Tax and Purchase Tax                           | Page 8  |
+------------------------------------------------------------+---------+
| Consumer Taste and Perference                              | Page 8  |
+------------------------------------------------------------+---------+
| Food Standards and Regulations                             | Page 8  |
+------------------------------------------------------------+---------+
| Import Procedure for Food Products                         | Page 9  |
+------------------------------------------------------------+---------+
| Import Registration                                        | Page 10 |
+------------------------------------------------------------+---------+
| Import Licenses                                            | Page 10 |
+------------------------------------------------------------+---------+
| General Tips for Exporters                                 | Page 10 |
+------------------------------------------------------------+---------+
| Section III- Market Sector Structure and Trends            | Page 13 |
+------------------------------------------------------------+---------+
| Retail Food Sector                                         | Page 13 |
+------------------------------------------------------------+---------+
| HRI Sector                                                 | Page 13 |
+------------------------------------------------------------+---------+
| Section IV- Best High Value Products Prospects             | Page 14 |
+------------------------------------------------------------+---------+
| Section V - Key Contacts and Further Information           | Page 14 |
+------------------------------------------------------------+---------+
| Annex 3 - Imports of Main Agricultural and Food Products   | Page 16 |
+------------------------------------------------------------+---------+

**Section I: Market Overview**

**Economic and Demographic Situation**

All in all, most economic indices indicate an improving economy.
Economic growth in 2005 totaled 5.2 percent, and per capita gross
domestic product (GDP) increased 3.3 percent to \$17,800. In 2005,
population totaled 7 million. The annual population growth rate was 1.8
percent. In December 2005, unemployment totaled 8.8 percent, a 10
percent decrease from December 2004 (9.8 percent). The inflation rate
was 2.4 percent. The annual average per capita income stands at
\$20,980. In 2005, total private consumption rose by 3.9 percent.

In 1985, Israel signed a Free Trade Area Agreement (FTAA) with the
United States.

Since 1995, nearly all tariffs on trade between the two countries have
been eliminated. Israel also has free trade agreements with Canada,
Bulgaria, EFTA, Jordan, Romania, Turkey, Mexico, and the European Union.
Israel has a customs union with the Palestinian Authority. As a member
of the World Trade Organization (WTO), Israel implemented the WTO
Customs Valuation Agreement that requires legislation to eliminate
non-tariff barriers.

######## **Israel Food Processing Industry**

In CY 2005, the value of the Israeli food processing industry, including
beverages, beer and tobacco, was estimated at \$9.35 billion, a 3.2
percent increase compared to the previous year (\$9.06 billion). Growth
over the next few years is expected vary between 1-3 percent annually.
An estimated 1,000 companies make up the local food processing industry,
many of them quite small. Out of the total, 150 companies produce
approximately 90 percent of the total value. Most processing facilities
are located in rural areas. Low salaries and high subsidies from the
Israeli government granted to investors in these areas attract this
sector. For further information, see Israeli Food Processing Sector
Report: <http://www.fas.usda.gov/gainfiles/200603/146176957.pdf>

#  Table 1: Israeli Food, Beverages and Tobacco Processing Industry Value, 

#  \$[^1] Billion, Nominal Terms

+-------------------------+----------------------+---------------------+
| ###### CY               | **Value**            | **Percent Change    |
|                         |                      | Compared to         |
|                         |                      | Previous Year**     |
+-------------------------+----------------------+---------------------+
| 2001                    | \$7.92               |                     |
+-------------------------+----------------------+---------------------+
| 2002                    | \$8.44               | 6.62                |
+-------------------------+----------------------+---------------------+
| 2003                    | \$8.71               | 3.17                |
+-------------------------+----------------------+---------------------+
| 2004                    | \$9.06               | 4.00                |
+-------------------------+----------------------+---------------------+
| 2005                    | \$9.35               | 3.20                |
+-------------------------+----------------------+---------------------+

Source: The Food Industries Association, Manufactures' Association of
Israel

#  Chart 1: Israeli Food Processing Industry Value, by Sub-Sectors, Percent, CY 2005

![](media/image2.wmf) Source: The Food Industries Association,
Manufactures' Association of Israel

**Consumer Buying and Eating Habits**

The monthly household consumption expenditure in 2005 totaled \$2,403,
of which 16.3 percent (\$392) was directed to food purchases and
consumption. Approximately 40 percent of food purchases occur on
Thursdays and Fridays. When buying food, Israelis are quality oriented
and are ready to pay a premium for quality food products. Consumers are
acquainted with American products and wish to have more of them
available. During the last decade, an increasing share of consumers
prefer to buy their products through supermarket chains compared to the
traditional channels of open markets and small grocery stores.

Except for meat, Kosher certification is not an obligatory requirement
for importing food into Israel. However, non-kosher products have a much
smaller market share as the large supermarket chains and hotels refuse
to carry them. About two-thirds of consumers buy kosher food products.

**Table 1: Monthly Household Consumption Expenditure, \$, CY 2004**

  ----------------------------------- ------------- ----------------------
                                      **Value**     **Percent**

  **Consumption Expenditure - total** **\$2,320**   

  Bread, Cereals and Pastry Products  \$55.0        14.9%

  Vegetable Oils and Products         \$7.4         3.0%

  Meat and Poultry                    \$59.3        14.2%

  Seafood                             \$11.9        3.1%

  Milk, Milk Products and Eggs        \$56.7        4.5%

  Sugar and Products                  \$12.5        1.6%

  Soft Drinks                         \$17.8        7.4%

  Alcoholic Beverages                 \$6.3         18.5%

  Miscellaneous Food Products         \$29.5        3.0%

  Fresh Vegetables & Fruits           \$74.0        1.7%

  Frozen & Pickled Vegetables         \$11.9        0.6%

  Dried Fruit                         \$6.9         12.0%

  Fruit Juices, natural               \$2.2         14.9%

  Meals away from home                \$47.8        3.0%

  **Food - total**                    **\$399.2**   **100.0%**
  ----------------------------------- ------------- ----------------------

#  Source: Household Expenditure Survey, 2004, CBS.

**Table 2: Food- Household Purchase by Outlet Type - % of Total
Expenditure**

**(Excl. Meals Away From Home), 2004**

  ---------------- ------------- ---------------- --------------- ------------
                   **Grocery     **Open Markets** **Supermarket   **Others**
                   Stores**                       Chains**        

  **Food - Total** **20.7**      **7.2**          **51.7**        **20.4**

  Bread, Cereals   26.0          2.4              53.3            18.3
  and Pastry                                                      
  Products                                                        

  Vegetable Oils   26.7          8.9              54.6            9.8
  and Products                                                    

  Meat and Poultry 8.9           4.9              44.3            41.9

  Fish             10.2          11.9             45.1            32.8

  Milk, Milk       34.3          1.9              59.9            3.9
  Products and                                                    
  Eggs                                                            

  Sugar and        23.7          3.8              58.0            14.5
  Products                                                        

  Soft Drinks and  30.1          2.1              58.6            9.2
  Alcoholic                                                       
  Beverages                                                       

  Fresh Vegetables 8.4           26.3             35.4            29.9

  Fresh Fruits     7.5           26.1             35.4            31.0

  Frozen & Pickled 21.2          3.2              70.2            5.4
  Vegetables                                                      

  Dried Fruit      22.7          17.0             47.8            12.5
  ---------------- ------------- ---------------- --------------- ------------

# Source: Household Expenditure Survey, 2004, CBS.

**Trade and the Market for U.S. Products and Services**

Israel is the twenty-first largest export market for all U.S. products
and services. In 2005, approximately \$21.5 billion in two-way trade was
recorded, a 6.2 percent increase compared to the previous year. Although
the European Union (EU) is Israel\'s largest trade partner, the United
States is Israel\'s largest single country trade partner.

In 1996, Israel and the United States signed a five-year Agreement on
Trade in Agricultural Products (ATAP), in which Israel was allowed to
protect a number of sensitive crops and livestock products with a
combination of tariff-rate quotas and relatively high duties.

In 2005, agricultural and processed foods imports to Israel totaled
\$2.55 billion, 1.8 percent down from previous year levels (see annex
1). Out of total agricultural imports, \$382 million (15 percent) were
from the United States and \$1.07 billion (42 percent) from the EU.

Imports of agricultural and food products from relatively new sources
such as Eastern Europe, Turkey and the Far East, are expanding at the
expense of existing sources.

###### Table 9: Opportunities and Challenges for U.S. Exporters to Israel

  ----------------------------------- -----------------------------------
  **Opportunities**                   **Challenges**

  The current exchange rate between   Shipping costs from the U.S. are
  the U.S. dollar and the euro        higher.
  continues to favor U.S. suppliers,  
  as European products become more    
  expensive.                          

  There is tremendous growth in the   Growing competition exists from
  number of food stores               Eastern Europe, Turkey, Former
  (supermarkets, grocery stores,      Soviet Union, South America and the
  24-hour convenience stores), and    Far East. Products from those areas
  restaurants.                        are cheaper then products from the
                                      U.S. and EU and the quality is
                                      steadily improving.

  The Israeli consumer appreciates    Religious restrictions on food
  American products and they are in   ingredients, eg: non-kosher meat,
  demand.                             poultry and pork.

  Israel has the potential to be a    U.S. suppliers' interest in the
  "bridge" to the Palestinian         Israeli market is still low.
  Authority with its rapidly growing  
  population.                         

  Agricultural trade agreement        Israeli buyers unfamiliar with U.S.
  between the U.S. and Israel.        suppliers and products.

                                      U.S. exporters lack knowledge of
                                      the Israeli market and are unaware
                                      of new opportunities.
  ----------------------------------- -----------------------------------

**Table 4: Imports, by Regions**[^2]**, \$ Million**

+---------+---------+---------+---------+---------+---------+---------+
| **CY**  | **M     | **      | **EU**  | **USA** | *       | **      |
|         | onths** | Total** |         |         | *Asia** | Other** |
+---------+---------+---------+---------+---------+---------+---------+
| 2005    | 1-7     | 2       | 7,667.4 | 3,228.3 | 3,658.3 | 5,897.7 |
|         |         | 0,451.7 |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 2006    | 1-7     | 2       | 8,290.0 | 2,968.6 | 4,134.3 | 6,694.8 |
|         |         | 2,087.7 |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| #       |         | **      | **      | **      | **+     | **+     |
| Percent |         | +8.0%** | +8.1%** | -8.0%** | 13.0%** | 13.5%** |
|  Change |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+

Source: Central Bureau of Statistics

**Chart 1: Total Imports, by Major Countries, CY 2005**

![](media/image3.wmf) Source: CBS, Foreign Trade Statistics, 2005.

**Chart 2: Imports by Regions, CY 2003-2005**

![](media/image4.wmf) Source: CBS, Foreign Trade Statistics, Different
Years.

**Section II: Exporter Business Tips**

**[Local Business Customs:]{.underline}**

[1. Customs Valuation and Taxes]{.underline}

Israel has implemented the WTO Customs Valuation Agreement, effectively
eliminating most non-tariff barriers. Under WTO regulations, the basis
for valuation is the transaction value, in most cases the CIF price.

######## 2. Value Added Tax and Purchase Tax

According to an order signed by the Minister of Finance, the VAT rate
was reduced from 16.5 percent to 15.5 percent, effective from July 1,
2006, and applying to all transactions and import of goods whose date of
liability to tax applies beginning from July 1, 2006.

The VAT on imports is levied on the CIF landed cost plus purchase tax.
VAT is recovered by the importer upon resale of the goods and is
ultimately paid by the consumer. Israel levies purchase taxes on many
consumer goods. The GOI reduced or eliminated the tax on more than 600
items in 2000, including televisions, washing machines, electrical
appliances and cosmetics. Rates that had ranged from 25-85 percent were
reduced to 5-45 percent. Purchase taxes of up to 90 percent on motor
vehicles, fuel, tobacco and liquor were left unchanged.

###### Consumer Taste and Preference

The food service industry is expanding and consumers' habits are
changing. Over the last few years, Israelis have begun to dine out more
frequently and choose premium food when doing so. Approximately 20
percent of Israel\'s 7 million people are concentrated in the Tel Aviv
district, Israel\'s commercial and financial center. Other major
concentrations of the population are the Haifa area (15 percent), a
major port city and center for the petrochemical industry, and Jerusalem
(12 percent). While most companies are headquartered in the Tel Aviv or
Haifa metropolitan areas, a growing number of firms maintain branches,
showrooms, or service facilities in Jerusalem and Beer Sheva.

Consumer malls and shopping centers are popular in Israel. Over 200
malls exist and others are planned. Many American specialty shops, chain
stores, and franchises have outlets in malls and shopping centers. The
key to success is offering an increasing variety of new products and
services to the consumer.

The institutional services, including the army, hospitals, hotels,
restaurants, banquet halls and places of employment, account for 30
percent of the total market share (households and institutional). Over
50 percent of the total food supply directed at non-institutional
consumers is sold through supermarkets and retail chains. Two major
supermarket chains with hundreds of outlets throughout the country
dominate the retail food market. The average floor size of a supermarket
is 600 square meters. Some of the larger stores have areas of 1,000 -
2,000 square meters. Typical Middle Eastern-style open-air markets and
small groceries serve the remainder of the food market. In recent years,
specialty food stores have developed in all of the main metropolitan
centers.

####### Food Standards and Regulations

See Gain Report IS6017 -
<http://www.fas.usda.gov/gainfiles/200607/146208505.pdf>

The Standards Institution of Israel (SII) is the agency responsible for
the development of most product standards, compliance testing, and
certification of products and industry quality assurance systems. For
further information, interested firms should contact: The Standards
Institution of Israel, 42 Levanon Street, Tel Aviv 69977; Tel:
972-3-6465154;

Fax: 972-3-6419683; E-mail: <vered@sii.org.il>.

It is the declared policy of the Government of Israel to adopt
international standards wherever possible, and to implement mandatory
standards related only to safety, health, and the environment. In
practice, however, many products are still subject to mandatory
standards some of which were designed to favor domestic producers over
importers. As in the case of plywood, these local standards often
specify terms of design rather than performance.

The Israel plywood standard effectively excludes most U.S. plywood from
the market. Israel has not officially adopted ISO-9000 standards,
although there is a growing preference for ISO-9000 standards among
Israeli importers. This is especially important in the case of
ingredients and raw materials destined for the production of export
products.

The Government of Israel requires that food and health products be
registered with the Ministry of Health before they can be sold in the
country. FDA approval for food and health care products is not
mandatory, but Israeli importers prefer it as it accelerates the product
registration process and import license approval. Product registration
normally takes from

4-6 weeks if all documentation is in order.

Another subject to be considered is the issue of kosher food. Kosher
certification is not a legal requirement for importing food into Israel,
with the exception of all types of meat. However, non-kosher products
have a much smaller market as the large supermarket chains and hotels
refuse to carry them. Manufacturers who produce kosher products must be
able to satisfy Israeli rabbinical supervisors that all ingredients and
processes are kosher. According to the Law for Prevention of Fraud in
Kashrut, only the Chief Rabbinate of Israel is authorized to determine
and approve a product as kosher for consumption in Israel; the Chief
Rabbinate may authorize another supervisory body to act in its name.
Here too, U.S. products have an advantage as Israel's Chief Rabbinate
recognizes the kashrut certification issued by many American rabbis. It
is, however, quite simple for Israeli importers to send an Israeli rabbi
to any supply source, thereby reducing the American advantage. In recent
years, opportunity for non-kosher foods has been increased as immigrants
from the Former Soviet Union (FSU) make up a significant share of
purchasing power (15 percent).

# New Food Registration Procedure and Biotechnology Policy

In February 2006, the Israeli "New Food Committee" published new
regulations for new food registration. It is expected that the
registration of foods containing GMO ingredients will begin by the end
of 2006. The new procedure deals with food registration and will not
concern the labeling of modified food products.

# The purpose of the new regulations is to establish a clear, orderly and systematic registration process for new food and updating the New Foods Register. Its purpose is also to provide information as to the designation of authority and operational responsibility.

Imported food products will be divided into two groups -- food products
already existing in the food market and new to the market food products.
The procedures for each group will be as follows:

> 1\. Already existing food products -- The new food committee will
> issue a list of GMO agricultural varieties, which have been already
> imported to Israel (soybean, corn, canola, chicory and more). It is
> assumed that those varieties will be exempt from the registration
> procedure. However, the Israeli food committee has not yet decided
> finally on that. It is estimated that the committee will finish its
> discussions by the end of 2006.
>
> 2\. For new food products which have not yet been registered, the
> importer must submit the following registration documents: Application
> to register a new food, Legislative status of the new food, and
> Additional requirements of new foods according to the type of new
> food.

The importer must submit an application to register a new food,
Legislative status of the new food accompanied by a risk assessment
certificate. The Israeli Health Ministry have authorized the following
institutions to carry out food risk assessments:

-   The European Communities/EFSA

-   USDA (FSIS)

-   FDA

-   Health Canada

-   ANZFA -- Australia and New Zealand Food Authority/\
    FSANZ Food Standards Australia New Zealand

-   Japan -- Department of Food Safety, Ministry of Health

-   WHO/FAO CODEX ALIMENTARIUS Expert Committees

The new food should be approved by at least two institutions on the List
of Authorized Bodies.

> **Figure 1. Treatment of the registration of a new food.**
>
> **[EXAMINATION OF LEGAL STATUS -- DOES IT HAVE 2
> APPROVALS?]{.underline}**

**\| \|**

**YES \| \| NO**

**\|\-\-\-\-\-\-\-\-- New Food Committee**
\-\-\-\-\-\-\-\-\-\-\-\-\--**\| \| \^ V**

**\| \^ CONSULTATION V V \^ V**

**RECOMMANDATION \|\<\< \< \< \< \< \< \< \< \|**

**\| \|**

**\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \|**

**\|**

**\|**

**\|**

\|

  -----------------------------------------------------------------------
  **[DIRECTOR'S DECISION]{.underline}**

  -----------------------------------------------------------------------

\| \|

**AFFIRMATIVE \_\_\_**\_\_\_ **NEGATIVE \_\_\_**

**\| \| \|**

**\| \| \|**

\| \| \|

**UPDATE NEW \-\-\-\-\-\-\-\-\-\-\-- \-\-\-\-\-\-\-\-- NOTIFY
\-\-\-\-\-\-\-\-\-\--**

**FOOD REGISTRY APPLICANT**

**Import Licenses**

All import licensing requirements for U.S. made consumer and industrial
goods have been eliminated under the United States - Israel Free Trade
Area Agreement (FTAA) of 1985 and World Trade Organization (WTO)
agreements. Imported food items require the approval of the Ministry of
Health's Food Control Administration, which is also responsible for
approval of labeling and packaging. All plant material (including dried
fruits and nuts) require import approval from the Plant Protection and
Inspection Service. Unprocessed and unpackaged imported meat must be
licensed by the Israel Veterinary Services (IVS) and originate in a
plant which has been certified as approved by the IVS. Packed meat and
poultry for retail sale are subject to licensing by the Food Control
Administration of the Ministry of Health. Israel law requires that all
meat and poultry imports be certified kosher by the Rabbinical Council
of the Chief Rabbinate or a body authorized by the Council. As an
exception, it is possible to import non-kosher beef offal. Israel's
veterinary authorities ban imports of bone-in beef from countries where
there is a danger of transmitting Foot and Mouth Disease (FMD) or Bovine
Spongiform Encephaly (BSE), also known as the Mad Cow Disease.

## General Tips for Exporters

-   Consider participating in FAS Tel Aviv organized or sponsored
    events.

FAS Tel Aviv normally participates in ISRAFOOD - An International Food &
Beverages

Exhibition in Tel Aviv for professionals of the catering and food
wholesale, retail,

restaurants, hotels, institutional and food shops. During the same time
the

HOTEX exhibition takes place -- presenting food display and restaurant
equipment.

It is the largest trade exhibition of its kind in Israel. Israfood
represents a good opportunity

to present products to key food importers, distributors,

retailers, wholesaler and processors. The trade show takes place
annually in November.

-   Communicate with potential importers of your product. Contact FAS
    Tel Aviv to

obtain a list of local importers; Tel: 972-3-519-7588/7324/7686;

Fax: 972-3-510-2565; E-mail: <gilad.shachar@usda.gov>;
<Yossi.barak@usda.gov>;

**Section III: Market Sector Structure and Trends**

**1. Retail Food Sector**

In 2005, the retail food market was valued at \$7.7 billion, of which 44
percent (\$3.4 billion) belonged to the two major retail food-marketing
chains. The traditional open markets capture only 9.5 percent (\$738
million) of the food market. The private supermarkets (the "fourth
chain") were valued at \$2.22 billion, and grocery stores and
minimarkets valued at \$1.34 billion. There are approximately 5,500
grocery stores and 1,700 minimarkets in Israel. Due to the intensive
competition in the Israeli food sector, the grocery stores and
minimarkets are operating at very small profit margins. More than 100
convenience stores, which are open 24 hours, were established in recent
years. The retail food sector's growth in CY 2005 totaled 3 percent.

**2. HRI Sector**

The Israeli HRI market is very complex and diverse. Food service is
divided into two categories: commercial and institutional. The
commercial sector is divided into sub-sectors: hotels and restaurants.
The commercial sector comprises an estimated 650 hotels and hostels,
2,300 restaurants, more than 700 banquet halls, over 420 coffee shops
and cafeterias, and about 900 pubs and bars. In 2005, the market value
of the restaurants (\$681 million), coffee shops, pubs and bars was
estimated at \$2 billion. Approximately 45 and 23 percent of the bars
and pubs respectively, are located in central Israel and northern
Israel. In Israel there are about 2,300 kiosks, with a market value of
\$1 billion annually. Fifty percent of the kiosks are located in central
Israel. In Tel Aviv, approximately 1,550 restaurants, clubs, pubs and
bars exist. In 2005, approximately 860,000 people consumed meals away
from home per day. The average expenditure for each meal in a restaurant
is about \$8.3 per person.

The institutional food service companies include approximately 4,000
kitchens. The Israeli Defense Forces (IDF) is the largest institutional
food consumer. It is estimated that the IDF alone consumes about 4
percent of all Israeli food through its purchasing channels. Currently
the IDF is in the process of privatizing its food supply chain (150,000
meals/day). The Israeli police force will join the IDF as a consumer in
the project adding an additional 20,000 meals/day. Total revenue of the
Israeli food trade is estimated at \$7.07 billion, and the HRI market is
valued at \$4.42 billion.

In 2005, 1.9 million people visited Israel, of which 24 percent were
from the U.S.

Entries into the country rose by 27 percent compared to the previous
year. In 2005, income from tourism totaled \$2.9 billion, a 21 percent
increase compared to the previous year.

# Section IV: Best High Value Products Prospects

Wine and beer

Energy drinks

Coffee and Tea

Organic food

Ice cream

Soy food products

Frozen pizza

Morning cereals

Fish and seafood products

Baby food

Frozen Bagels

Frozen vegetables

Pet food

Vinegar and Olive oil

Dried fruits & Nuts

Intermediate products for further processing (whip toppings, corn and
potato starch, milk powder, products for the baking industry)

In July 2006, the Israel Customs Service changed the tariff rate for
imported cheese. The maximum tariff rate was cancelled and a specific
tariff was implemented. The new policy is designed to protect the local
cheese industry, mainly against inexpensive cheese imports from Russia
and east Europe. As a result, it is estimated that local cheese sales
and high quality cheese imports will increase on the account of low
quality cheese imports (See Gain report IS6020 -
<http://www.fas.usda.gov/gainfiles/200609/146208843.pdf> )

Israel approved a plan to allow organized gambling on horse racing in
Israel. The number of race horses is expected to increase from 250 to
1,200 (380 percent), in addition to the development of many supporting
services. Two new hippodromes will be constructed, and it is estimated
that horseracing gambling will begin in 2007. The future presents good
opportunities for U.S. suppliers (See Gain report IS5001 -
<http://www.fas.usda.gov/gainfiles/200506/146129922.pdf>)

# Section V: Key Contacts and Further Information

**[U.S. Mailing Address]{.underline}**: AGRICULTURE UNIT 7228 BOX 3 APO
AE 09830

Packages can weigh no more than 70 pounds and must not be larger than
108 inch. Anything larger will be subject to a tariff.

**[Local Mailing address]{.underline}**: Contact the Office of
Agricultural Affairs in the U.S. Embassy in

Tel Aviv. Contact: Tel: 972-3-5197588/7324, Fax: 972-3-5102565, E-mail:
<gilad.shachar@usda.gov> ; <yossi.barak@usda.gov>

**[Food Control Service]{.underline}**

**[Ministry of Health]{.underline}**

12 Ha'arba'a St.

64739, Tel Aviv

Israel

Web site: <http://www.health.gov.il/english/>

Tel: 972-3-6270100

Fax: 972-3-5619549

Contact: Ms. Ruthy Shinberg: Tel: 972-3-6270107

Milk Products Import Specialist: Contact: Mr. Eli Gordon: Tel:
972-3-6270136

**[Israel Veterinary and Animal Health Services (IVAHS)]{.underline}**

Web Site: <http://www.vetserveng.moag.gov.il/vetserveng>

Ministry of Agriculture

P.O. Box 12

50250, Bet Dagan

Israel

Contact: Dr. Moshe Chaimovich, Director. E-mail: <mosheh@moag.gov.il>

Tel : 972-3-9681614, 972-3-9690871

Fax: 972-3-9681641, 972-3-9681746

**[Import & Export Veterinary Division]{.underline}**

Chief Import & Export Veterinary Officer Dr. Med. Vet. Roni Ozari

Tel: 972-3-9681649, Fax: 972-3-9605194. E-mail: <ronio@moag.gov.il>

**[Plant Protection & Inspection Service (PPIS)]{.underline}**

P.O. Box 78

50250, Bet Dagan

Israel

Contact: Ms. Miriam Freund, Deputy Director

Tel : 972-3-9681561

Fax: 972-3-9681582

E-mail: <miriamf@moag.gov.il>

Web Site:
[www.ppis.moag.gov.il/PPIS/SiteEnglish/SiteinEnglish/](http://www.ppis.moag.gov.il/PPIS/SiteEnglish/SiteinEnglish/)

**[Standards Institution of Israel]{.underline}**

42 H. Levanon St

69977, Tel Aviv

Israel

Web Site: [www.sii.org.il](http://www.sii.org.il/)

General Information: E-mail: <vered@sii.org.il>

Tel : 972-3-6465154

Fax: 972-3-6419683

**[Major Newspapers and Business Journals]{.underline}**

\- English Language:

Ha'aretz (daily English version)
[http://www.haaretz.com](http://www.haaretz.com/)

The Jerusalem Post (daily newspaper)
[http://www.jpost.com](http://www.jpost.com/)

Globes <http://www.globes.co.il/serveen/>

The Marker [http://www.themarker.co.il/eng
/](http://www.themarker.co.il/eng /)

####### More Useful Web Sites

Bank of Israel - <http://www.bankisrael.gov.il/firsteng.htm>

Central Bureau of Statistics - <http://www.cbs.gov.il/engindex.htm>

The Agricultural Research Center of Israel - <http://www.agri.gov.il/>

Ministry of Agricultural and Rural Development -
<http://www.moag.gov.il/english/>

Faculty of Agricultural, Food and Environmental Quality Sciences
<http://www.agri.huji.ac.il/index-eng.html>

Annex 1: Imports of Main Agricultural and Food Products

  ----------------------------- --------------- ------------- --------------- -------------
  Product Category              **2004**                      **2005**        

                                **Million \$**  **Percent**   **Million \$**  **Percent**

  Live animals                  21.621          0.85          37.139          1.48

  Meat & edible meat offal      156.779         6.15          148.459         5.93

  Fish, crustaceans and         103.198         4.05          113.663         4.54
  mollusca                                                                    

  Dairy produce; eggs, natural  31.669          1.24          36.603          1.46
  honey; edible products of                                                   
  animal origin                                                               

  Products of animal origin     2.919           0.11          3.739           0.15
  n.e.c                                                                       

  Live trees and other plants,  9.995           0.39          11.026          0.44
  bulbs, roots and other garden                                               
  plants                                                                      

  Edible vegetables, roots and  42.638          1.67          43.722          1.75
  tubers                                                                      

  Edible fruits and nuts; peel  92.719          3.64          112.354         4.49
  of melons and other citrus                                                  
  fruit                                                                       

  Coffee, tea, mate and spices  49.810          1.95          58.542          2.34

  Cereals                       566.095         22.20         449.015         17.93

  Products of milling industry; 41.641          1.63          40.236          1.61
  malt and starches; wheat                                                    
  gluten                                                                      

  Oil seeds, grains, fruits,    280.737         11.01         249.603         9.97
  industrial and medical                                                      
  plants. Straw and feed                                                      

  Tree gum; resins, other       18.307          0.72          18.559          0.74
  vegetable saps and extracts                                                 

  Vegetable plaiting materials; 7.830           0.31          9.259           0.37
  vegetable products n.e.c                                                    

  Animal or vegetable fats and  64.620          2.53          73.679          2.94
  oils; animal or vegetable                                                   
  waxes                                                                       

  Preparation of meat, fish, or 38.839          1.52          43.888          1.75
  of other aquatic                                                            
  invertebrates                                                               

  Sugar and sugar confectionery 163.823         6.43          175.041         6.99

  Cocoa and cocoa preparations  77.240          3.03          80.835          3.23

  Preparations of cereals,      94.457          3.71          101.192         4.04
  flour starch or milk; pastry                                                
  products                                                                    

  Preparations of vegetable,    135.029         5.30          131.985         5.27
  fruits, nuts and other plants                                               

  Miscellaneous edible          202.469         7.94          213.110         8.51
  preparations                                                                

  Alcoholic beverages and       96.426          3.78          103.947         4.15
  vinegar                                                                     

  Residues and waste from the   127.895         5.02          126.358         5.05%
  food industries; prepared                                                   
  animal feed                                                                 

  Tobacco and tobacco           122.686         4.81          122.244         4.88
  substitutes                                                                 

  **Grand total**               **2,549.442**   **100**       **2,504.198**   **100**
  ----------------------------- --------------- ------------- --------------- -------------

Source: CBS, Foreign Trade Statistics, Different Years.

[^1]: Exchange Rate, 1 USA Dollar=4.5 NIS

[^2]: Excl. diamonds