Israel's Minister of Agriculture Shalom Simhon is acting to privatise Agrexco and transfer the ownership of the company to growers.
Export company Agrexco is 50 per cent owned by the government with the remaining ownership split equally between the agricultural production boards and the Tunuva co-op, Israel’s largest food company. Simhon said this week he will meet with the director of government-owned companies “to chart the course to privatise Agrexco.”
A privatisation of Israel’s largest fresh produce exporter has been mooted for some time, but has always remained firmly on the back-burner in successive government agendas, but this week Simhon told the Israeli national Yediot Ahronot, Israel’s largest national daily, that “the conditions of Israel's export of fresh produce have changed and it is about time that Agrexco leave the government's stables.” He added that privatising Agrexco, which exports between 65 and 70 per cent of Israel's fresh produce, will allow market forces to act on a privatised Agrexco. “There is no reason why the growers should not own the company,” Simhon was quoted. “The growers do not need the government in order to export. Export is free to anyone.”
Roughly 30 per cent of the total volume of exports of fresh produce are carried out by private companies.
Sources at Agrexco in Israel reacted “with joy” to the minister's plan to privatise the company. They told freshinfo that in the past, a plan has been prepared to have the government strip its holding in the company, “but this plan did not materialise then.”
The Agrexco sources also added that in view of the company’s present status, “it is indeed preferable that the company will act as an independent business entity, without being subject to the limitations which characterise a government-owned company.”
Agrexco UK boss Amos Orr told freshinfo: “Our position towards privatisation is very positive. There is no necessity for the government to be involved in Agrexco.”
He believes any privatisation will take years to achieve as legislation needs to be brought in to allow for it. “One option may be for growers to take leadership of Agrexco,” he said. “They are already very much involved, it might be run by a co-operative of users. Everyone will benefit from privatisation.”
Personally, he does not foresee an impact on Agrexco UK. “Growers are already very much involved in the marketing side and we have lots of visits from growers - there is a party here even this week,” said Orr. “There are alraedy 110 different exporters of fresh produce from Israel, that is more than enough so I don’t think there will be an impact in terms of creating more exporters. Maybe more [growers]will come over to Agrexco though.”
The news has been welcomed in the UK by another Israeli exporter. “We are delighted at the prospect,” said David Crossland of Arava. “This will mean that we will all be operating on a level playing field, with the same rules whereas in the past, Agrexco has not had to play to those same rules.”
Crossland also believes that privatisation of Israel’s largest sender will present tremendous opportunities. “It will remove a major distortion in export and marketing. It is better for growers and yes, Agrexco had an unfair advantage, but it will eliminate that. They don’t need the government support - we exist without it, so do all the others.”
There is likely to be quite a shake-up in the sector in Israel following privatisation, and it will allow for more movement of growers between companies in the longer term. As yet there is no government timetable for the privatisation.
Agrexco is Israel's largest exporter of fresh produce. Its export basket contains some 200 products which are marketed throughout the world under the Carmel brand. The main markets for Agrexco’s products, including flowers and fresh herbs are the UK and Western Europe, where it has seven offices. A further branch in West New York City handles distribution in North America. Agrexco's annual sales turnover in 2005 amounted to €550 million and it is estimated that the 2006 turnover will rise to €600m.
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