Israel’s Collective Farms Agree to Government Bailout

Israel’s financially strapped collective farm movement agreed to an austerity program including meatless meals and fewer trips abroad under a government bailout of its $3.6-billion debt, a spokesman said.

The collective farms, a symbol of Israel’s socialist pioneers, also agreed to increase investment in light industry, said Shimon Helman, spokesman for the United Kibbutz Movement.

“It’s part of a trend,” he said. “We already produce far more than the agricultural needs of the state, so we are looking for profitable exports, like winter fruit and flowers to Western Europe and light industry.”

Kibbutzim were founded at the turn of the century by European immigrants who believed that hard work on collective farms would build a unique Israeli character. But the movement’s debts and aging population have forced kibbutzim to invest in light industry, which accounts for half of their profits.

The movement also agreed to sell $20 million in assets, including property in Tel Aviv, and ordered member farms to serve two meatless meals a week as part of a 7% cutback in living expenses, Helman said.

Under the agreement, the government will write off $835 million in debts.

It will offer tax breaks to banks to give the collective farms 25-year loans at 4.5% interest to cover the remainder of the total debt.

The plan was approved by the United Kibbutz Movement early this month. The smaller Kibbutz Artzi movement had already accepted the program.

“There was a tremendous amount of disagreement over whether to accept the government offer,” Helman said. “It does not address our future, the building of new kibbutzes , the absorption of new immigrants or our pension plan.”

Helman said many kibbutz members blamed the government for creating the unfavorable exchange rates and high interest rates that devastated kibbutz exports and helped cause the huge debt.

Newspaper reports said Finance Minister Shimon Peres, head of the center-left Labor Party, pressured the movement to accept the offer.

The movement’s 164 collective farms are affiliated with Labor, while the Kibbutz Artzi movement’s 84 collective farms are linked to the socialist Mapam party. The two groups have 110,000 members.