Many shelves stand empty in Israeli supermarkets, as agricultural activities grind to a halt and a shortage of logistics and manufacturing workers disrupts operations in major food plants.

Agricultural workers, in the midst of the apple, avocado and kiwi-picking season, are said to have been evacuated from the northern border settlements, as border clashes with Lebanese terror organisation Hezbollah escalate and lands surrounding Gaza lie fallow.

TheMarker, a Hebrew-language daily business newspaper, reports that government ministries are mapping agricultural crops in the north, where 40% of Israel’s deciduous and sub-tropical fruits are grown, planning for the increasing prospect of a war in the north. Israel’s Ministry of Agriculture also fears that there will soon be poultry and egg shortages, given that half of the nation’s total egg production takes place within 5km of the Lebanese border. Import quotas of 50 million eggs have now been opened.

English-language Israeli news outlet Ynetnews reports that dairy farming in the south of the country has also suffered a major blow, as milk producers responsible for supplying the likes of Tnuva, one of Israel’s largest food manufacturers, are denied access to their dairies.

“We’ve abandoned dairies in kibbutzim that the army won’t give us access to,” said Lior Simcha, CEO of the Milk Producers Association. “The dairies at Nahal Oz, Alumim and Be’eri are finished. We’re talking about thousands of cows.”

Tnuva did not immediately respond to a request for comment on how the conflict is affecting business operations.

Meanwhile, the food sector’s labour force is taking a pummelling, as Israeli workers are called into the reserves. Palestinian workers are either too afraid or unable to turn up for work. Calcalist, an Israeli daily business newspaper, reports that workers, even those with a blue ID card, are struggling to get to and through checkpoints.

Kav LaOved, an Israeli labour rights NGO, says that 100,000 Palestinian workers are employed in Israel or Israeli settlements, while Arab workers make up a significant proportion of the workforce in the bakery and slaughterhouse sectors.

As many as 20,000 Thai workers were also working on Israeli agricultural lands at the time of the 7 October attacks, according to Phil Robertson, deputy Asia director at Human Rights Watch. At least 35 Thai nationals are reported to have been killed or kidnapped, while many more have returned home.

Supply-side challenges are also being compounded by increased demand, according to Calcalist. Consumers are reportedly stockpiling, fearing an expansion of the fighting as well as urban riots of a similar kind to those that took place during the so-called 'Guardian of the Walls' operation in 2021.

A spokesperson for Nestlé, which recently reopened one of its Israeli plants after closing amid the conflict with Hamas, declined to comment on how the conflict is affecting its business operations in Israel.

Israel’s novel food and food tech businesses focus on business continuity

Israel’s burgeoning food tech scene has also been affected by the conflict, with companies and R&D centres around Gaza having been damaged by marauding Hamas members.

“The city of Sderot and the Kibbutzim surrounding Gaza, which are one of the centres of the Israeli ag and food ecosystem, were severely damaged,” Dr Kardish CEO at agrifoodtech investor The Trendlines Group explains. “Many companies, incubators and R&D centres are located in this region, and some were hurt as well.”

Dr Amit Yaari CEO at Israel startup BioBetter, which grows growth factors for the cultivated-meat sector, has also said that 20% of the company has been drafted, presenting challenges for business continuity.

One solution has been to recruit Haredi orthodox Jews who are exempt from military service.

Israel’s premier food tech event, FoodTech IL 2023, due to take place today, has also been cancelled. The event, which brings together startups, large food companies and investors, was due to showcase innovative food startups and futuristic foods.

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