Tnuva, Israel's largest agricultural cooperative and dairy producer, has entered the organic food arena by acquiring 51% of the shares of Kibbutz Hardof Organic Food Company. Kibbutz Hardof in Upper Galilee owns and operates a large dairy farm and bakery and cultivates fruits and vegetables, all under the organic agriculture protocol.

According to a report in Yediot Ahronot, Hardof sales returns amount to NIS30m (US$7.1m). The report added that acquiring a controlling share in the kibbutz organic company represents Tnuva's strategy to develop the health and functional food category. Kibbutz Hardof started last year to import organic food products, mainly from Holland and Turkey, and this year it will launch marketing frozen poultry meat processed from organically grown chickens.

The move by Tnuva to enter the organic food scene expresses in part the rapid growth of organic agriculture in Israel, which has grown at an average rate of 35% for each of the past three years, against an average growth of 20% worldwide. Last week, six large kibbutzim in the western Negev switched to organic farming by turning thousands of acres of arable land for cultivating organic potatoes, celery, carrots, wheat and groundnuts. The value of organic food produced in Israel is estimated at nearly NIS230m, of which approximately two-thirds is generated from sales on overseas markets.

By Aaron Priel, correspondent