Kibbutz Tzuba: meeting the social and economic challenges of a changing Israeli society.

Goldstein, Larry

CASE DESCRIPTION

The primary subject matter of this case concerns business policy. Secondary issues examined include organizational theory, marketing decision-making and the effects of cultural institutions and political orientations on decision-making. The case has a difficulty level of four, appropriate for senior level courses. The case is designed to be taught in two class hours and is expected to require three hours of outside preparation by students.

CASE SYNOPSIS

This case deals with a culture (Israeli) about which most students know little and an Israeli institution (the kibbutz) about which most students know nothing. It presents the history of the kibbutz movement and its evolution to the present. This is done to establish the cultural environment in which a particular kibbutz, Kibbutz Tzuba, operates. Like other kibbutzim, Kibbutz Tzuba was founded as a socialistic agricultural collective. And like most of the other kibbutzim, it has had to adapt and embrace elements of capitalism to survive the social and economic changes within Israeli society. While it has retained some elements of socialism, Kibbutz Tzuba has become entrepreneurial and has engaged in a number of capitalist ventures. However, the decisions it has made may not be sufficient to ensure its long-term survival.

INTRODUCTION

Located on the outskirts of Jerusalem, atop a high mountain overlooking an awe-inspiring view of the Judean Hills, is Kibbutz Tzuba. Founded in 1948, as an agricultural collective, this kibbutz (pl. kibbutzim), like many of the other kibbutzim in Israel, has evolved to meet the changing social, political and economic environments of the country. The problems it must contend with, though, threaten its viability.

HISTORY OF THE KIBBUTZ MOVEMENT IN ISRAEL

The Hebrew word kibbutz means a communal settlement. The kibbutz movement in Israel was started by a group of singles who had immigrated to [then] Palestine in the late 19th and early 20th centuries, mainly from Russia. These individuals were imbued with the ideals of socialism and the spirit of the period which led to the Russian Revolution. They also believed in a Zionism based on the return to the land of Israel and the tilling of its earth. They believed that this would lead to the creation of a new Jewish identity and to the establishment of Jewish settlements in Palestine.

The first kibbutz was established at Degonia, near the Sea of Galilee, in 1910, by a group of young pioneers who had drained swamps near Hadera and lived as a collective community. Kibbutz Degonia was an independent farm owned by its worker-members. The idea behind the kibbutz was that everyone would contribute to the [kibbutz] society according to his capabilities and would draw from it according to his needs. This was the embodiment of total equality and mutual responsibility. All assets were jointly owned by the members; there was no private ownership of anything. Kibbutz Degonia was set up in the form of a self-supporting cooperative communal village, relying on agriculture as the basic income to support the commune.

Other kibbutzim soon followed. These early settlements regarded themselves as enlarged families and kept membership small. In 1913, for example, Degonia had only twenty-eight members. These settlements were poor, life was harsh and work required the draining of swamps and the removal of rocks from hills, transforming parts of the desert into fertile farmland. The settlers had to cope with extreme heat, malaria and food-related illnesses.

During the 1920s and 1930s, the settlements' societies of singles changed to ones in which families were formed, leading to the establishment of schools and children's houses. Small industries began to appear, mainly as extensions of agriculture, and these soon became profitable enterprises. The kibbutzim emerged as large, self-sufficient communities, combining agriculture and industry. The 1930s also witnessed the beginnings of a religious kibbutz movement which, in contrast to its secular predecessors, saw the ideals of the movement, including equality, mutual help and building the Land, as a realization of the Jewish way of life.

ORGANIZATION OF THE KIBBUTZ

Most kibbutzim are laid out according to a similar plan. The residential area encompasses carefully tended members' homes and gardens, children's houses and playgrounds for every age group, and communal facilities such as a dining hall, auditorium, library, swimming pool, tennis court, medical clinic, laundry, and grocery. Adjacent to the living quarters are, typically, sheds for dairy cattle and modern chicken coops, as well as one or more industrial plants. Agricultural fields, orchards and fish ponds are located around the perimeter, a short tractor ride from the center.

The organization of the kibbutz is based on the ideals of democracy; all members have an equal say in its operation. The sovereign decision-making body, the general assembly, consists of all members and convenes weekly to vote on major proposals and decisions that the secretariat and various committees have made. The daily affairs of the kibbutz are run by a secretariat, made up of the elected secretary, treasurer, and economic coordinator, along with ten other kibbutz members who meet at the conclusion of the working day. Members of the secretariat are elected by the general assembly for a period of three to five years, depending on the individual kibbutz, and are accountable to the general assembly that must ratify all major decisions. For all the main activities and aspects of kibbutz life, individual committees are elected. Each kibbutz has approximately 15 committees, including economic, labor, adult training, education, culture, welfare and health. Since every member has the possibility of holding any position, the formation of either an elite or a hierarchy is discouraged. Members also have the right to appeal any decisions that are made.

Although each kibbutz is socially and economically an autonomous unit, a number of national federations provide coordination of activities as well as some services. The largest of the national federations is the United Kibbutz Movement with which about 60% of the kibbutzim are affiliated. About 32% of the kibbutzim belong to the Kibbutz Artzi movement. Religious kibbutzim, which comprise 6% of the total, are affiliated with the Kibbutz Dati movement; the rest are ultra- Orthodox kibbutzim affiliated with Poalei Agudat Yisrael.

FINANCING OF THE KIBBUTZ

Between 1936 and 1951, all kibbutz capital was entirely financed by the settlement department of the Jewish Agency (a governmental body). This was necessary since many new kibbutzim were fulfilling social functions as well as idealistic ones of settling the land, particularly in outlying border areas. In the initial years the kibbutzim showed no profit and the Jewish Agency considered it their duty to support them. The agency allocated funds on a per capita basis for 30 years with extended grace periods. The first repayment installment was usually ten years after disbursement. Interest rates were nominal and at times lower than the rate of inflation.

Subsequently, the government, itself, and commercial banks became sources of kibbutz financing. Government credit was granted on much easier terms than similar commercial loans, with the interest rate usually 3%-4% above inflation. However, repayment terms were stricter than those of the Jewish Agency, on the order of ten to 15 years. Bank credit was the main source of short-term finance and was guaranteed on a commercial basis at a higher prevailing interest rate than government loans.

Currently, the kibbutz system is financed by the main bank of the kibbutz movement, Keren Ha'takam. The bank raises funds for the kibbutzim from the Jewish Agency, other government bodies, free market borrowing from commercial banks, and, to a small degree, from other kibbutzim, via the mutual reliance system, whereby the richer kibbutzim help the poorer ones to develop and grow. Representatives of the kibbutzim sit on the governing body of the bank. Because it has a higher credit rating than an individual kibbutz and a resulting lower risk to lenders to the bank, Keren Ha'takam can raise funds and loan them to kibbutzim at lower than normal interest rates.

LIFE ON THE KIBBUTZ

Kibbutzim do not have any unemployment. If a member is unemployed, (s)he is being wasted. A person unproductive in one area is moved to another area to work. Beginning in the 1960's, when kibbutzim began to diversify and to open new industries, they found it necessary to hire employees who were not kibbutz members. This was because it was too expensive to take on new members, particularly families with young children. To avoid ideological conflict, some kibbutzim accepted foreign volunteers who earned their keep while working on the kibbutz as they learned about Israeli life. In this way, the kibbutz considered itself as an educational unit.

Until comparatively recently the kibbutz provided wages in kind, each family according to its need. Living accommodations were provided by the kibbutz, including three meals daily in a central dining area. Other things (for example, the size of living quarters) were provided by the kibbutz according to each individual's requirement and not according to their position or status in the kibbutz. The kibbutz provided 24-hour-a-day care for children from the age of four weeks until 18 years, when they entered National Service. This enabled the mothers to return full-time to their kibbutz duties. Schooling of children until high school was provided on the kibbutz. High school children attended a regional high school with tuition paid for by the kibbutz. Any member of the kibbutz who wished to continue with higher education following National Service could apply to the kibbutz education committee to pay for their fees. All children and students when they were not studying were expected to work on the kibbutz.

Even today, each family has a budget according to its size to spend in the kibbutz store. A small amount of pocket money is given to each member each month to spend as they wish. The kibbutz pays for members' medical insurance.

To join a kibbutz, a potential member has to undertake a probationary year living and working on the kibbutz like any other member. During that year (s)he has full benefits (for example, paid tuition and medical insurance) but cannot participate in the running of the kibbutz. Following the probationary year the kibbutz absorption committee will recommend either accepting or rejecting the individual and the general assembly will vote on the recommendation.

By 1948, with the establishment of the State of Israel, the kibbutz movement had not only succeeded in creating a unique society; it had also been instrumental in many aspects of the struggle towards the creation of the State and in its early development. Kibbutzim had assumed key functions in the settlement of outlying areas and along the country's future borders. They had a major role in the absorption of new immigrants, in the defense of the country, and in the development of agriculture. However, once these functions were assumed by the government, the significant interaction between the kibbutzim and society at large was diminished.

CONFRONTING CHANGES AND CHALLENGES ON THE KIBBUTZ

Changes in Israeli society have necessitated changes within the kibbutzim. Israel has evolved from a society that emphasized the collective, the nation and the people to a society in which the individual is the focal point. Personal freedom has become more important to people than economic security.

Since the 1960s, many kibbutzim have diversified into industry, due to the maturing of the agricultural market and the increase in the market for industrial products. This diversification required an infusion of capital and labor. Many kibbutzim borrowed heavily so that they could satisfy the growing demand for industrial products by producing such things as sophisticated agricultural equipment, furniture, and glass. Increasing the labor supply was a problem.

Many kibbutzim found that it was too costly to accept new members. They hoped to rely upon their existing members to satisfy their labor needs. However, several factors contributed to a decline in kibbutz membership. First, the kibbutz practice of separating children from their parents was problematic. Children lived in a separate house and were raised communally. They could visit their parents in the afternoons and on weekends, but they slept in special quarters and not with their parents. This resulted in family instability and alienation, with many kibbutz children not sharing their parents' values, including the value of the kibbutz way of life. These children, in their teens, began to abandon the kibbutzim. By the end of the 1970s kibbutzim gradually began to stop separating children's sleeping quarters from those of their parents. Today, no kibbutz separates children's and parents' sleeping quarters.

Second, the heavy borrowing of funds by kibbutzim led to a financial disaster in the 1980s. Many kibbutz enterprises (for example, Nerot Etzion, Israel's biggest candle factory, located in Kibbutz Merav and the Tafnukim diaper factory, owned by Amir Paper Products of Kibbutz Amir) were forced into bankruptcy and others were on the brink of collapse. One result of this was a mass exodus of kibbutz youth. Children of kibbutz members chose to abandon the ailing kibbutzim before they turned 18 and received kibbutz membership, which would automatically saddle them with debt. Finally, many young couples also began to desert kibbutzim. The annual living allowance of $4000 was not a financial inducement to have them stay as members when they could earn the same money in a month outside of the kibbutz.

The only way to solve the kibbutzim's labor shortage was to employ non-members. In fact, presently, most workers in kibbutz industries are not kibbutz members while members occupy senior and managerial positions. This has led to the creation of a hierarchical system and a compromise of kibbutz ideology, as these external employees have no say in the running of the industry. On the positive side, employing non-member labor means that older members can undertake light work instead of manual labor.

Economic conditions in Israel in the 1980s were a wake-up call for kibbutzim. Triple-digit inflation and exorbitant interest rates, which brought many kibbutzim to the brink of disaster could have spelled the end of the kibbutz movement. Kibbutzim had amassed over $2.25 billion in debt. The Israeli government, commercial banks and the kibbutz federations hammered out several agreements for canceling and restructuring kibbutz debts. The price was heavy--some kibbutzim had to sell agricultural land to pay off their debts; many others were forced to slash operating costs, which they did by reducing their spending on basics like food, non-essential medical care, education and travel. Kibbutzim found it necessary to find new sources of income and to increase productivity.

Kibbutz Ga'ash, on the coast near Tel Aviv, sold lots for $1000 to $1850 per square meter. Kibbutz Shefayim nearby sold individual plots for half a million dollars each. In the process, these and several other kibbutzim actually became wealthy by selling off their government- granted land.

Kibbutz Lohamei Hagetaot, located between the towns of Acre and Nahariyya, branched out from farming and operating a small electric-condenser factory to producing soy foods. Their brand, Tivall, currently controls 70% of the Israeli market for soy products. To break into the international market, the kibbutz teamed up with Osem, a Nestle subsidiary. Tivall now reports about $55 million in annual sales. A second kibbutz, Hatzor, located near Ashdod, expanded from farming and die casting into the production of soy ingredients. They produce a caramel-colored soy pellet that is used for everything from food products to isoflavones, a supplement for menopausal women. The kibbutz' brand, Solbar, has become a multinational force in soy food ingredients.

Many kibbutzim located adjacent to each other have entered into joint economic ventures. Granot, for example, is owned by 38 kibbutzim and services Emeq Hefer, Sharon, and the Shomron areas in the north of Israel with packaging houses for fruits and vegetables. Other groups of kibbutzim have created their own regional supply and marketing cooperatives which involve, for example, floral processing plants and packing houses, with the goals of realizing economies of scale and increasing marketing efficiency. The kibbutz movement has ten such regional cooperatives, each employing up to 1000 people. These cooperatives sell their products to the National Marketing Board and to such producer-cooperatives as Tnuva (for home sales) and Agrexco (for export).

Essentially, the 1980's required kibbutzim to assess what they needed to do to survive. Elements of the socialist model that had driven kibbutzim for more than half a century had already been abandoned. Now many kibbutzim realized that they would have to adopt many elements of capitalism if the movement were to continue. "Entrepreneurship", "private property", "differential salaries" and "board of directors" became part of the movement's vocabulary.

EVOLUTION OF THE KIBBUTZ

In December, 2003, the United Kibbutz Movement, seeing the changes taking place in kibbutzim, met and officially blessed the dissolution of the original collectivist ideal that was the kibbutz and proclaimed the birth of a new construct, the "renewed kibbutz". In the renewed kibbutz, members would own their own houses, be able to work outside the kibbutz, and receive differential salaries according to their contribution to their kibbutz' economy. In order to maintain their status as cooperatives, the kibbutzim assured the Israel government that all productive assets would remain in the ownership of the kibbutzim, but kibbutz members would be allowed to own shares of these assets.

In addition, to attract new members the kibbutzim would use a more flexible definition of membership to make it easier to join the kibbutz. Concurrently, kibbutzim would improve social security programs, particularly pension plans, for the rapidly aging kibbutz population. All members would also be entitled to education, health care, welfare and care for members with special needs. In April, 2004, the Israeli Cabinet approved these kibbutz reforms.

It is believed that about two-thirds of the country's 287 kibbutzim will embrace the principles of the renewed kibbutz. Kibbutz Kfar Hanasi, near Tel Aviv, for example, plans to start building an expansion neighborhood within its municipal jurisdiction, offering young families an opportunity to enjoy the advantages of the kibbutz, strong schools, health care and a rural environment, without assuming the burdens of kibbutz membership. The neighborhood of Kfar Hanasi will consist of one-eighth-of-an-acre plots, with homes starting at 120 square yards. Potential owners must be Israeli citizens and approved by something similar to a co-op board.

Kibbutz Yahel, located 65 kilometers north of Eilat, is attempting to attract new residents by offering free plots of land of between 75 and 100 square meters. Those who accept the offer and are approved will receive a government grant of about $9000. About 185 plots will be offered for people to build luxury villas at a cost of $130,000 each. Before being approved, interested persons will have to spend a weekend on the kibbutz to become familiar with it. Those who accept the offer will be able to rent a house on the kibbutz for $400 a month until their own villa is ready. They will not have to become kibbutz members. In addition, Kibbutz Yahel is in the early stages of setting up a commercial center.

In the renewed kibbutz, enterprises have become profit centers and are created or continued only if they are economically profitable. These enterprises are run by managers who are responsible to a board of directors. These boards have replaced the kibbutz' general assembly.

After many years of declining membership, 2003-2004 witnessed an increase in the number of new kibbutz members, possibly due to the reforms that are in place. It is estimated that 12,000 people are waiting to join the renewed kibbutzim. The average age of kibbutz members, now 54, is starting to decline as almost 2000 new members, the vast majority of whom are under the age of 30, joined kibbutzim in the last two years. The kibbutz movement presently includes 102,000 Israelis, and accounts for ten percent of Israel's manufacturing output and half of its agricultural production. Clearly, the health of the movement is crucial to Israel's economy, society and security.

KIBBUTZ TZUBA

In 1948, 50 former members of Palmach (at that time, the name of Israel's Defense Force) established Kibbutz Tzuba, at that time called Kibbutz Palmach-Tzova. The government of the new State of Israel recognized the importance of safeguarding the access to Jerusalem and provided the land and the funding for the creation of the kibbutz, which was strategically located near Highway #1, the primary access route to the State's capital.

Like all other kibbutzim, Kibbutz Tzuba started as a socialistic agricultural collective. And like most of the other kibbutzim, it has had to adapt and embrace elements of capitalism to survive. It has even created the position of director of marketing. The person holding this position is responsible for the marketing of Kiftzuba, the Hotel Belmont, and the dining room, which are discussed below.

The kibbutz has a living area of 75-100 acres; orchards and an industrial area are located on approximately 250 acres; and there are 875,000 acres of agricultural fields. It presently has 266 members, about 30% of whom work outside of the kibbutz, and employs an additional 150 part-time workers. Approximately 600 people live on the kibbutz. Members do not own their own homes and they do not pay any rent. The average age of members is 50.3, with more than 50% of them over the age of 45. The annual budget for members' expenses is about $2.7million.

The general assembly has been retained and meets every two to three weeks to discuss the major issues of kibbutz life. It also ratifies the annual budget and oversees the elections of key kibbutz personnel. However, the Kibbutz Authority, consisting of a series of committees, governs all aspects of kibbutz life. The two major committees are the Secretariat, which authorizes all the other committees, and the Economic Board, which makes all the economic decisions that affect the kibbutz.

KIBBUTZ TZUBA ENTERPRISES

Kibbutz Tzuba raises chickens that are sold to the producer-cooperative, Tnuva. This venture is not profitable. Grapes grown in the kibbutz' vineyards have been sold to a wine-producing company in the nearby town of Abu Ghosh. The kibbutz has decided to establish its own winery and olive oil factory and to market its own brand of wines and oil through a visitors' center. Nectarines, apples, kiwis, cherries and pears grown in the kibbutz' orchards and cotton, corn and organic vegetables grown in their agricultural fields are sold in the open market through a regional packing center.

In 1975, a furniture factory and store were founded on the kibbutz, providing work for about ten members. The factory specialized in office and residential furniture made of pinewood. Because the factory became unprofitable, it was closed in mid-2003. The factory space was taken over by the kibbutz' glass factory (see below) for the production of glass and aluminum products. The furniture shop was rented to Kibbutz Ein Charod.

In 1979, the kibbutz built a glass factory, specializing in safety (that is, bulletproof) glass. The glass is used for automobiles and for office buildings. Kibbutz Tzuba is the largest provider of safety glass for the government of the State of Israel, which purchases this glass on a bidding basis. This operation nets the kibbutz more than $4.5million annually.

A garage located on the kibbutz services members' cars and is also the authorized service center for Renault and Nissan automobiles. The garage employs five people, three of whom are kibbutz members.

There is a workshop for several senior members whose handicrafts are sold from a store located near the dining room. The store hours, however, are limited and irregular. The kibbutz has a young children's education program (nursery and kindergarten). Half of the attendees are members' children and half are children of non-members. There are three teachers for each ten children. This venture only breaks even.

KIFTZUBA

Unlike many other kibbutzim which sought new opportunities in the industrial market, Kibbutz Tzuba began to explore the consumer market and, in 1997, it built Kiftzuba, an outdoor family entertainment center, targeted at children ages 1-14. The park offered children the opportunity to bounce, slide and climb on huge inflatables, as well as picnic tables for families.

Recognizing the competitiveness of the entertainment market, the kibbutz decided it would have to regularly upgrade the park and, in 1998, it constructed an air-conditioned indoor facility, housing ten different activity areas, including an area for preschoolers, and areas for table games like air hockey and soccer, LEGO[R] construction toys, computers, developmental games and a mini-market. The facility also has a restaurant with abundant seating accommodations.

A separate indoor skating rink was added in 2000, using synthetic ice. A state-of-the-art sound system and lighting effects enhanced the skating experience for children and adults. This facility also included a machine games arcade, including video and shooting games for prizes and a food counter.

In 2001, an outdoor area was added for bumper cars, battery-operated motorcycles and scooters and in 2002, a children's petting zoo was relocated from the inner grounds of the kibbutz to Kiftzuba. In 2004, because of exorbitant labor and insurance costs, the skating rink was closed and replaced with a two-story foam ball cannon arena. In addition, a jungle locomotive was also introduced.

Kiftzuba is the only family entertainment center in Israel that is open 362 days a year. Its hours of operation are Sunday-Thursday, on school days, from 1:00-7:00PM; Sunday- Thursday+Saturday, on holidays and during the summer months, from 10:00AM to 7:00PM; and on Friday and the eve of Jewish holidays, 10:00AM to 5:00PM.

Admission to Kiftzuba is 52 shekels (the monetary unit of Israel. At this writing, 4.3 shekels = $1) for children ages 1-14 and 29 shekels per adult. During the last three hours of operation, admission is 37 shekels per child and 15 shekels per adult. A ten-entrance discount card is available for 275 shekels and can be used Sunday through Friday, excluding Jewish holidays and their intermediate days. During the summer vacation season, admission using this discount card is only from 4:00PM. Each visit with the discount card entitles two accompanying adults to free admission.

Kiftzuba has an administrative staff of nine kibbutz members and employs 30-35 paid workers during the summer season and three or four paid workers during the off-season. The park is heavily promoted, including advertisements in the media and in a major journal, the "Encyclopedia of Tourism". An internet site is maintained. Kiftzuba works with travel agents to bring school groups to the park. Various events are scheduled including beginning and end of summer parties and a major end of Passover party. Coupons and reduced price tickets are also employed. T-shirts advertising Kiftzuba are available for purchase.

The operation of Kiftzuba is profitable, although figures are not available. However, the current intifada, the terrorist attacks on Israeli civilians, has necessitated tightened security at the park. Packages carried by people entering Kiftzuba are subjected to a search, resulting in an increase in the time it takes one to pass through the entrance. The heightened security is also a reminder of the potential danger of being in a place with a concentration of people. This, most likely, has kept many families away from the park.

Kibbutz Tzuba boasts a natural Spring Park, consisting of an ancient spring, the underground tunnel of Ein Zova and other archeological sites, such as a cave believed to be the place where John the Baptist anointed his disciples. The underground spring is open on Saturdays in the winter from 10:00AM to 4:00PM and in the summer from 10:00AM to 5:00PM. Entrance to the spring is free with the purchase of any ticket to Kiftzuba. The tunnel is open on weekdays for groups by reservation. The other archeological sites are in open agricultural areas, allowing hikers to approach them freely.

THE BELMONT HOTEL

The signing of the Oslo Peace Accord in 1993 by Israel and the Palestinian Authority was followed by a number of years of optimism. There was hope that peace in the Middle East would result in economic prosperity and an increase in tourism. With this in mind, Kibbutz Tzuba decided, in 1998, to build the Belmont Hotel, at a cost of close to $700,000, with the Israeli government contributing 20% of the cost.

The hotel has a spacious lobby with indoor and outdoor lounge areas, a coffee shop, 64 suites, a lecture hall seating up to 150 people and four conference rooms for seminars and meetings. Each suite offers two separate air-conditioned rooms, a full bath, a refrigerator and facilities to make coffee, color television, two telephones, internet connection on request, and a balcony with a magnificent view of the surrounding hills and valley. In season, there is an outdoor full-sized heated swimming pool for adults and a separate pool for younger children. A hairdresser and cosmetician are on the premises and a variety of holistic treatments is available. The hotel rates are 500 shekels per couple, bed and breakfast, and 115 shekels per child ages 2-12.

The hotel offers many attractions both in the immediate area and within a short drive away; a hike to the Crusader castle "Belmont"; a guided tour of the natural spring and archeological digs; burial caves from the First Temple period; Sataf, the reconstruction of an agricultural village built around an ancient natural spring; tours of local wineries, natural springs and stalactite caves; cycling paths; horseback riding; and the city of Jerusalem.

The Belmont Hotel is slightly profitable, contributing a little more than $200,000 of the kibbutz members' salaries. However, because of the intifada that was begun in 2000, the spate of tourists to Israel hadn't materialized and the hotel's occupancy rate was only 40%. In 2004, there was a recovery and the occupancy rate is currently around 60%.

No advertising is done for the hotel. It is promoted through travel agents and an internet site is maintained. A club membership was created to reward frequent guests.

THE FOOD SERVICES BRANCH

Like the other kibbutzim, Kibbutz Tzuba's kitchen prepared the meals for its members from ingredients often grown or raised on the kibbutz, its bakery provided breads and other baked goods, and members ate in the communal dining room for free. Later on, the kibbutz opened the "Col-Bo", an on-site supermarket, from which members could purchase food to prepare and eat in their residences. These four units, the kitchen, the bakery, the dining room and the supermarket, were run as not-for-profit enterprises, each with its own manager. In the 1980s, the kibbutz decided to centralize these food services in order to reduce expenses and it created the Food Services Branch (FSB), with one manager and a smaller multi-task workforce moving, as needed, between the different units of the FSB.

The dining room, which became kosher in 1998, has a seating capacity of 250 and served kibbutz members, their guests, and employees, exclusively, until Hotel Belmont opened in 2000. At that time, the FSB was converted to a profit center from a service center, with the dining room as the dominant revenue producer. The FSB employs over 30 workers (members and paid employees), has a budget of approximately $180,000, and grosses about $1.4million annually. The largest group that the FSB serves is the kibbutz' fixed population, consisting of its members, their children and personal guests, non-member residents, and the employees working in the kibbutz' various enterprises. The FSB also serves the temporary non-resident kibbutz population, consisting of guests at the Hotel Belmont, organized groups of tourists sightseeing in the area, and guests of those working in the kibbutz' enterprises.

The dining room offers three buffet-style meals daily and at any given time, the population using the FSB's services can be between a few dozen to over 1,200 people, such as at the annual kibbutz founding celebration.

Kibbutz members no longer get their meals for free since the communal food budget has been privatized. Members continue to pass their salaries to a common pool and live on budgeted allowances but they are expected to pay for their own meals. However, the cost of those meals to members is subsidized by the kibbutz. For example, the cost for breakfast is normally about $7.00, but members pay less than 90 cents; the cost for lunch is about $9.30, but members pay about $1.33.

The only promotion of the dining room is with travel agents who can arrange meals for their clients who might be staying at the Belmont Hotel or who are sightseeing in the area.

Even though members' meals are subsidized, they see themselves as cash-paying customers, just like the Belmont's guests. As such, many are beginning to expect better quality food than what they are now offered. In the future, meal subsidies are likely to be abolished as the kibbutz further expands the privatization process and business efficiency improvement programs are implemented. If food quality is not improved, members may abandon the FSB in favor of other meal sources.

In addition, informal surveys of FSB guests eating in the dining room show that, although there are few complaints about either the quantity or quality of the food, many guests do not care for the buffet-style meals. They would much rather have waiter service with a fancier ambience than that offered by the spartan dining room. Of course, they want the prices of meals to remain the same.

CONCLUSION

Historically, the kibbutz movement has been an integral part of Israeli society. But kibbutzim have had to evolve to survive in contemporary Israel. It remains to be seen if the decisions made by the kibbutz movement, in general, and by Kibbutz Tzuba, in particular, will contribute to their continued viability.

DISCUSSION QUESTIONS

1. What role did the kibbutzim play in Israeli society?

2. What role do the kibbutzim have in contemporary Israeli society?

3. Evaluate the "renewed kibbutz".

4. What are the benefits of becoming a member of a kibbutz?

5. Should kibbutzim encourage membership? What are the consequences of doing this? How can it be done?

6. Is Kibbutz Tzuba a traditional or a renewed kibbutz?

7. Evaluate the organizational structure of Kibbutz Tzuba.

8. Should Kibbutz Tzuba sell off its housing to its members? How might the proceeds from such a sale be used?

9. What marketing opportunities exist for Kibbutz Tzuba?

Larry Goldstein, Iona College