JERUSALEM — The next time you unwrap a Subway-brand tuna sandwich on an El Al flight, consider this: It was made at the sole Subway factory worldwide, in Kibbutz Be’erot Yitzhak, near Ben-Gurion Airport.
Launching a Subway factory was a major change for the 35-year-old sandwich giant, with 17,109 franchised stores in 73 countries worldwide. But it was an even bigger shift for the 66-year-old kibbutz, which was looking for ways to augment its annual $1.3 million in revenue from a pipe-coating factory and spice warehouse.
When El Al was looking for a franchise to supply sandwiches on flights, Be’erot Yitzhak jumped at the opportunity.
Now the kibbutz is making more than 30 types of sandwiches for El Al, the Israel Defense Force, schools and community centers. It’s a profitable business, as witnessed by the state-of-the-art, $1 million facility the kibbutz recently built to automatically slather, spread and plastic-wrap more than 18,000 submarine-shaped snacks a day.
But for Be’erot Yitzhak, it’s just another route to ensuring that this religious kibbutz with 170 members remains intact as Israel’s 266 kibbutzim undergo sweeping social and economic changes.
The utopian fields of the socialist kibbutz movement have been largely bypassed by the materialistic wave engulfing Israel. However, most of the second-generation, baby-boomer-age kibbutzniks are watching their children opt for high-tech jobs in the city rather than milking cows in the dairy.
As a result, many of these farming cooperatives have been actively seeking ways to ensure their financial security and communal way of life with decidedly nonagricultural business. It’s a process that began back in the 1960s and 1970s, when water for crop irrigation became too expensive and kibbutzim paved over their corn and cotton fields with industrial factories.
But some kibbutzim never emerged from the rubble.
“We’re still millions of dollars in debt,” says Yoav Drori, general secretary of Kibbutz Ga’ash in the country’s center, which now runs a reception hall, a hot springs spa, a commercial center and a golf club, in addition to its industrial lighting factory, orchards and fields of sod. “We started looking for something, any business that wasn’t agricultural or industrial.”
Now Ga’ash is starting to see some commercial success, as well as potential profits on the balance sheets. But Drori, a second-generation kibbutznik, is still bitter about the lack of support from the government and the surrounding cities. The government doesn’t like the cooperative’s use of agricultural lands for commercial purposes. And the neighboring communities of Netanya, Ra’anana and Herzliya are making noise about the kibbutz supercenters that threaten their mom-and-pop businesses.
“When we were poor, they laughed at us,” Drori said with a wry smile. “Now that we’re making money, they want to take it away from us. We’re the enemy of the state.”
Most of the kibbutzim aren’t getting rich from their commercial or industrial ventures. Ga’ash and a partner invested more than $1 million in the golf club, which hasn’t yet turned a profit. Be’erot Yitzhak is slightly better off, but if the kibbutz decided to pay off its debts tomorrow, it would be left with empty coffers.
“We’re not rich,” said Micha Amir, the kibbutz secretary. “We’re in a good position and we’re pretty liberal about what business we’ll consider getting into. But every decision we make is a painful, communal process.”
Take Be’erot Yitzhak’s first industrial endeavor, Avrot Industries Ltd., a publicly traded company that coats pipes. The company was started by Be’erot and a partner in 1984, and is earning an average of $80 million in sales. It went public on the Tel Aviv Stock Exchange in 1995, and four years later, the kibbutz bought out the partner and owns 77 percent of the company.
Now Be’erot Yitzhak is sinking some of those profits in a joint venture with real estate developer Eliezer Fishman.
Nevertheless, this kibbutz of European immigrants that fought off the Egyptian Army from its original Negev site has no desire to completely abandon its farming roots. While it has expanded with the Avrot factory, Subway plant and Raychan, a seasonings and spice packager, the kibbutz also raises 1,600 turkeys, produces three million quarts of milk, manages 37 acres of orchards and operates an exclusive kindergarten that caters to discerning parents in the area.
Moreover, the cooperative recently decided to expand the dairy and produce a specialty line of rigorously kosher milk products.
“We may very well be spreading ourselves too thin,” admitted Amir, who worked in the dairy before moving up the kibbutz management ranks. “But we’re farmers, it’s in our blood.”
That seems to be the general consensus among more than one kibbutz. Sure, find a solution to make ends meet and pay back millions of shekels in debt. But the overall objective is to remain a kibbutz, a tight community of like-minded members who want to live a relatively simple life in a pastoral setting.
“No one has any serious aspirations to be other than what we are,” explains Eytan Ofer, an agricultural engineer and managing director of Bio-Bee Biological Systems, a natural pollination business that keeps Kibbutz Sde Eliyahu solvent. “We wanted to be a lab, to be high-tech. This is the perfect solution for a kibbutz because it lets us stay in agriculture and it also has a future.”
This religious kibbutz of 140 families based in the Beit Shean Valley initially made a living from eggs, milk, organic crops and fisheries, but it struck gold with the discovery of a giant bumblebee, Bombus terrestris, that pollinates greenhouse vegetables.
Bio-Bee automated the pollination process by creating a commercial hive — a cardboard box approximately the size of a shoebox — which fits one queen bee, her eggs and 60 worker bees. One hive costs $200 and can pollinate half an acre for eight to 12 weeks.
Bio-Bee signed a joint venture in 1990 with the Netherlands’ Koppert Biological Systems B.V., considered a market leader in biological crop protection and natural pollination. The kibbutz also recently sold off 25 percent of Bio-Bee to local seed developer Hazera-Quality Seeds Ltd., for an investment that places Bio- Bee’s value at $10 million
That’s relatively small potatoes — or seeds, in this case — for the Israeli investment community, but remarkable considering that Bio-Bee was created by a Sde Eliyahu member who spent his free time experimenting with bees in a spare bomb shelter.
At present, Bio-Bee has a turnover of $5 million in sales on an annual basis. That’s more than most of the dot.com, high-tech start-ups sitting in Tel Aviv and Herzliya with a spending rate of $1.5 million a year.
In Be’erot Yitzhak, managing director Micha Amir still has to sign up for a car when he wants to drive to Jerusalem and his office is in the basement of the dining room.
“What changed here is the understanding that equality is important, but there’s no shame in being profitable,” explained Be’erot’s Amir. “At the same time, it can’t only be about the money that we make.”