IDM ¦ Country Report
Dark times for the
dairy industry in Iran
Country report
Author: Vladislav Vorotnikov, Moscow, Russia
28 · May/June 2022 ¦ international-dairy.com
Milk consumption in Iran is on
the decline for various reasons
(photo: Vorotnikov)
Iranian dairy companies are caught between a hammer of skyrocketing
production costs and an anvil of state price regulation
on the domestic food market. Shrinking consumption and
problems with export are adding reasons for concerns to local
dairy companies.
In the past calendar year, Iran has experienced the strongest
rise in prices for dairy products in the past decade. A report from
the Ministry of Cooperatives, Labor and Social Welfare published in
August of 2021 indicated that the price of butter jumped by 120%
during the previous 12 months, while the price of milk climbed by
80%, and the picture was similar on most other dairy products.
The price hike is primarily associated with a change in the farmgate
price of raw milk, Mohammad Reza Bani Tabaa, spokesperson
for the Iranian Dairy Industry Association, said. In the middle
of 2021, the government approved a raise in farm-gate prices from
4,500 tomans ($1.06) to 6,600 tomans ($1.56) per kg. Under these
conditions, the prices immediately jumped by nearly 70% across
the entire range of dairy products, Tabaa said.
On the other hand, the raw milk rarely reaches dairy companies
at the rate approved by the government, Tabaa said, explaining
that when the price was 4,500 tomans, the actual deals were
concluded at 5,000 tomans ($1.18) per kg. The state control is
nearly absolute when it comes to retail prices, but the authorities
turn a blind eye to price differences in the raw milk segment, Tabaa
claimed.
The farm-gate price has been raised following an appeal from
milk farmers, who have seen the production costs skyrocketing
during the past year, amid a sharp rise in price for logistics, electricity,
fuel, but above all – animal feed. Mojtaba A'ali, chairman of the
Iranian Farmers Union, estimated that milk production decreased
by 50% during the summer months because of drought as well as
shortages and high prices for animal feed and other farm necessities.
It is believed that 50% of milk in Iran is produced by independent
farmers, who primarily rely on rain-fed pastures, the size of
which dwindled due to adverse weather conditions in 2020 and
2021. This factor raised the demand for animal feed, which was
already in short supply at the beginning of the last year.
Mansour Pourian, the head of the country's livestock supply
council, said that in the second half of 2021, the feedstuff supplies
/international-dairy.com
