Falling dairy consumption in Iran has triggered significant concerns within the society as the government responds with a 20% hike in wholesale raw milk prices to support milk farmers. This move, however, has sparked worries about the acceleration of food inflation as the cost of producing dairy products continues to rise.
With the Iranian Ministry of Agricultural Jihad decreeing an increase in raw milk prices from 15,000 tomans (US$0.25) per litre to 18,000 tomans (US$0.30), the dairy industry in Iran finds itself in a state of turbulence. The government’s price cap policy, aimed at regulating retail prices for key agricultural commodities, has faced backlash from both consumers demanding food price stability and agricultural manufacturers seeking higher profitability.
In response to rising operational costs, particularly related to feed production, local business organisations have criticised the government’s previous raw milk price hike in May 2023 as inadequate. The centralised system reform implemented in 2023 for purchasing and distributing feedstuff among farmers further added to the financial strain on dairy producers in Iran.
Ali Ehsan Zafari, chairman of the Iranian Dairy Products Union, highlighted that the recent price increase in raw milk is expected to have a more significant impact on the price of cheese, while the cost of drinking milk will see a relatively modest rise. Despite reassurances, the overall prices of dairy products are predicted to surge by approximately 25%, posing a new blow to dairy consumption in the country.
The looming financial burden on consumers is likely to intensify the decline in dairy consumption in Iran, with per capita dairy consumption plummeting to less than 70 kgs annually, according to the Iranian Dairy Products Industry Association. This stark drop from pre-2010 levels of 100-130 kgs per capita raises concerns among healthcare officials about the potential health implications for the population.
The current level of dairy consumption in Iran is alarmingly close to the minimum recommended threshold, potentially leading to a higher incidence of conditions like osteoporosis in the long run. The need for policy changes to address the declining dairy consumption trend in Iran is becoming increasingly urgent to safeguard public health and ensure the sustainability of the dairy industry.
In conclusion, Iran’s dairy sector faces significant challenges as the government’s response to support milk farmers through a raw milk price hike raises concerns about food inflation and consumer affordability. The decline in dairy consumption poses health risks for the population, highlighting the need for proactive measures to address the underlying issues affecting the industry. As stakeholders work towards finding a balance between profitability, affordability, and public health, collaborative efforts and informed policy decisions will be crucial in shaping the future of the dairy sector in Iran.
