Dairy Price Hike Unwise

Dairy Price Hike Unwise

Increasing prices of milk and dairy products will lead to a decline in their consumption, and as a consequence give rise to many health problems, says Mohammadreza Esmaeili, director general of National Dairy Producers Union.
At present milk constitutes 70% of dairy products share, he said, adding that “Although this year milk price may not be hiked, however, increase in the inflation rate and production costs including workers wages, transportation and energy products (water, electricity and gas) may put pressure on manufacturers and lead to closure of dairy units, IRNA reported.
According to the current year estimates, prices of dairy products should increase 15% over the previous year, but the union has recommended only a 5% price hike, Esmaeili said.
The union does not agree with the increase in the prices of dairy products, because the decrease in dairy consumption in recent years “indicates that people cannot afford to pay higher prices.” The government should support dairy producers by giving subsidies to producers or providing direct or indirect loans to farmers as well as dairy industries.

The government also can provide assistance to producers by providing subsidized energy. Also lower value added tax can help increase people’s purchasing power.
Despite the World Health Organization’s (WHO) recommendation that annual per capita milk consumption should be at least 165 kilograms, the average figure in advanced countries exceeds 300 kg per year; however, in Iran in recent years, consumption pattern does not match the figures in advanced countries.
Currently, all dairy products, except butter, are produced in the country.  “Since milk fat is mostly used in dairy industries, the amount of fat left for producing butter is insignificant. Therefore butter is imported in bulk and packaged here.”

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