Prices of dairy products are set to rise by 70%, the spokesman of Iran Dairy Industries Society said on Tuesday.
“As per the new decision of Market Regulation Headquarters, the mandated-price of a kilogram of farmgate milk price has increased from 45,000 rials (19 cents) to 64,000 rials (27 cents),” Mohammad Reza Banitaba added.
“Raw milk accounts for 65% of overall production costs of dairy products. Accordingly, prices of dairy products are bound to increase by 70% as of next week,” he was quoted as saying by ILNA.
Iran’s dairy industry currently has a nominal capacity of 12 million tons of products per annum. Presently, 650 licensed dairy production units are active across the country.
Iran is one of the top milk-producing countries.
Average per capita dairy consumption in Iran has reached 82 kg at its highest, which is well below the global average, according to Esmaeil Khatami-Moqaddam, an inspector of Iran Dairy Industries Society.
According to the Statistical Center of Iran, total production of raw milk by industrial and traditional dairy farms stood at 8.6 million tons in the year ending March 2020.
“Given Iran’s population of 83 million, per capita production of milk, measured in kilograms per person per year, stands at 103 kg. However, in many reports, per capita production is wrongfully perceived as per capita consumption,” Khatami-Moqaddam was quoted as saying by ILNA.
“Per capita consumption is the sum of production and import minus exports and consumption by animals divided by population. The result you gain by entering numbers in this formula shows a significant gap between per capita production and per capita consumption in Iran.”
The official noted that of the total 8.6 million tons of raw milk produced in Iran annually, industrial dairy farms account for 6 million tons or 70%, and traditional dairy farms constitute 2.6 million tons or 30%.
“Imports of dairy products, except for butter, were close to zero over recent years. As a result, the impact of imports on per capita consumption has been zero as well,” he added.
Statistics by the Islamic Republic of Iran Customs Administration show the country exports 700,000-900,000 tons of raw milk per year, which is equal to 9-10% of total raw milk production in Iran.
Outbound Milk Smuggling, Exports
Noting that the outbound smuggling of raw milk stands at 1 million tons (in the form of 80,000-100,000 tons of milk powder), Khatami-Moqaddam said that is 10% of the overall output of raw milk in Iran.
“A portion of milk powder produced in local factories is being stored, as per the country’s strategic reserves, i.e., 500,000 tons or 5% of the total output. Self-consumption by dairy farms accounts for a small fraction of total raw milk output, i.e., 5%. In other words, 5% of milk produced in dairy farms are directly used in their plants for purposes such as feeding the calves. All in all, 30% of raw milk produced in Iran must be eliminated from per capita consumption,” he said.
“Dairy consumption by each Iranian hovers around 72 kg at its lowest and 82 kg at its highest, which is well below the global average of 120 kg.”
According to Iran's 20-year Vision Plan (2005-25), per capita consumption of dairy products should hover around 120 kg, which figure seems unrealistic under the current circumstances.
Khatami-Moqaddam believes that the average level of consumption of dairy products continues to decline due to economic reasons.
“The decline in people’s purchasing power due to the economic hardship is one of the main reasons behind people cutting dairy out of their diet,” he said.
Iran exported 443,890 tons of dairy products with a total value of $390 million during the last fiscal year (March 2020-21).
According to the latest figures published by the Agriculture Ministry, dairy exports experienced a 4.63% growth, compared with the year before, while the collective value of exported dairy products was 20% lower than the year before.
Fresh milk topped the list of dairy products in terms of export value, with $103 million.
Milk powder came next with $49 million, followed by yogurt with $30 million and yogurt drink with $25 million.
Various types of cheese, cream and ice cream were also among the top dairy products exported from Iran during the period.
According to the Trade Promotion Organization of Iran, Iraq was the leading destination for Iranian dairy products last year, with a 59% share.
Afghanistan and Pakistan followed by importing 16% and 11% of the total, respectively.
Syria and Russia were also among the top importers of Iranian dairy products.
A total of 20,350 tons of dairy products worth $110 million were imported during the same period.
Butter with 9,800 tons worth $51.46 million tops the list of imports.
