Rewritten Title: A Perfect Storm in the Dairy Sector: How a Cattle Disease and Supply Chain Issues Are Reshaping the Market
Article:
A confluence of veterinary and economic challenges is placing significant pressure on Iran’s dairy industry, with experts pointing to a complex interplay of factors affecting production and prices.
The Initial Shock: A New Strain of Disease
The situation began with the emergence of a new, mutated strain of Foot-and-Mouth Disease (FMD). The UN’s Food and Agriculture Organization (FAO) had issued a global alert in early May, urging countries to rapidly adapt their vaccines and strengthen border controls. While Iran’s cattle were vaccinated, the existing vaccines were designed for older strains of the virus, leaving herds vulnerable. The arrival of this new variant led to substantial livestock losses across several provinces.
Cascading Effects on Milk Supply and Price
The impact extended beyond animal fatalities. Foot-and-Mouth Disease is notoriously effective at reducing milk yield. According to Reza Bakari, Secretary of the Association of Dairy Industries, in the initial months of the outbreak, the country’s daily supply of raw milk fell by approximately 3,000 tons.
This sharp decline in supply, within a market already facing constraints, inevitably disrupted the price equilibrium. The price of raw milk surged, exceeding the official benchmark in some areas.
Expert Analysis Points to Policy Delays
In a special session of the Food Industries Commission, Bakari stated that “disregarding international warnings and the delay in updating vaccines” were the primary causes of the price shock in the milk market. He contrasted Iran’s experience with that of Turkey, which he said successfully controlled the outbreak through swift action to modify its vaccines. Iran, he noted, was forced to import the effective vaccine from abroad only after the crisis had taken hold.
Broader Supply Chain Complications
The challenges were compounded by pre-existing issues within the supply chain. The dairy industry, a key component of Iran’s non-oil exports, requires an annual import of around $600 million in essential materials, including rennet, yogurt starters, and packaging.
However, Bakari reported that many factories have faced lengthy delays in receiving allocated foreign currency, with some purchased raw materials and equipment stuck in warehouses for up to nine months awaiting clearance. This “hesitation in currency policymaking,” as described, threatens the production capacity of the entire sector.
Debate Over Subsidy Effectiveness
A focal point of the discussion was the effectiveness of government support. Bakari highlighted that a substantial subsidy allocated for dairy cattle inputs was not reaching the end consumer. He argued that inflation across the production chain had “completely eroded” the benefit of this subsidy.
To create a more direct impact on household livelihoods, Bakari has proposed a policy shift: instead of subsidizing inputs at the start of the chain, support should be provided at the consumer level in the form of a dairy commodity card. He suggests this could potentially halve the price of key dairy products for families.
A Converging Challenge
The current situation is not the result of a single failure but a convergence of several trends: the FMD outbreak, a significant drop in milk production, soaring raw milk prices, currency allocation delays, and the perceived underperformance of support policies. The collective result is increased pressure on producers and a reduction in the purchasing power of consumers, a dynamic that experts warn could have long-term implications if not comprehensively addressed.