Title: Navigating Market Dynamics: An Inside Look at Iran’s Dairy Sector
Introduction: A Sector Under Scrutiny
Recent price adjustments in Iran’s dairy market have prompted industry representatives to clarify the complex economic factors at play. Key figures from both the retail and production sectors emphasize that pricing structures result from interconnected supply chain realities rather than isolated market events.
The Retail Perspective: Distribution Challenges
Ms. Soodabeh Sangchi, Head of the Tehran Dairy Sellers Union, outlined the multifaceted pressures facing retailers. “From our position at the end of the supply chain,” she explained, “the primary driver of price increases is the rising cost of raw milk and other primary materials from producers.”
She detailed how these increases are themselves influenced by higher costs for imported animal feed inputs like corn and soybean meal, which are sensitive to currency fluctuations. Additionally, persistent overhead costs for retailers—including rent, transportation, and packaging—continue to rise, collectively pushing final prices upward.
Ms. Sangchi also addressed the resilience of the domestic supply chain, noting that short-term regional instability had no widespread immediate impact, as the industry relies predominantly on domestic raw materials.
Production Realities and Policy Levers
Echoing this analysis, Mohammad Farbod, Spokesperson for the Iranian Dairy Industry Association, prioritized the cost factors from a manufacturing standpoint. “The reasons for price increases, in order of impact, are the price of raw milk, rising wages, and packaging costs,” he stated, listing transportation, energy, and currency rates as secondary influences.
A critical policy tool discussed was the preferential currency allocation for imported animal feed. Mr. Farbod clarified that this subsidy currently reduces raw milk prices by approximately 20%. His association has proposed redirecting this subsidy to a specific portion of raw milk production to create more affordable dairy products for lower-income families.
Public Health and Economic Interdependence
Both representatives expressed significant concern about falling consumption rates. Ms. Sangchi identified this as a major worry, stating that when purchasing power declines, nutritionally vital goods like dairy are often the first casualties. “This not only risks public health, especially for children and adolescents,” she warned, “but also creates a vicious cycle where reduced demand leads to stagnation across the entire industry, from producer to seller.”
Mr. Farbod highlighted the disproportionate impact on lower-income demographics, linking reduced dairy intake to long-term public health issues like osteoporosis.
Pathways Forward and Sector Resilience
On solutions, both officials called for coordinated, national strategies. Ms. Sangchi emphasized that unions alone cannot implement large-scale consumption programs, pointing to the need for government-supported public awareness campaigns and targeted subsidies. Mr. Farbod pointed to two key measures: the subsidy mechanism for low-income families and the continuation of the school milk program, for which the government has allocated a substantial budget this year.
Despite challenges, the sector shows signs of strength in exports. Mr. Farbod reported a 23% increase in export volume and a 28% rise in value for the first five months of the current year compared to the same period last year.
Regarding quality and market structure, he assured that competitive pressures and consumer awareness ensure quality remains a priority for all brands. He also downplayed concerns about market monopolization, noting the industry’s narrow profit margins make such dominance unlikely.
Conclusion: A Call for Coordinated Action
The industry’s outlook hinges on broader economic stabilization. The consensus among representatives is that breaking the current cycle requires integrated policy-making that addresses input costs, supports vulnerable consumers, and invests in long-term agricultural self-sufficiency, all aimed at safeguarding public health and ensuring the sector’s continued contribution to the national economy.