The drastic reduction of dairy production units in the last two decades in Iran

The Dairy Products Industry Association spokesperson pointed out: In the last 20 years, the number of dairy units has decreased from about 1800 factories and workshops to less than 300 dairy factories today. The same general business process causes part of this issue, and other reasons should be found in the targeted implementation of subsidies in 1989 and the decrease in demand for production, as well as the decrease in the profit margin of the industry due to the mandated pricing during the last decade.
Mohammadreza Bintaba, in an interview with Ilna’s economic reporter, in response to the question that some reports mention the closure of dairy production units, to what extent do you approve of this issue? He said: In the last 20 years, the number of dairy units has reached less than 300 from about 1800 factories and workshops today. Part of this issue is due to the same general business trend, and other reasons should be found in the implementation of the targeting plan for subsidies in 1989 and the decrease in demand for production, as well as the reduction in the industry’s profit margin due to mandated pricing during the last decade.
He stated that sometimes the process of closing dairy production units was done slowly, and sometimes it was done quickly, adding: It seems that until the increase of per capita consumption and also the avoidance of politicians from mandatory pricing is not considered, we can witness the continuation of this process. Currently, an average of about 60% of the capacity of the factories is under production load, and about 40% of the capacity of the lines is empty.
Referring to the supply of the domestic market, Bani-Taba stated: If the purchasing power of consumers is strengthened and awareness is raised regarding the consumption of dairy products, we will not have a problem with the supply, but in general, the approaches in the industry show that our country is affected by many factors, including Sanctions focus on the export of primary products such as milk powder, cream, and bulk butter rather than on the final products in export. This means that in the export markets, we are handing over the portfolio of finished products to our competitors, and we are supplying them with raw materials.

According to the spokesperson of the Dairy Products Industry Association, We have no other way to strengthen per capita consumption except culture on the one hand and to adopt supportive policies such as a basket of goods or school milk on the other hand.

He considered the situation of the dairy products market to be stable and added: There has been no price change, but the increase in production costs is evident. Officials have given instructions to producers regarding the necessity of price stability during the month of Ramadan. Still, they should pay attention to the fact that production costs in a country experiencing 50% inflation mean they incur about 4% more monthly production costs. Along with this issue, other production components, including salaries, have also increased. In this situation, how can the officials expect the producers to supply their products without changing the price until the end of the holy month? The government has made other services more expensive in addition to increased production costs and labor rates.

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