Falling consumption placing pressure on Iranian dairy

As estimated by Seyyed Mohammadreza Banitaba, head of the Iranian dairy industry association, the current level of dairy consumption in Iran stands at around 70 kg per capita. This is a far cry from the world’s average of about 160 kg, and the biggest problem is that this gap has been widening over the years.

Rampant inflation put pressure on household budgets, but the most vigorous blow to the demand on the market came from the removal of state subsidies last year, Banitaba claimed.

Mir Islam Timuri, a member of the board of directors of the Association of Dairy Industries, in turn, estimated that the market reform the Ministry of Agricultural Jihad embarked on in 2022 triggered a 15-20% slump in consumption as a large share of customers could not afford dairy products at higher prices in the same quantities.

Dairy consumption low

In 2017, dairy consumption in Iran per capita stood at 107 kg, the Association of dairy industries estimated. The Iranian government abandoned its subsidising policy in a bid to ease pressure on the state budget. Still, in the long run, this strategy could bring more harm than good, the market players believe, citing the fact that dairy consumption in the country is critically low.

“Such a low per capita consumption of dairy products can cause severe problems for people’s health, including osteoporosis, short stature, and tooth decay, and in the coming years, this factor will manifest itself in rising healthcare costs,” the association said.

The dairy industry association suggested that supporting dairy consumption through various efforts, like distributing free milk in schools, subsidising milk prices for the populations, and taking steps aimed at lowering production costs, should be on the government’s agenda.

Reza Bakri, the secretary of the Dairy Industry Association, also said that the future development of the dairy industry in the country would depend on consumption growth. He explained that the dairy companies must be confident in their future and that there is enough payable demand for their products on the market. This, he claimed, would require more fair wealth distribution in the country and a rise in purchasing power of households.