The Iranian dairy industry association has sent a letter to its members, allowing them to slightly increase the purchasing price of raw milk and adjust the wholesale price of yoghurt and cheese upward from 1 June. The move has been made without the consent of the Market Regulation Headquarters, a government body empowered to regulate prices for essential food commodities in Iran.
The dairy industry association explained that the reason for this step was a delay in the government’s decision on the new prices. As a result, dairy companies had no opportunity to sign new contracts with milk farms with a delivery date beyond 1 June. The delay reportedly nearly paralysed the Iranian dairy industry.
“The dairy industries that are members of the association can no longer work in the uncertainty and postpone payment to livestock farms under an approved rate. This endangers the sustainable growth of livestock farms and raw milk production, jeopardising the industry,” the dairy association said in the letter.
It is not clear what caused the delay. Authorities regularly revise prices following consultations with market players, and some local publications reported that several recent rounds of such consultations have led to no result. Farmers demand higher prices for raw milk, citing rising feed costs, while milk processors warned about supply disruptions if the price of their products is not adequate.
In the statement, the dairy industry association justified a need to adjust prices upward with “new rates of raw milk, petrochemicals, wages, exchange rates, transportation and other factors affecting production costs”. New prices, among other things, are needed to avoid production disruptions and prevent scarcity in the market.
The Market Regulation Headquarters, however, has been cautious in revising prices to keep food inflation in the country at bay.
Iranian officials advised dairy companies to follow the new pricing guideline. Masoud Amrollahi, general director of the basic commodities department of the Ministry of Agricultural Jihad, called the association’s recent order to dairy companies illegal. “Until the new price of dairy products is determined by the Market Regulation Headquarters, dairy companies are not allowed to raise their prices. And in case of illegal increases, violators will be dealt with,” he promised.
Local press reported that it is unlikely that Iranian dairy companies will actually sell products under the prices suggested by the Iranian dairy association.