Overview of the Growing Dairy Industry in the World and Iran

Today, milk and its products are among the primary providers of essential nutrients for the body. They contain many micronutrients, and their consistent consumption is highly recommended by nutritionists for growth, bone and teeth strength, increased intelligence and work capacity, longevity, and more. Milk's main components include water, proteins (primarily casein), milk sugar or lactose, and minerals. Additionally, milk contains tiny amounts of substances like pigments, enzymes, vitamins, phospholipids, and gases. Some of these substances are unique and are only found in nature within milk. Generally, the composition of milk's fat, sugar, and casein consists entirely of two main groups: water and dry matter. If fat is removed from the dry matter, the remaining substance is commonly referred to as non-fat dry matter. Also, if milk protein is coagulated and separated from milk by any acidic substance, the separated liquid is called milk serum.

Introduction to the Dairy Industry

The dairy industry is one of the largest sectors of agriculture and provides nearly the most complete natural food for consumers. Today, the dairy industry meets the needs of approximately 7 billion dairy consumers, and around one billion people are directly and indirectly dependent on this industry for their livelihood. The majority of the world's milk production (about 91%) comes from dairy cows. In recent decades, countries around the world have faced an increasing need to produce milk and dairy products. This need arises from two factors: the exponential increase in population over the past century and the rise in per capita milk consumption worldwide.

History of Dairy Production in Iran

The establishment of the first dairy farms and the industrial development of dairy in Iran can be traced back to 1940, during World War II. These dairy cattle were purchased from France and delivered to the Haidarabad Institute. Consequently, many dairy farms were established in Iran, with the first industrial dairy farm being constructed ten years after World War II.

Establishment of the First Dairy Factory and Industry in Iran

Over time, the dairy industry in Iran expanded, with numerous cattle raised on farms. This growth rendered the dairy workshops in large institutions insufficient, leading to the establishment of dairy factories. The first relatively modern factory in Iran was inaugurated in late 1948 (early 1949) and was named "Alpha." It was recognized as the first modern dairy industry institution in Iran, located in the Javadiyeh area of Tehran, and paved the way for the development of other factories.

The Alpha Dairy Factory initially received and processed 5 tons of milk daily into dairy products. It utilized industrial equipment such as pasteurizers and cream separators designed to meet hygienic standards, and it employed fillers for different bottle types. As a result, significant advancements were made in the production of hygienic milk and dairy products. The Alpha factory significantly contributed to the growth of the dairy industry in Iran. Gradually, it was equipped with semi-automatic bottle washers featuring motorized brushes and washing solution chambers, which facilitated the cleaning of bottles both internally and externally by machine and human labor.

The Alpha factory operated effectively for ten years, increasing its daily dairy product output to 15 tons. However, it unexpectedly went bankrupt and was closed after a decade.

Pasteurized Milk Factory in Tehran

Among the subsequent units that began packaging and distributing milk and yogurt were Mickey Yogurt and Lark, each providing services in offering hygienic dairy products. In 1954, the plan to establish the Tehran Pasteurized Milk Factory was prepared by the Ministry of Health, the Plan Organization, and UNICEF (a United Nations organization). According to the plan, the necessary buildings and capital were to be provided by the Plan Organization of Iran from national development funds, while the required machinery was donated by UNICEF. In return, the Iranian government committed to allocating an amount equivalent to one and a half times the value of the machinery (approximately $430,000) to feed needy children with a portion of the factory's milk production for seven years, thereby significantly improving the nutrition of this segment of Iran's population.

After signing the contract, construction work and machinery installation began, and in November 1957, the Tehran Pasteurized Milk Factory opened with an initial capacity of 45 tons per day. The establishment of the Tehran Pasteurized Milk Factory and the public's enthusiastic reception of its products led to the creation of numerous modern dairy farms. These farms, separate from Iran's long-standing traditional dairy practices, utilized the most modern equipment available, ensuring the production of completely hygienic milk. The resulting increase in dairy farm productivity boosted the output of the Pasteurized Milk Factory, further ensuring the health and hygiene of Tehran's residents.

The public's positive response to the Tehran Pasteurized Milk Factory's products increased the demand for raw milk from this factory. In September 1960, Iran's second pasteurized milk factory, Pak Pasteurized Dairy Company, was established in Tehran with a capacity of 3 tons per hour. During the second development plan (until the end of 1962), additional units were established in Tabriz, Rasht, and Abadan. During the third development plan (1963-1965), six more units were established in Isfahan, Shiraz, Mashhad, Sari, Kermanshah, and Ahvaz.

In the fourth development plan (1968-1972), according to a statute approved by the joint commissions of the Ministries of Finance, Agriculture, and Parliament, the Iranian Dairy Industries Company was formed. It took over the pasteurized milk factories in Tehran, Tabriz, and Shiraz, while a private-sector factory was also established in Urmia. During the fifth development plan (1972-1977), dairy production units were established in Arak and (me mas) by the private sector and the Milk Procurement and Distribution Company of Iran, affiliated with the Agricultural Development Bank and the Industrial and Mining Development Bank of Iran. This was done to provide free milk for primary and secondary school students. The Milk Procurement and Distribution Company of Iran was tasked with establishing eleven factories for pasteurized and sterilized milk and other dairy products with capacities between 15 and 75 tons per day in various provinces. By early 1978, construction and machinery installation for four of the eleven pasteurized and sterilized milk factories in the regions of Azerbaijan, Khorasan, Isfahan, and Fars were completed and operational.

Classification of Dairy Companies in Iran

There are no official statistics available on the production volume and annual changes of dairy products in Iran. The only accessible data pertains to the production and sales of publicly listed companies in the industry. Nevertheless, the active companies in Iran's dairy industry can be classified into five groups:

Group 1: These companies provide dairy products as essential consumables for a large segment of society, particularly low-income groups. An example of this strategic group is the Iran Dairy Industries Company (Pegah).

Group 2: Companies in this group are characterized by high specialization, extensive production lines, and diverse product offerings. Examples include Kalleh, Pak, Damdaran, and Mihan.

Group 3: This strategic group consists of companies with relatively high production volumes, though not sufficient to achieve nationwide recognition. Instead of producing a wide range of dairy products, they focus on essential products that constitute a significant portion of the community's consumption. They adopt a "focus on high-consumption geographical areas" strategy. Examples include Damdaran and Ramak.

Group 4: Although relatively well-known across the country, these companies employ a "focus on product and market" strategy. An example is Choopan.

Group 5: Known collectively as local companies, this group uses a strategy of "focus on limited and small geographical areas," such as villages and less populated towns.

Each group plays a crucial role in meeting the diverse dairy needs of Iran’s population, employing different strategies to cater to various market segments and geographical areas.

Global Dairy Market

The total global dairy exports in 2022 reached over $81.7 billion, marking an 11% increase compared to 2021's $73.6 billion and a 24% rise from 2020's $65.4 billion. Cheese accounts for slightly more than one-third of this trade. Milk and cream constitute slightly less than one-third, with the remaining portion related to butter, eggs, whey, and derivative products like yogurt. Germany is the world's largest importer of dairy products, with imports exceeding $8.4 billion in 2022, reflecting a 9.9% increase from the previous year.

Milk Production

More than 80% of the world's milk production comes from cow's milk, followed by buffalo, goat, sheep, and camel milk, each contributing less than cow's milk. According to a FAO report, global milk production in 2022 was approximately 930 million tons, representing a 0.6% increase from 2021.

FAO Dairy Product Prices

According to the Dairy Products Industry Association, the overall food price index in January 2023 reached 131.2, the lowest since September 2021. This represents a 0.8% decrease compared to the previous month and a 3.2% decrease compared to January 2022. The highest food price index in the two years from January 2021 to January 2023 was recorded in March 2022 at 159.7, due to the Ukraine-Russia war. After the initial shock of the war, prices of vegetable oils, dairy products, and sugar decreased, while grains and meat remained relatively stable. The dairy price index in January 2023 was 136.2, a 1.4% decrease from the previous month and a 2.7% increase from January 2022. The highest dairy price index in this period was in June 2022 at 150.2.

Global Prices of Key Dairy Products

The average price of raw milk in the European Union has been on a downward trend since the beginning of 2023. In July 2023, it decreased by 0.6% compared to the previous month and by 13.6% compared to July 2022, reaching 44.1 euros per 100 kilograms. The global average price of butter on August 1, 2023, with a 0.5% decrease from two weeks prior, was $4,680 per ton. In January 2023, butter reached its lowest price in the past 12 months at $4,449 per ton, while in June 2023, it hit its highest price in the past 12 months at $5,379 per ton.

The global average price of whole milk powder on August 1, 2023, decreased by 1.9% from two weeks prior to $2,454 per ton. Skimmed milk powder reached its lowest price in the past 12 months in August 2023, while its highest price in the past 12 months was recorded in September 2022 at $3,575 per ton. The global average price of whole milk powder on August 1, 2023, with a 7.6% decrease from two weeks prior, was $2,864 per ton. Whole milk powder reached its lowest price in the past 12 months in August 2023, while its highest price in the past 12 months was recorded in September 2022 at $3,733 per ton.

International Dairy Markets and Iran's Share

Global Dairy Market Overview

The global dairy market is projected to reach a value of $1,243 billion by 2028. In 2022, approximately $68 billion worth of dairy products were exported worldwide. Germany alone accounted for about $6 billion of these exports, highlighting its significant share in the global dairy market.

Butter Production

In 2023, India emerged as the leading butter producer, generating over 6.7 million tons of butter. The European Union (EU) ranked second with around 2.1 million tons of butter production. Among EU countries, Germany is a major consumer, with total butter consumption reaching approximately 450,000 tons in 2022. This results in a per capita butter consumption of over 5 kilograms in Germany.

Cheese Production and Export

Cheese is another highly popular product in the global dairy industry. The EU remains the largest cheese producer, with its 27 member countries producing about 10.39 million tons of cheese in 2023. Germany leads in global cheese exports, while the Netherlands, France, and Italy are also renowned for their cheese production and are among the top cheese exporters.

In terms of cheese imports, Italy was the largest importer of fresh cheese globally in 2022, with imports valued at around $1 billion.

Summary

- Global Dairy Market: Projected to reach $1,243 billion by 2028.

- Major Exporters: Germany, with $6 billion in 2022.

- Butter Production: India (6.7 million tons in 2023), EU (2.1 million tons in 2023).

- Cheese Production: EU (10.39 million tons in 2023).

- Key Importers: Italy (largest fresh cheese importer in 2022, $1 billion).

Share of Iran's Dairy Exports

Growth and Development of Iran's Dairy Industry

In recent years, the dairy industry in Iran has experienced significant growth and demonstrated positive performance. A crucial factor in this improvement is the export of dairy products to foreign countries. With the development of the dairy industry and the enhancement of production processes, Iranian products can easily compete with international products and attract global markets. Additionally, understanding all the necessary standards and variables for export has enabled Iranian manufacturing companies to accurately and efficiently export their products abroad.

Given the crucial role of the dairy industry in Iran and its ability to export its products to foreign countries, the Iranian government has implemented various programs to increase the export of this industry. These initiatives include providing financial facilities and discounts for manufacturing and exporting companies, strengthening trade and marketing networks abroad, and developing connections with other industries. These measures have significantly boosted dairy exports, positioning Iran as a key player in the global dairy product export market.

Export Statistics

According to FAO statistics, Iran was a net exporter of milk and dairy products in 2022. In that year, Iran imported 86 thousand tons of milk and dairy products and exported 1 million 583 thousand tons. This means that 13% of Iran's milk and dairy production was exported to other countries. It is predicted that Iran's milk and dairy exports will increase to 1 million 592 thousand tons in the current year.

The total export of milk and dairy products from Asian countries last year amounted to 9 million tons, with Iran holding a significant share of this figure. Specifically, Iran accounted for 17% of the total milk and dairy exports from Asia, making it the largest exporter of dairy products on the continent.

Recent Export Performance

According to published statistics, Iranian dairy products had the highest export value in the food industry group over the past 10 months. The chairman of the Iran Dairy Industries Association stated that 11% of the total agricultural and food industry exports in the past 10 months were from the dairy industry. According to Iran Customs, dairy exports in the past 10 months reached 548 thousand tons, valued at 708 million dollars.

In the last 10 months, Iran exported 424,953 tons and 352 kilograms of various dairy products, worth 561 million 340 thousand 258 dollars. This is compared to the previous year's export of 394,572 tons of dairy products, worth 563 million 293 thousand dollars. In 2021, only 318 million dollars' worth of dairy products were exported, indicating an 80% growth in the past two years.

Global Reach

Last year, Iranian products were exported to 42 countries, including Austria, Jordan, Armenia, Uzbekistan, Australia, Afghanistan, UAE, UK, Albania, Germany, Bahrain, Pakistan, Tajikistan, Thailand, Turkmenistan, Turkey, Azerbaijan, China, Denmark, Romania, Japan, Ivory Coast, Syria, Somalia, Iraq, Oman, Russia, Kyrgyzstan, Kazakhstan, Qatar, Canada, Kuwait, Georgia, Lebanon, Libya, Malaysia, Special Zones, Norway, Nigeria, New Zealand, Netherlands, and Yemen.

Private sector investment in dairy production and government support have transformed Iran from an importer to an exporter of dairy products. Currently, Iran supplies 17% of Asia's dairy products and is the largest exporter of these products on the continent. Among its trading partners, Iraq accounts for 63%, Pakistan 16%, Afghanistan 8%, and the UAE 4%, making up 92% of Iran's dairy exports by volume.

Recently, Japan included Iran in the list of approved dairy import countries, initially importing 1,500 tons of raw milk and dairy products. Additionally, China has shown interest in importing dairy products from Iran following agreements with Iranian officials. These developments have driven Iranian dairy companies to produce high-standard, long-shelf-life products such as powdered milk, which can increase profit margins and improve the overall situation of Iranian dairy companies.

Opportunities for Importing Dairy Products from Iran

The continuous growth and high quality of Iranian dairy products present lucrative opportunities for international buyers. Iran's strategic initiatives and government support have fostered a robust dairy industry capable of meeting global demands. Products such as powdered milk and long-shelf-life dairy items are particularly attractive due to their compliance with international standards and high-profit margins.

Role of Liyana Trade Development Company

Liyana Trade Development Company offers comprehensive services to those interested in importing dairy products from Iran. These services include:

- Product Sourcing: Identifying high-quality dairy products tailored to market needs.

- Quality Control: Ensuring products meet international quality standards through rigorous quality checks.

- Financial Transactions: Facilitating smooth and secure financial transactions for international buyers.

We hope this article provides a general view of Iran's dairy industry and its opportunities. Follow us; in the future, we will detail all the dairy products produced in Iran.