The Preferred Currency Rate for Baby Formula Increases Sevenfold; Production May Stop in Coming Months

On Thursday, January 7, the head of the Association of Baby Formula Producers announced that the preferred currency rate for baby formula has increased "sevenfold" by order of the Central Bank. According to ILNA news agency, Hani Tahvilzadeh stated that "the preferred currency rate allocated for importing raw materials for domestic baby formula production has risen from 4,200 tomans to 28,500 tomans." He warned that due to pressure on producers to pay the difference in the preferred currency before the release of raw materials from customs, alongside the obligation to adhere to regulated prices, baby formula production will likely cease in the coming months. Tahvilzadeh mentioned that the Central Bank has sent a letter to companies indicating that producers have only two months to pay the sevenfold currency difference from the time the raw materials arrive at customs. He added that the process of clearing raw materials, producing and selling the product, and achieving liquidity takes at least eight months. The head of the Association emphasized that "in addition to all this, the issue of regulated pricing imposed by the Food and Drug Administration has caused widespread dissatisfaction." He identified the main reason for the potential shutdown of baby formula production as the regulated pricing set by the Food and Drug Administration, stating, "This leads to company losses, and the continuation of this trend will result in production shutdowns." Tahvilzadeh estimated that the baby formula production industry needs to secure 5.5 trillion tomans in loans with a one-year repayment period to sustain production next year. Regarding the import of 14 million units of baby formula intended to enter the market through eight urgent companies from Turkey, he said, "These baby formulas arrived on October 20, during the peak shortage, but have not yet been distributed due to various issues." However, he did not provide details on what those issues were. Tahvilzadeh claimed that consumers believe there is a shortage of baby formula production, "but since the supply of baby formula in pharmacies is tied to health insurance, this is not easily done." He also claimed that the current price of domestically produced baby formula in the market is "between 140,000 to 150,000 tomans," while the price of imported baby formula ranges from "185,000 to 220,000 tomans" per can. Following the baby formula crisis in recent months, the Food and Drug Administration, under the Ministry of Health, announced that the sale of baby formula in Iranian pharmacies would only be possible with the infant's national ID code starting from Thursday, October 20. In recent months, government officials have repeatedly announced the resolution of the crisis in this area, while public reports contradict this. A member of parliament has reported the continuation of problems in supplying medicine and baby formula, while Iranian media have reported the government's failure to provide baby formula. The saga of "embezzlements" in Iran continues; 17 trillion tomans have "gone missing" in Tehran's municipality.