"We have had to cut down on production because of the smuggled milk that is sold for 8,000 rials (about one dollar) per kilogram," a Iranian dairy executive, Husayn Chamani, told reporters on Saturday.

Domestic powdered milk retails at 40,000 rials a kilo in Iranian pharmacies.

Chamani blamed lax border controls and said about 3000 jobs in the milk industry would be in jeopardy if smuggled milk kept flooding the Iranian market.

There are also health concerns over the inappropriate packaging of the smuggled milk in 25- and 50-kg bags, he added.