Yemen's foreign minister called for the coalition to send in ground troops, saying that, "at some stage, air strikes will be ineffective".
Diplomats said meanwhile that Gulf countries were locked in tough negotiations with Russia on a UN draft resolution to impose an arms embargo and sanctions on the Huthi Shiite rebels.
But rights groups have voiced growing alarm about civilian casualties from the nearly week-old air war aimed at preventing the fall of President Abedrabbo Mansour Hadi.
At least 37 workers were killed and 80 wounded overnight at the dairy in the Red Sea port of Hodeida, Governor Hasan al-Hai said, without specifying whether the plant was hit by an air strike or rebel shelling.
Health authorities said 35 people were killed and dozens wounded, and that rescuers had to search for survivors under the rubble of the partly destroyed factory.
The circumstances of the bombing were unclear, with some witnesses saying the dairy was hit by a coalition strike and others blaming rebels loyal to former president Ali Abdullah Saleh.
Coalition spokesman Brigadier General Ahmed Assiri accused the Huthis of targeting the site, using "mortar shells and Katyusha rockets... in a bid to create unrest among the Yemeni society".
The Arab forces would continue to "evaluate targets" and "lower the chances of targeting civilians or aid workers," he said, urging humanitarian organisations to "contact concerned parties in order to facilitate this process".
Assiri said the latest Saudi-led operations targeted rebel brigades in Daleh, Aden and Shabwa, all provinces in Yemen's south.
Pro-government forces had seized the town of Daleh, and a bid to also take Shabwa was showing "positive" results, he added, urging the renegade troops to rejoin forces of the "legitimate government".
The coalition bombarded rebel positions in the main southern port city Aden in a seventh night of raids that also targeted the capital and other areas.
Those strikes focused on the rebel-held provincial administration complex in Dar Saad in the city's north, said a military official.
Clashes on Wednesday pitting rebels against residents and militias, sparked by a Huthi advance on Aden's Khor Maksar district killed at least 19 people, six of them civilians, officials said.
- Fresh strikes in capital -
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The coalition has vowed to keep targeting the Huthis and allied army units loyal to Saleh until they end their insurrection.
Air strikes targeting military bases in Sanaa resumed later Wednesday as rebel air defence systems fired back, residents said.
The United Arab Emirates said its fighter jets carried out "successful" raids against Sanaa's Huthi-held airport, and arms depots in the capital and third city Taez.
A medic at the University Of Science & Technology Hospital said a mortar landed at the facility's entrance, wounding five civilians.
Six other civilians were killed in an air raid on Maydi in the northwest province of Hajjah, officials said.
After entering the capital in September, the Huthis and their allies gradually conquered areas in the centre, west and south before bearing down on Aden last month, prompting Hadi to flee to Saudi Arabia.
The embattled president had taken refuge in Aden in February after escaping house arrest in the capital.
- 'Verge of collapse' -
Since Friday, at least 93 civilians have been killed and 364 wounded, the UN said Tuesday.
"We have reports that the hospitals are really full of dead and injured people," spokeswoman Cecile Pouilly told AFP. "We have heard about lots of dead bodies."
UN human rights high commissioner Zeid Ra'ad Al Hussein warned Yemen "seems to be on the verge of total collapse".
Yemen's Foreign Minister Riyadh Yassin said sending ground troops would cause "less civilian casualties" and enable aid deliveries.
A Western diplomat said a land offensive would be complicated because it would have to pass through northern mountains, with which the Huthis are highly familiar.
Meanwhile, Al-Qaeda's Yemen franchise -- seen by the US as the network's deadliest -- said it killed eight Huthis in a bomb attack on their vehicle in the central province of Bayda.
The claim could not be immediately verified.