Chennai, Jan 5 Mounting frustration is growing among nearly four lakh dairy farmers supplying milk to Aavin, as incentive payments promised by the state government have remained unpaid for the past four months.
Farmer organisations say the prolonged delay has severely affected livelihoods and have called on the government to urgently release more than Rs 200 crore in pending dues.
Farmers have also raised concerns over the deteriorating financial health of village-level primary milk producers’ cooperative societies.
According to them, many societies are now operating at a loss due to low procurement prices and delays in incentive payments. They have demanded that the government compensate Aavin for the annual loss of nearly Rs 550 crore incurred since May 2021, after the retail price of milk was reduced by Rs 3 per litre.
Drawing a comparison with state-run transport corporations, farmer leaders pointed out that the government regularly compensates transport undertakings for operating buses without fare revisions. In contrast, Aavin has been forced to absorb sustained losses without direct fiscal support, they alleged.
A few months ago, faced with mounting pressure from farmers, the government permitted Aavin to clear incentive arrears using internal resources drawn from the milk cooperative federation and profit-making district-level cooperative unions.
The government had assured that these funds would be reimbursed at a later date. Following this directive, incentives for the period from June to August were paid. However, payments for the subsequent months remain pending, further straining cooperative finances.
Aavin Managing Director John Louis said the cooperative must maintain a delicate balance between safeguarding the interests of milk producers and ensuring affordability for consumers, particularly in urban centres such as Chennai.
He noted that when the government announces a price reduction, all stakeholders, including the federation and district unions, are expected to implement it. He also maintained that over 90 per cent of primary cooperative societies are operating profitably and assured that the pending incentive dues would be cleared soon.
Producers, however, contested this claim, stating that diverting funds from profit-making district unions has reduced annual dividends payable to primary societies, pushing several of them into losses.
“A growing number of unions and village-level cooperatives are struggling financially due to low procurement prices,” said R. Kannan, general secretary of the Tamil Nadu Milk Producers’ Welfare Association.
To address farmer concerns, the government introduced an incentive of Rs 3 per litre from December 18, 2023. Following this, the procurement price of cow milk was revised to Rs 38 per litre, while buffalo milk is procured at Rs 47 per litre.
Farmers warn that unless the government steps in with timely financial support and clears pending incentives, the cooperative milk ecosystem could face deeper distress, potentially affecting both producers and consumers across the state.
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