Mounting frustration is growing among nearly four lakh dairy farmers supplying milk to Aavin, as incentive payments promised by the Tamil Nadu government have remained unpaid for the past four months. Farmer organisations warn that the prolonged delay has begun to severely affect livelihoods and the financial stability of milk cooperatives.
₹200 Crore in Pending Dues Sparks Protest
According to farmer groups, the state owes more than ₹200 crore in unpaid incentives. They argue that the delay has strained household incomes and disrupted cash flows at the farm level.
In addition, village-level primary milk producers’ cooperative societies are facing mounting losses. Farmers say low procurement prices, combined with delayed incentives, have pushed several societies into financial distress.
Retail Price Cut Adds to Aavin’s Financial Strain
Farmer leaders have demanded that the government compensate Aavin for an annual loss of nearly ₹550 crore incurred since May 2021. The losses followed a government decision to reduce the retail price of milk by ₹3 per litre.
They pointed out that while state-run transport corporations receive regular compensation for operating without fare revisions, Aavin has absorbed sustained losses without direct fiscal support.
Temporary Relief Through Internal Funds
A few months ago, amid rising pressure, the government allowed Aavin to clear incentive arrears using internal resources from the Milk Cooperative Federation and profit-making district cooperative unions. The government assured that these funds would be reimbursed later.
As a result, incentives for the period from June to August were paid. However, payments for subsequent months remain pending. This has further weakened cooperative finances.
Aavin Defends Its Balancing Act
Aavin Managing Director John Louis said the cooperative must balance farmer interests with consumer affordability, especially in urban markets like Chennai. He explained that when the government announces a price cut, all stakeholders must implement it.
Louis also claimed that over 90 per cent of primary cooperative societies remain profitable. Moreover, he assured farmers that the pending incentive dues would be cleared soon.
Farmers Contest Profitability Claims
Producers, however, dispute Aavin’s assessment. They argue that diverting funds from profit-making district unions has reduced dividends payable to village-level societies. As a result, several primary cooperatives have slipped into losses.
“A growing number of unions and village cooperatives are struggling due to low procurement prices,” said R. Kannan, General Secretary of the Tamil Nadu Milk Producers’ Welfare Association.
Revised Procurement Prices Offer Partial Relief
To ease farmer concerns, the government introduced an incentive of ₹3 per litre from December 18, 2023. Subsequently, the procurement price of cow milk was revised to ₹38 per litre, while buffalo milk now fetches ₹47 per litre.
However, farmers caution that without timely payments and direct government support, these measures may not be sufficient.
Risk to Cooperative Dairy Ecosystem
Farmer organisations warn that continued delays could destabilise Tamil Nadu’s cooperative dairy system. If unresolved, the crisis could eventually affect both milk producers and consumers across the state.
