CHENNAI : The Tamil Nadu government is considering a further increase in the milk procurement price paid to dairy farmers, with Dairy Development Minister C. Vijayalakshmi telling the State Assembly that the rate could be raised to ₹44 per litre, subject to consultations with Chief Minister C. Joseph Vijay and the financial position of the state dairy cooperative Aavin.
The proposed increase comes after the government recently raised Aavin’s milk procurement price from ₹38 to ₹41 per litre.
Government Considering Further Increase
Responding to a special calling-attention motion in the Assembly, Vijayalakshmi said there was no disagreement over the need to improve the procurement price received by dairy farmers.
She said the government would consult the Chief Minister before taking a decision on increasing the procurement price to ₹44 per litre, while ensuring that the financial health of Aavin is taken into account.
The minister said the recent increase from ₹38 to ₹41 per litre was implemented within three months of the present government assuming office.
Dairy Farmers Seek Higher Returns
The demand for a higher procurement price comes amid rising costs of cattle feed, livestock maintenance and dairy farm operations.
Former minister E. V. Velu, who moved the special calling-attention motion, argued that increasing input costs were making it increasingly difficult for farmers to supply milk to Aavin.
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He cited Kerala’s procurement price of ₹45 per litre and urged the Tamil Nadu government to provide better returns to dairy farmers.
Former Chief Minister Edappadi K. Palaniswami sought an even higher procurement price, proposing ₹50 per litre for cow’s milk and ₹60 per litre for buffalo milk, citing the financial pressure faced by dairy farmers.
Aavin’s Financial Position Remains a Consideration
The proposed procurement-price increase also comes against the backdrop of financial pressures faced by Aavin.
Vijayalakshmi said the earlier reduction in Aavin’s retail milk price by ₹3 per litre in 2021 had resulted in an additional annual loss of around ₹270 crore for the cooperative.
The minister criticised the previous DMK government over Aavin’s financial situation and said the present government had moved to increase the procurement price despite the cooperative’s financial constraints.
What the Proposed ₹44 Rate Could Mean
If approved, a procurement price of ₹44 per litre would represent a ₹6-per-litre increase over the earlier ₹38 rate and a ₹3 increase over the recently announced ₹41 rate.
For dairy farmers, the higher procurement price could provide some relief against escalating production costs. For Aavin, however, the move would need to be balanced against procurement expenditure, consumer milk prices, operating margins and the cooperative’s overall financial sustainability.
The government is expected to take a decision after consultations with the Chief Minister and an assessment of Aavin’s financial position.
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