Tamil Nadu’s state-owned dairy cooperative cites rising production and packaging costs, while saying everyday liquid-milk prices remain affordable.
CHENNAI: Tamil Nadu Co-operative Milk Producers’ Federation Limited, which markets dairy products under the Aavin brand, has defended its recent price increases across 63 dairy products ahead of Diwali, stating that more than 90% of the additional revenue will be directed towards milk-producer welfare and procurement incentives.
The federation attributed the revisions to rising production, packaging and other operating costs. It said its primary objective was to support rural milk-producing households and sustain the cooperative milk procurement network rather than maximise commercial profits.
Aavin cites rising production and operating costs
According to the federation, it reviewed production inputs, packaging expenses and prices charged by private dairies and dairy cooperatives in other states before approving the increases.
The affected product categories include ghee, butter, paneer and traditional sweets, which typically see higher demand during the festive season.
Aavin said its processing and distribution operations face pressure from rising costs associated with automated packaging equipment, refrigerated storage, temperature-controlled transport, food-grade packaging materials, corrugated cartons, fuel and electricity.
The price revisions are intended to help manage these expenses and maintain the financial sustainability of its processing and distribution operations.
Everyday liquid milk remains a priority
Aavin said the price increases were applied selectively to value-added dairy products, while everyday liquid-milk pouches were kept affordable.
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The federation also maintained that its products remain competitively priced compared with comparable offerings from private dairies and regional brands, even after the revisions.
The cooperative operates processing facilities serving Chennai and district milk unions, linking milk procurement from producers with processing, packaging and distribution to consumers.
Additional revenue intended to benefit milk producers
Aavin said more than 90% of the additional revenue generated by the price increases would support milk-producer welfare and procurement incentives.
The proposed allocation is significant for smallholder and landless households that depend on dairy farming for primary or supplementary income. Producers continue to face cost pressures from manufactured cattle feed, fodder availability and veterinary care.
According to the federation, the additional income is intended to strengthen farmer payments, welfare measures and rural infrastructure, including the village cooperative network responsible for milk collection.
The actual impact on producers will depend on how the additional revenue is calculated, allocated and disbursed.
Cooperative model links consumer purchases with rural livelihoods
Aavin has appealed to consumers to continue purchasing its products, presenting the cooperative’s pricing policy as part of a broader effort to sustain milk procurement and support rural livelihoods.
The development highlights a recurring challenge for dairy cooperatives: balancing affordable consumer prices with the need to cover processing and distribution costs while providing remunerative returns to milk producers.
Greater transparency on the additional revenue generated, the allocation mechanism and the benefits reaching farmers would help consumers and producers assess the impact of the revised pricing policy.
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