Rising discontent grips Tamil Nadu’s dairy sector as nearly four lakh milk suppliers to state cooperative Aavin protest the four-month delay in government-promised incentive payments, warning of deepening financial strain on village cooperatives and milk producers.
Farmer organisations say the continued delay in releasing over ₹200 crore in outstanding incentive dues has hit their livelihoods hard. With procurement prices stagnant and payments overdue, many primary milk producer cooperative societies are now operating at a loss, they allege.
Cooperatives Struggle as Incentives Lag
Farmer leaders highlighted that while the government routinely compensates loss-making public enterprises — such as state transport corporations — Aavin has been left to shoulder costs without commensurate fiscal support. The grievance echoes longstanding appeals for compensation of nearly ₹550 crore in annual losses incurred since May 2021, after the state cut retail milk prices by ₹3 per litre.
In response to earlier farmer pressure, the government in recent months allowed Aavin to clear some arrears using internal funds from the milk federation and profitable district cooperative unions, with a promise of later reimbursement. This arrangement enabled incentive payments for June to August last year, but subsequent months remain unsettled, squeezing cooperative finances further.
Official Response and Contrasting Claims
Aavin Managing Director John Louis acknowledged the delicate balance the cooperative must strike between supporting producers and keeping milk affordable for consumers, particularly in urban centres such as Chennai. He maintained that over 90% of primary societies remain profitable and reiterated assurance that pending dues would be cleared soon.
However, producers disputed this assessment. They argue that redirecting funds from district unions has reduced the dividends paid to primary societies, pushing several into losses. R. Kannan, general secretary of the Tamil Nadu Milk Producers’ Welfare Association, remarked that increasing numbers of unions and village cooperatives are now financially stressed due to low procurement prices and incentives that have not been honoured.
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Government Incentive and Producer Warnings
To support farmers, the state introduced an incentive of ₹3 per litre from December 18, 2023, raising procurement prices to ₹38 per litre for cow milk and ₹47 per litre for buffalo milk. Yet with delays in disbursing promised funds, farmers warn that the cooperative milk ecosystem could face deeper distress — with potential impacts on both producers and consumers statewide if the government does not step in promptly with financial support.
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