Salem: Dairy farmers across Tamil Nadu are grappling with mounting financial stress as milk procurement prices remain far below rising production costs, triggering sustained losses and growing discontent in the sector.
Cost–Price Gap Widens
According to the Tamil Nadu Milk Producers Welfare Association, the cost of producing one litre of milk has risen to around ₹61, while procurement prices remain significantly lower across all channels.
- Aavin pays ~₹36.75/litre → Loss: ~₹24/litre
- Private dairies pay ~₹45/litre → Loss: ~₹16/litre
- Local traders pay ~₹28/litre → Loss: ~₹32/litre
Impact on Farmers
Nearly 30 lakh farmers are engaged in dairy activities in the state:
- About 4.5 lakh farmers supply milk to Aavin
- Over 8 lakh farmers sell to private dairy firms
- A large number depend on local traders, often receiving the lowest prices
Farmers say the widening gap between input costs and procurement prices is making dairy farming increasingly unviable.
Rising Costs Driving Crisis
The increase in production cost is attributed to:
- Higher cattle feed prices
- Increased fodder costs
- Rising labour and maintenance expenses
These factors have pushed the cost of milk production beyond what most procurement systems currently offer.
Farmers Losing Interest
Industry representatives warn that prolonged losses are forcing many farmers to:
- Exit dairy farming
- Shift to alternative occupations
“Farmers have been supplying milk at a loss for years. If this continues, milk production will be affected,” said M.G. Rajendran of the association.
Read More: India’s $14 Trillion Dairy Sector Faces Systemic Crisis Amid Supply Crunch
Demand for Policy Intervention
The Tamil Nadu Milk Producers Welfare Association has urged policymakers to:
- Revise procurement prices
- Ensure minimum profit margins for farmers
- Stabilize the dairy sector
Bigger Concern for the Dairy Sector
Experts caution that if the current trend continues:
- Milk supply may decline
- Farmer participation could drop further
- Consumer prices may rise due to reduced production
The situation highlights a broader structural issue in India’s dairy sector, where rising input costs are not being matched by procurement pricing mechanisms.
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