CHENNAI: The Tamil Nadu Dairies Association has urged Chief Minister C Joseph Vijay to reconsider the subsidy structure extended to Aavin and ensure what it described as a level playing field for private dairy companies.
In a representation to the Chief Minister, the association said private dairies had contributed significantly to the development of Tamil Nadu’s dairy sector over the past three decades. It claimed that private companies account for around 75% of milk procurement and sales in the state.
Association Raises Concern Over Subsidy Differential
The association argued that government support provided to Aavin puts private dairy companies at a competitive disadvantage because they do not receive comparable subsidies.
It said successive increases in Aavin’s milk procurement price could increase cost pressures on private dairies and the farmers who supply them.
The association also referred to earlier government measures that provided incentives to consumers and milk producers, arguing that the latest increase in support for Aavin had further widened the difference between the cooperative and private sector.
Aavin Procurement Price Raised Twice in August
Aavin’s cow-milk procurement price was increased from ₹38 to ₹41 per litre on August 19, followed by another ₹3 increase to ₹44 per litre on August 31.
The government cited rising costs of fodder and other inputs as factors behind the revisions. The latest increase is estimated to add approximately ₹60 crore a month to the state’s expenditure.
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The association said private dairies, which do not receive an equivalent subsidy, face pressure to increase procurement prices to retain milk producers and may subsequently have to pass higher costs on to consumers.
According to the association, private dairies in several parts of Tamil Nadu are already paying farmers more than Aavin.
Calls for Procurement Costs to Reflect in Retail Prices
The association said the private dairy sector and farmers supplying it face pressure from both subsidised cooperative milk and competition from dairies in neighbouring states.
It urged the government to reconsider consumer subsidies and allow retail milk prices to better reflect procurement costs, while ensuring that farmers supplying private dairies are protected.
Association Cites Amul Cooperative Model
The association also referred to the Amul cooperative model in Gujarat, suggesting that cooperatives could distribute a portion of their profits to milk producers rather than relying primarily on subsidies.
The association said a more balanced approach could help protect private dairy companies and the farmers associated with them while supporting a competitive and sustainable dairy sector in Tamil Nadu.
The representation comes amid continuing changes in Aavin’s procurement economics and renewed debate over the role of subsidies, farmer payments and retail pricing in the state’s dairy market.
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