CHENNAI: Nearly four lakh dairy farmers supplying milk to Aavin in Tamil Nadu have not received incentive payments for the past four months due to delays in the release of government funds. The farmers have urged the state government to release the long-pending dues amounting to over Rs 200 crore.
The farmers also pointed out that most village-level cooperative societies are operating at a loss. They demanded that the state government compensate Aavin for the annual loss of nearly Rs 550 crore incurred since May 2021, following a reduction in milk selling price by Rs 3 per litre. Drawing a parallel, they said transport corporations are compensated by the government for operating buses without fare hikes, while Aavin has been left to absorb losses on its own.
A few months ago, due to delays in releasing incentive funds, the state government authorised Aavin to clear dues using funds from the milk cooperative federation (Aavin) and profit-making district-level cooperative unions, assuring that these entities will be reimbursed later. Accordingly, incentives for the period from June to August were paid using internal funds.
Dues of primary co-op societies will be cleared soon, says Aavin
However, payments for the subsequent months remain pending.
Aavin Managing Director John Louis told TNIE that Aavin must strike a balance between protecting milk producers and middle-class consumers, particularly in Chennai. “When the government announces a price reduction, it is the responsibility of all stakeholders, including the federation and district unions, to implement it,” he said. He added that over 90% of primary cooperative societies are operating profitably and assured that the pending dues will be cleared soon.
Producers, however, alleged that diverting funds from profit-making district unions to pay incentives has reduced annual dividends to primary societies, pushing several of them into losses.
“A significant number of unions and village-level primary milk producers cooperative societies are now running at a loss due to low procurement price,” said M G Rajendran, general secretary of the Tamil Nadu Milk Producers’ Welfare Association (TNMPWA).
In response to repeated demands from farmers, the government introduced an incentive of Rs 3 per litre from December 18, 2023. Following the revision, the procurement price of cow milk stands at `38 per litre, while buffalo milk is priced at Rs 47 per litre.
Echoing these concerns, S Krishna Kumar, a dairy farmer from Vellore, said, “The government reduced Aavin’s milk selling price in May 2021, resulting in loss of `550 crore a year. While transport corporations are compensated for operating without fare hikes, Aavin has been left to function at a loss without any government support.”