Delayed Payments and Price Cuts Strain Tamil Nadu's Dairy Sector
In Tamil Nadu, approximately four lakh dairy farmers are expressing frustration due to the government's failure to pay promised incentives for the past four months. This delay has resulted in financial hardships for farmers and has begun to impact the stability of milk cooperatives across the state.
According to farmer organizations, the state government owes more than ₹200 crore in unpaid incentives. This delay has put a strain on household incomes and disrupted cash flows at the farm level. Village-level primary milk producers' cooperative societies are also experiencing significant financial losses due to low procurement prices and the delayed incentives.
The situation worsened when the government reduced the retail price of milk by ₹3 per litre, leading to an annual loss of nearly ₹550 crore for Aavin, the state-run dairy cooperative. Despite this, Aavin has not received direct fiscal support, unlike state-run transport corporations that receive compensation for operating without fare revisions.
In response to mounting pressure, the government allowed Aavin to clear some incentive arrears using internal funds from the Milk Cooperative Federation and profit-making district cooperative unions. However, while incentives for June to August were paid, subsequent payments remain pending, further weakening cooperative finances.
Aavin’s Managing Director, John Louis, stated that the cooperative must balance farmer interests with consumer affordability, particularly in urban markets like Chennai. He assured farmers that pending incentive dues would be cleared soon, although producers contest his claims of profitability among primary cooperative societies.
To address farmer concerns, the government introduced a ₹3 per litre incentive from December 18, 2023, and revised the procurement price of cow milk to ₹38 per litre and buffalo milk to ₹47 per litre. However, farmers warn that without timely payments and direct government support, these measures may be insufficient.
Farmer organizations caution that continued delays could destabilize Tamil Nadu's cooperative dairy system, potentially affecting both milk producers and consumers across the state.
