Chennai: The Tamil Nadu government is considering another increase in the milk procurement price paid to dairy farmers supplying milk to Aavin, the state’s cooperative dairy brand.
Dairy Development Minister C Vijayalakshmi said the government has already increased Aavin’s milk procurement price by ₹3 per litre, taking it to ₹41, and is now considering a further increase to ₹44 per litre in response to demands from dairy farmers.
The minister made the statement while responding to a special call attention motion raised in the Tamil Nadu Assembly by former minister E V Velu and former chief minister Edappadi K Palaniswami.
Government Considering Further ₹3 Increase
Vijayalakshmi said there was no disagreement over the need to increase the procurement price and that the government would consult Chief Minister C Joseph Vijay before taking a final decision on raising the rate to ₹44 per litre.
The potential increase comes amid concerns over rising expenses faced by dairy farmers, particularly the cost of cattle feed, animal maintenance and other farm inputs.
Farmers Seek Higher Procurement Prices
During the Assembly discussion, E V Velu highlighted the increasing financial pressure on dairy farmers supplying milk to Aavin. He pointed to rising cattle feed and maintenance costs and said the existing procurement price was making it increasingly difficult for farmers to continue supplying milk to the cooperative.
Velu also referred to Kerala’s reported procurement price of ₹45 per litre, urging Tamil Nadu to increase its rate to provide better returns to producers.
Palaniswami called for an even larger increase. He sought a procurement price of ₹50 per litre for cow’s milk and ₹60 per litre for buffalo milk, arguing that farmers are facing rising input costs and need better returns to sustain dairy production.
Aavin’s Financial Position Also Raises Concerns
In response to the discussion, Vijayalakshmi also raised concerns over Aavin’s financial position.
She attributed part of the cooperative’s financial difficulties to a decision taken by the previous DMK government in 2021 to reduce the retail price of Aavin milk by ₹3 per litre.
According to the minister, the retail price reduction resulted in an additional annual loss of around ₹270 crore for the cooperative.
The government therefore faces the challenge of balancing higher returns for milk producers with the financial sustainability of Aavin and the affordability of milk for consumers.
Potential Impact on Dairy Farmers
A further increase in Aavin’s procurement price could provide additional income support to dairy farmers and potentially encourage greater milk supply through the organised cooperative network.
Higher procurement prices can also help farmers manage rising feed, veterinary care, labour and animal maintenance costs. However, any increase in procurement expenditure could also place additional financial pressure on Aavin if it is not accompanied by corresponding improvements in retail pricing, operational efficiency or government support.
The proposed move comes at a time when milk procurement and farmer incomes remain important policy priorities for state dairy cooperatives.
If approved, the proposed ₹44-per-litre procurement price would represent a ₹6-per-litre increase compared with the earlier rate of ₹38, and a ₹3 increase over the current reported rate of ₹41.
The government is expected to consult the Chief Minister before making a final decision on the proposed hike.