Mounting frustration grips around 400,000 dairy farmers supplying milk to Aavin in Tamil Nadu as the state government delays incentive payments for four months. Farmer organizations highlight the severe impact on livelihoods and urge the government to release over Rs 200 crore in pending dues urgently. Concerns arise over the financial stability of village-level milk producer cooperatives, which are facing losses due to low procurement prices and delayed payments.
The farmers emphasize that many cooperatives are now operating at a deficit, leading to a demand for government compensation to Aavin for the significant annual loss of nearly Rs 550 crore since May 2021. They draw attention to the disparity in how the government supports state-run transport corporations compared to Aavin, alleging that the latter has been sustaining losses without direct fiscal aid.
In response to pressure from farmers, the government allowed Aavin to settle incentive arrears using internal resources from the milk cooperative federation and profitable district-level unions. While some payments were made for the period from June to August, subsequent months’ incentives remain unpaid, further stressing cooperative finances. Aavin’s Managing Director emphasizes the need to balance the interests of milk producers and consumers, particularly in urban areas like Chennai.
Despite assurances from Aavin’s management that pending dues will be cleared soon, producers express concerns over reduced dividends and financial struggles faced by many unions and cooperatives due to low procurement prices. The government recently introduced a Rs 3 per liter incentive from December 18, 2023, aiming to address farmer grievances and stabilize the milk procurement prices for cow and buffalo milk. Farmers warn of deeper distress in the cooperative milk sector without timely financial support and clearance of pending incentives, potentially impacting both producers and consumers statewide.
