TN hikes milk procurement price by Rs 3 per litre; is it enough to fix Aavin’s problems?
Farmers rough it out in dairies, but procurement price has not been increased over years, says Vijay; is his govt on track to revive the milk cooperative?
Tamil Nadu Chief Minister C Joseph Vijay on Wednesday (August 19) raised the milk procurement price for farmers, from Rs 38 to Rs 41 per litre. The rate revision is done for the first time in four years.
In the Assembly, Vijay said the new rate will help more than 3.16 lakh milk producers across the state. But milk sellers and producers say the move alone will not solve state-owned Aavin’s deep problems.
Aavin sells 31 lakh litres of milk daily
Aavin buys milk every day from 8,800 cooperative societies. These societies have 3.16 lakh members. At present, Aavin collects about 34 lakh litres a day and sells 31 lakh litres to customers. Until now, farmers have received Rs 38 per litre of milk with 4.3 per cent fat and 8.2 per cent other solids. Of this, Rs 35 came from the cooperative society, and Rs 3 was government support. That rate had stayed the same since November 5, 2022.
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The Chief Minister said farmers wake up at 3 a.m., clean their cattle and produce milk. Feed costs and worker wages have gone up, yet past governments did not raise the price enough.
Even though the state faces financial problems, the government decided to value the hard work of these farmers. So the purchase price will now be Rs 41 a litre – a rise of Rs 3. The cooperative society part goes up by Rs 1, and government support rises from Rs 3 to Rs 5. This will cost the state an extra Rs 30 crore every month, or Rs 360 crore a year, he added.
‘We asked for Rs 10’
Mohammed Ali of the Tamil Nadu Milk Producers Association welcomed the hike but called it too small. “We asked for Rs 10. They gave Rs 3. It is not enough,” he said.
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Only about 10 per cent of producers will feel the full benefit because the price depends on milk quality. Feed and cattle prices keep rising, he added.
The association had asked for a 50 per cent subsidy on feed through the agriculture department, but that has not come yet.
Tamil Nadu produces 2.15 crore litres of milk a day, yet Aavin buys only about 25 lakh litres. The rest goes to private players. Ali urged the TVK government to raise Aavin’s daily purchase to at least 50 lakh litres.
In Karnataka, state-owned Nandini buys 57 lakh of the state’s 1 crore litres. In Gujarat, Amul takes 65 lakh of 1.15 crore litres. In Tamil Nadu, Aavin’s share is just 10 to 12 per cent.
Aavin’s Rs 3,000 crore losses
Ponnusamy, head of the Tamil Nadu Milk Agents and Workers Welfare Association, said the announcement is a good step. Of the Rs 3 rise, Rs 2 is government support that goes straight into farmers’ bank accounts and Rs 1 is added by Aavin.
Speaking with The Federal, Ponnuswamy claimed that the previous DMK government left Aavin with losses of around Rs 3,000 crore due to poor management. "When the DMK cut the selling price by Rs 3 a litre and failed to provide the promised subsidy for five years, Aavin lost Rs 1,825 crore. The 2022 purchase price rise without a matching sale price rise added another Rs 1,000 crore loss over four years. Agents still get only Rs 2 commission per litre, unchanged for 15 years. That money is shared by three people, so many sellers raise the final price from Rs 44 to Rs 48."
When contacted, Milk and Dairy Development Minister C Vijayalakshmi said Aavin suffered heavy losses under the last regime. She also warned of strict steps against firms supplying poor-quality materials.
Sharp drop in Aavin’s milk supply
The price hike is welcome news for farmers. But unless Aavin cuts waste, ends under-use of plants, stops irregularities and keeps politics out of buying and hiring, the extra Rs 3 may only cover the cracks for a short time. Private dairies move faster and pay more. Aavin will have to do the same if it wants to win farmers and customers back.
Chennai and nearby areas recently saw a sharp drop in Aavin milk supply. Officials blamed lower collection, but workers’ groups say the real issues run deeper. Aavin is losing both milk and market share. Private companies pay farmers Rs 45 to Rs 50 a litre, while Aavin paid only around Rs 34 on average. Daily collection is said to have fallen from 41 lakh litres in 2022-23 to about 28 lakh litres now.
Bribes, water mixed in milk
In 2025-26, Aavin and its district unions together lost around Rs 143 crore, the worst result since the pandemic years. Cattle-feed plants run at only 28 per cent capacity, so farmers buy costlier private feed. Old audit reports, vigilance checks and court notes have pointed to the same troubles for years: water mixed in milk in 2014, bribes for route permits, inflated purchase records, advertising scams and jobs given through influence. High Court judges have said these problems help explain why Aavin lags far behind cooperatives like Amul.
Corruption cases have cut across parties. Under the earlier AIADMK government, then minister KT Rajendra Balaji faced cases over alleged cash-for-jobs worth nearly Rs 3 crore; the matter reached the CBI and is still in court. Under the previous DMK government, minister T Mano Thangaraj faced questions over shortages and quality. Reports kept coming, yet strong action was rare.
