Pending ₹215-Crore Incentives Hit Tamil Nadu Dairy Producers

Dairy producers in Tamil Nadu have stepped up pressure on the state government to release pending incentive payments reportedly amounting to around ₹215 crore, claiming the delay is heavily impacting their livelihoods.

Members of Tamil Nadu Milk Producers’ Welfare Association (TNMPWA) and local cooperative societies said that though the government had announced a bonus incentive of ₹ 3 per litre of milk supplied to the state cooperative Aavin, the payments have remained stuck for months — leaving tens of thousands of farmers unpaid.

Farmers Protest, Halt Supplies

In recent weeks, milk farmers in Coimbatore and across other districts resorted to protests. In one incident, several suppliers halted milk deliveries citing a 48-day delay in incentive disbursement. “We haven’t received the bonus for March even though payments were due by early April,” said a farmer associated with a cooperative society.

The delays have aggravated stress among producers already grappling with rising feed and cattle maintenance costs. With cooperative procurement prices at ₹ 35–₹ 38 per litre, many farmers argue that the missing incentives are vital to meeting breakeven costs.

Government Response: Partial Release, Conditions

In November 2024, the state government released around ₹140 crore to cover dues from July to October, following pleas from Aavin and producer associations.  Since December 2023, the government claims to have disbursed a total of ₹536 crore in incentives to milk suppliers under the scheme.

However, farmers and TNMPWA say disbursement remains uneven — with many small-scale suppliers still waiting. They warn that continued delays could drive producers toward private buyers who are offering higher rates for milk procurement.

Impact on Milk Procurement & Market Stability

According to union officials, milk procurement by Aavin has dropped by several lakhs of litres daily in districts like Coimbatore, Tiruppur and Salem, attributed in part to farmer protests and supply diversion.  The drop has increased pressure on supply stability, especially for urban markets dependent on cooperative-procured milk.

Industry observers warn that persistent delays and loss of trust could erode the cooperative dairy system’s long-term viability. “If farmers lose faith in timely payments, they may permanently shift to private dairies — undermining the backbone of state-level milk co-ops,” said a dairy economist.

What Producers Demand

The TNMPWA has raised three main demands:

• Immediate release of all pending incentives (claimed at ~₹215 crore),

• Assurance of timely monthly subsidies going forward,

• Revision of base procurement prices to reflect rising input costs (feed, veterinary, labour).

Aavin and state dairy authorities have reportedly acknowledged the backlog and assured farmers that remaining dues will be cleared “shortly,” provided cooperative-society accounts are regularized and audited.

Why This Matters

With Tamil Nadu supplying a substantial share of urban milk demand and dairy producers depending heavily on state-run procurement, failure to address these payment delays could not only jeopardize farmer incomes but also risk supply disruptions.

As one elderly dairy farmer put it: “When milk sells at barely break-even price, the incentive is not a bonus — it’s what feeds our cows and pays for fodder. Without it, we can’t survive.”

Source : Dairynews7x7 Dec 5th 2025 Hindu and others