Dairy farmers in Tiruchy have raised concerns over deductions from the revised milk procurement price announced by the Tamil Nadu government, saying cooperative milk societies are withholding part of the benefit of the higher rate.
The state government recently increased Aavin’s cow milk procurement price from ₹38 to ₹44 per litre and the buffalo milk procurement price from ₹47 to ₹53 per litre, with the revised rates effective from September 1.
The issue surfaced after cooperative societies credited milk payments to farmers’ bank accounts on October 3. Some farmers said they received ₹40 per litre instead of the announced ₹44 rate and alleged that ₹4 was being deducted towards cooperative staff salaries, administrative expenses, festival bonus and an incentive.
A farmer from Punganur told The New Indian Express that the deductions communicated to farmers included ₹1.85 towards employee salaries and administrative expenses, ₹1.15 towards Pongal bonus and ₹1 towards an incentive to be paid later.
However, the in-charge general manager of Aavin Tiruchy provided a different explanation. He said ₹1.75 per litre was being deducted towards administrative expenses of milk societies, while ₹1 per litre was being retained for subsequent payment to farmers, and that no separate amount would be deducted towards bonus.
According to the official explanation, after the ₹2.75 deduction, farmers would receive ₹41.25 per litre, while the retained ₹1 would be paid later as an incentive. Aavin said it was preparing handbills to explain the payment mechanism to farmers.
The Tamil Nadu government order had already increased the administrative contribution deducted from milk suppliers towards primary milk producers’ cooperative societies from ₹1.25 to ₹1.75 per litre. It also provided for a further ₹1 per litre to be deducted by district unions and credited to farmers.
Farmers' representatives have questioned the need for retaining part of the procurement price and have urged Aavin and the government to ensure that the announced procurement benefit reaches producers directly.
The dispute comes against a backdrop of sustained pressure from dairy farmers for higher procurement prices. In August, farmers had demanded a ₹44 per litre cow-milk procurement rate, arguing that rising feed, fodder and other input costs were squeezing dairy-farm margins.
The episode highlights a broader issue for dairy cooperatives: the announced procurement price and the amount ultimately credited to farmers can differ when cooperative-level administrative contributions and other payment mechanisms are applied.
For dairy policy, the immediate challenge is balancing the financial sustainability of milk-producer societies with the need to ensure that higher procurement prices translate into meaningful income gains for farmers.
Source: Dairynews7x7 7 Oct, 2026 Read full story here
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