Chennai, Jan 5 (NationPress) Frustration has reached a tipping point among nearly 400,000 dairy farmers supplying milk to Aavin, as the incentive payments promised by the state government have not been disbursed for the last four months. Farmer organizations are expressing that this extended delay is severely impacting their livelihoods and are urging the government to urgently release over Rs 200 crore in outstanding payments.

Concerns have also been raised regarding the declining financial status of village-level primary milk producers’ cooperative societies. Many of these societies are reportedly operating at a loss due to low procurement prices coupled with the delay in incentive payments. They are demanding that the government provide compensation to Aavin for the annual loss of nearly Rs 550 crore incurred since May 2021, when the retail price of milk was lowered by Rs 3 per litre.

Farmer leaders have drawn attention to the fact that the government consistently compensates state-run transport corporations for operating buses without fare adjustments. In contrast, Aavin has had to endure continuous losses without receiving any direct financial support, they contend.

A few months prior, under pressure from farmers, the government allowed Aavin to settle incentive arrears using internal funds from the milk cooperative federation and profitable district-level cooperative unions. The government assured that these funds would be reimbursed later. Following this directive, incentives for the period from June to August were disbursed, yet payments for the following months remain overdue, further straining cooperative finances.

Aavin Managing Director John Louis emphasized the need for the cooperative to strike a balance between protecting the interests of milk producers and ensuring affordability for consumers, particularly in urban areas like Chennai. He noted that when the government announces a price reduction, all stakeholders must comply. He also claimed that over 90% of primary cooperative societies are profitable and assured that pending incentive payments would be settled soon.

However, producers have disputed this assertion, arguing that diverting funds from profitable district unions has diminished annual dividends for primary societies, resulting in financial hardships for several. “A growing number of unions and village-level cooperatives are facing financial difficulties due to low procurement prices,” stated R. Kannan, general secretary of the Tamil Nadu Milk Producers’ Welfare Association.

To alleviate farmer concerns, the government introduced an incentive of Rs 3 per litre starting December 18, 2023, leading to a revised procurement price of Rs 38 per litre for cow milk and Rs 47 per litre for buffalo milk. Farmers caution that without timely financial intervention from the government and resolution of pending incentives, the cooperative milk ecosystem may face severe distress, potentially impacting both producers and consumers throughout the state.