Chief Minister Vijay has announced a further increase in the milk procurement price to ₹44 per litre to offset rising fodder costs. The government will provide an annual subsidy of ₹720 crore to Aavin to sustain this hike.
- Milk procurement price raised to ₹44 per litre in Tamil Nadu.
- Government to provide ₹60 crore monthly compensation to Aavin.
- Total annual fiscal impact estimated at ₹720 crore.
- Decision driven by rising input costs and fodder prices for dairy farmers.
In a significant move to support the agrarian economy, Chief Minister C. Joseph Vijay announced on Monday that the procurement price of milk collected by primary milk producers’ cooperative societies in Tamil Nadu has been further increased to ₹44 per litre. This announcement comes as a rapid follow-up to a previous price adjustment made just weeks prior.
The timeline of these increments reveals a government aggressively tackling inflation in the dairy sector. On August 19, the state had already implemented a hike of ₹3 per litre from the government side, complemented by a ₹1 increase from cooperative societies, which had collectively pushed the price from ₹38 to ₹41 per litre. However, the current announcement adds another ₹3, bringing the final procurement rate to ₹44.
Why This Matters
BozokMedia analysis shows that this rapid succession of price hikes indicates a critical surge in operational costs for dairy farmers. By intervening directly, the Tamil Nadu government is attempting to prevent a potential collapse in milk production that could occur if farmers found the business unsustainable due to soaring fodder prices.
"The government's decision to subsidize the difference through Aavin is a strategic move to maintain rural income stability without immediately passing the full cost burden onto the end consumer."
To facilitate this increase, the state government has committed to compensating Aavin, the state's milk marketing federation. This financial support is estimated to cost the state exchequer ₹60 crore per month, amounting to a total annual expenditure of ₹720 crore. This ensures that the cooperative societies can pay farmers more without destabilizing the federation's balance sheets.
Historically, milk procurement prices in India have been a volatile point of contention between farmer unions and state governments. In Tamil Nadu, the cooperative model via Aavin has long been the backbone of the dairy industry, ensuring a steady market for small-scale farmers while regulating retail prices for urban populations.
| Phase | Previous Price | New Price | Increment |
|---|---|---|---|
| Initial Rate | ₹38 | ₹41 | +₹3 (Govt) + ₹1 (Co-op) |
| Latest Rate | ₹41 | ₹44 | +₹3 (Govt) |
Frequently Asked Questions
1. Who will bear the cost of the price increase?
The Tamil Nadu government will compensate Aavin for the additional amount, costing roughly ₹720 crore annually.
2. Why was the price increased twice in one month?
The further hike was necessitated by the continuous rise in input costs and the price of cattle fodder.
