CHENNAI: The Tamil Nadu Dairies Association on Tuesday urged Chief Minister C Joseph Vijay to reconsider the subsidy structure for Aavin and ensure a level playing field for private dairy companies, warning that successive increases in the cooperative’s milk procurement price could intensify pressure on the private sector and the farmers supplying it.
In a representation to the Chief Minister, the association said private dairy companies had played a significant role in developing Tamil Nadu’s dairy sector over the past three decades and claimed that they handled about 75 per cent of milk procurement and sales in the State.
The association said government support extended to Aavin placed private dairies at a disadvantage as they did not receive comparable subsidies. It recalled that the previous government had provided incentives to both consumers and milk producers and said the latest increase in support to Aavin had further widened the disparity.
Aavin’s cow-milk procurement price was raised from Rs 38 to Rs 41 a litre on August 19 and subsequently to Rs 44 on August 31, with the government citing rising costs of fodder and other inputs. The latest revision is expected to cost the State an additional Rs 60 crore a month.
The association said private dairies, which receive no equivalent subsidy, were being forced to raise procurement prices to retain milk producers and pass the increased cost on to consumers. Private dairies were already paying higher rates than Aavin in several parts of the State, according to recent reports.
“The private dairy sector and the milk producers associated with it are being squeezed between subsidised cooperative milk and competition from neighbouring States,” the association said.
It urged the government to reconsider consumer subsidies and allow retail prices to reflect procurement costs, while protecting farmers dependent on private dairies.
Citing Gujarat’s Amul model, the association suggested that cooperatives could distribute a share of profits to milk producers instead of relying on subsidies.
It appealed to the Chief Minister to protect both private dairies and their producers and ensure a sustainable and competitive dairy sector in Tamil Nadu.