Milk producers have urged the State government to settle ₹400 crore due to them through a one-time grant before the Deepavali festival. The government had reduced the price of Aavin milk by ₹3 per litre four months ago leading to a loss of ₹23 crore per month. However, no subsidy was provided to Aavin to make up for this loss, said M. G. Rajendran, Tamil Nadu Milk Producers’ Welfare Association.

Last year Aavin had settled dues amounting to ₹250 crore after the district unions took loans from public sector banks. “Due to buying milk over and above its requirement, almost all the unions attached to the Tamil Nadu Cooperative Milk Federation, whose popular brand is known as Aavin, are running at a loss. The Federation has been purchasing at least 10 lakh litres of additional milk on the orders of the State government,” explained a retired official of Aavin.

Mr. Rajendran said that another round of bank loans would unnecessarily burden the district unions that were already in a bad shape. “A one-time grant would help Aavin get back on its feet. The government should also subsidise the ₹3 that it directed to reduce,” he said.

Another retired official said that several years ago Karnataka had a system by which new members were paid lesser than the regular members of the cooperative societies. They would be paid more when there was a demand. If implemented in Tamil Nadu, a small but significant saving could be made, he added.

Aavin procures around 37 lakh litres of milk daily of which it supplies 25 lakh litres as milk and requires another 2 lakh litres to process into milk-based products. The additional milk is being converted into butter and skimmed milk powder. The milk major has vast stocks of both products and is unable to sell powder due to a glut in the international market.