India: Tamil Nadu Raises Milk Procurement Prices; Retail Rates Unchanged, Farmer Payouts Improve

The Tamil Nadu government has issued a Government Order revising Aavin’s milk procurement prices, effective September 1, while keeping retail prices unchanged to protect consumers.

Cow milk procurement has increased from ₹38 to ₹44 per litre, and buffalo milk from ₹47 to ₹53 per litre; the new cow-milk rate includes a ₹36 base plus an ₹8 per-litre incentive funded at ₹600 crore annually by the state, with district unions bearing an additional ₹120 crore.

The GO also raises administrative deductions for primary cooperative societies from ₹1.25 to ₹1.75 per litre and mandates a ₹1 per-litre deduction by district unions that will be credited back to farmers.

Payments to farmers must be made via direct benefit transfer to bank accounts, and the order bars procurement of milk below 3% fat and 7.5% SNF, with confiscation and non-payment for substandard supplies.

The move improves farmer realization but tightens cooperative margins, creating downstream implications for procurement discipline, quality incentives, and potential consolidation among smaller societies.