Milk Price Hike Proposed: Aavin Cites Rising Costs

Tamil Nadu's cooperative dairy Aavin has put forward a proposal to raise retail milk prices by Rs 5 per litre. Citing higher operating costs and the financial difficulties of milk outlet operators, the organisation says the step has become essential.

The revised rate will apply only if the state government grants approval. Until that happens, consumers will continue to pay existing retail prices.

According to Aavin officials, the proposed Rs 5 increase will be divided between the cooperative society, which will receive Rs 4, and milk outlet operators, who will get Rs 1. The purpose is to make outlet businesses more financially viable over the long term.

Aavin buys around 35 lakh litres of milk each day, and its daily sales in Chennai city alone reach about 15 lakh litres. Its comparatively low prices have made the brand popular among both households and businesses.

Currently, a 500 ml orange-packet milk pouch is sold at Rs 30. The same quantity in green and purple packets costs Rs 24, while the blue packet is priced at Rs 20.

Sellers say they receive just 75 paise in commission for each packet. That, they add, is inadequate to meet power bills, shop rent and other running costs. Several vendors report difficulty in keeping their businesses afloat even though demand remains consistent.

Sources indicate that many newly launched Aavin outlets have shut down within a few months due to financial stress. This is why the proposed hike includes additional support for vendors.

A growing price difference between Aavin and private brands has also boosted demand from commercial customers. Private companies are reportedly selling milk for more than Rs 75 per litre. Hotels, tea stalls and sweet sellers therefore purchase large volumes of Aavin milk, which can sometimes affect availability for families.

Aavin argues that low selling prices are weighing on farmers, the cooperative society and retailers simultaneously. The state's recent increase in milk procurement prices has provided relief to farmers, but the financial challenges within the cooperative and its distribution network still require solutions.

The company has also highlighted that Karnataka has recently raised milk prices by up to Rs 8 per litre. The proposed increase for Tamil Nadu is lower than that.

For the time being, the Rs 5 per litre increase remains under consideration by the state government, and current retail rates stay in place until a decision is made.