Rs 44 promised, Rs 41.25 paid: dairy farmers say the milk hike vanished at the society counter

CHENNAI: A price rise is only real when it reaches the bank account. By that test, Tamil Nadu's latest milk procurement hike has not yet arrived for many dairy farmers. The state government recently raised the benchmark price for cow milk from Rs 38 to Rs 44 a litre, and buffalo milk to Rs 53, answering a long-standing demand from producers squeezed by feed costs. Yet primary cooperative societies are withholding Rs 2.75 a litre as a matter of routine, and farmers in some rural societies say the deduction approaches Rs 4. The net credit for cow milk, producers say, is Rs 41.25 a litre.

The arithmetic of the deduction is not mysterious. Cooperative managers confirm that Rs 1.75 a litre is kept for local administrative expenses and another Rs 1 is retained against delayed disbursement. Half of the administrative charge, societies say, pays for daily collection, staff salaries, testing equipment and chilling; the other half is set aside for annual bonus payments to registered suppliers. None of that explains the transaction to the farmer standing at the counter, who was told the price is now Rs 44 and is paid something else.

What has changed is the scale. When procurement prices were lower and margins thinner, a small deduction could be absorbed, however grudgingly. Feed economics no longer allow that. Oilcakes, maize concentrates and dry fodder have all risen sharply over recent seasons, and a smallholder's herd eats every day whether the society pays in full or not. Producers argue that a deduction of nearly three rupees on a six-rupee hike does not soften that pressure; it cancels most of the relief the cabinet announced.

There is also a structural question the government cannot dodge. Village societies fund their own running costs out of the farmer's litre because many of them hold no working capital of their own. That is an institutional failure being quietly billed to the smallest balance sheet in the chain. Producer representatives are demanding two things: payment of the full Rs 44 directly into farmer accounts, and a state budget line that carries society administration openly instead of recovering it at the counter.

The risk of doing nothing is written into the cooperative model itself. Private buyers and middlemen pay without ceremony. Every month the announced price and the paid price stay apart, more producers will weigh leaving the organised pool, and the societies that depend on their volume will weaken further. The government chose the headline number. It now has to decide whether the number was a policy or an announcement.