The Tamil Nadu Government has hiked procurement and sale price of Aavin milk by the dairy cooperative.

According to an official press release, the price of a litre of toned milk available through the monthly milk card has been increased by ₹ 10. Consumers will now pay ₹ 34 a litre as compared with ₹ 24 earlier.

Reliable sources said the ₹ 10 hike per litre has been implemented for all varieties of Aavin milk including toned, standardised and double toned milk and milk sold in the open market. Despite the hike the cooperative milk brand will continue to be ₹ 6 a litre cheaper than that of leading private dairy brands.

The milk price has been hiked after nearly three years and has been necessitated by the increasing cost of production as the cost of milch cows; animal feed and fodder have gone up, the release said.

In line with the demand by dairy farmers the Tamil Nadu Cooperative Milk Producers Federation, the apex body for cooperatives, has also hiked the procurement price of milk.

From November 1, 2014, the dairy cooperative will pay dairy farmers ₹ 5 more per litre for cow milk taking the procurement price to ₹ 28 a litre; and ₹ 4 more for buffalo milk which will give dairy farmers ₹ 35 a litre.

The release pointed out that the cooperative had hiked the procurement price in January this year by ₹ 3 a litre but had not passed on the hike to the consumers. Typically, the procurement price of milk is about 75-80 per cent of the retail price.

The hike in sales price of milk will help improve the viability of the dairy cooperative. The State Government has given the Federation financial assistance of over ₹ 192 crore and helped stabilise its operations. The milk price hike will benefit over 22.5 lakh dairy farmers, the release said.

Sources in the know said the hike in sales price will help Aavin turn a small profit of about ₹ 0.22 (22 paise) a litre. Previously the dairy cooperative was making a loss of about ₹ 4.77 on every litre of milk sold. Aavin sells about 21.5 lakh litres of milk daily in Tamil Nadu with 11.5 lakh litres sold in Chennai and the balance across the State.

Due to sustained losses Aavin had lost its dominant position in the dairy market to private brands such as Aroky, Heritage and Tirumala, the sources said.