Rabakavi milk union: FIR alleges Rs 16.5 crore farmer insurance money diverted

Police in Ballari, Karnataka, have registered a case against six people, including the managing director of the Rabakavi milk producers' cooperative union, over the alleged diversion of more than Rs 16.5 crore that was meant for dairy farmers. Brucepet police registered the FIR on October 13, 2026 on a complaint by a former director of the union. The complaint says money due to farmers as cattle insurance claims, and funds from the union's Farmers' Welfare Trust, were routed to other people's bank accounts between 2018 and 2026. These are allegations in a police complaint; no court has ruled on them.

For many rural families in Karnataka, milk is a regular source of income, and much of it is collected through cooperatives. A farmer pours milk at a village society, the society sends it to a district milk union, and the union processes and sells it, usually under the federation's brand. The union also runs services for its members, such as cattle feed, veterinary care and insurance for animals. That last service matters a great deal: for a small farmer, a dead cow or buffalo can wipe out a large share of the family's income and savings at once, and an insurance claim is often the only way to replace the animal.

The scheme described in the complaint was built to share that risk. The union met 60 per cent of the premium and farmers paid 40 per cent, so that compensation would come to the farmer when an insured animal died. The complaint alleges that the system was turned around: claims were paid, but the money went to accounts of people linked to the accused, while eligible farmers were left unpaid. It also says money from the union's Farmers' Welfare Trust was diverted. If the police investigation confirms this, the losers are the members who paid their share of the premium and lost animals without receiving compensation.

The case also raises a wider question about how cooperatives are checked. A cooperative belongs to its members, and its strength depends on their trust that collective money is being used for them. Diversion said to have run over eight years, from 2018 to 2026, would point to weak internal controls and audit. It comes at a time when the Centre is trying to expand the dairy cooperative network and tighten audit and reporting rules for cooperative societies. Whatever the investigation finds, it will be watched by members of other unions who pay into similar schemes.

Short-term: Police are examining bank statements and the union's account registers to trace where the insurance compensation and trust funds went. Those named in the FIR are accused, not convicted; their side of the matter had not been reported, and any finding of guilt is for a court to make.

Long-term: If the allegations are proved, affected farmers may have claims to unpaid compensation, and the case could push the federation and the state's cooperative authorities to tighten how insurance claims are verified and paid.

Who is affected: Dairy farmers who are members of the Rabakavi union and paid towards cattle insurance, especially those whose insured animals died between 2018 and 2026; the union's staff and board; and members of other milk unions that run similar insurance and welfare schemes.

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