Farmers and producer associations argue that the incentive backlog stems from a lack of timely release of funds from the state, undermining cooperative finances and leaving many primary societies operating at a loss. They contend that the state’s decision to cut the retail milk selling price by ₹3 per litre has further eroded margins for Aavin, resulting in an estimated ₹550 crore annual loss since May 2021 that they believe should be reimbursed by the government.

To address earlier arrears, the government authorised Aavin to use internal funds — drawn from the milk cooperative federation and profitable district-level unions — to pay incentives for June to August, with a promise of future reimbursement. However, producers say that only the initial payout was made using these funds, and dues from subsequent months are still unpaid, heightening liquidity issues for smaller cooperatives.

Aavin’s Managing Director, John Louis, has publicly stated that the cooperative must balance protecting producer incomes with ensuring affordable milk prices for consumers, particularly in urban markets like Chennai. He also noted that most primary cooperatives (over 90%) remain profitable and assured that pending dues would be cleared soon, though farmers dispute the extent of current profitability.