Under the new tariff structure, baseline procurement payouts will rise from ₹38 to ₹43 per litre for cow milk and from ₹47 to ₹54 per litre for buffalo milk (including existing incentive structures). This adjustment narrows the persistent pricing deficit between Aavin and aggressive private dairy processors, who have been procuring cow milk at ₹42 to ₹45 per litre and buffalo milk at ₹50 to ₹55 per litre. By matching commercial private-sector benchmarks, the cooperative federation seeks to incentivize primary producers to redirect daily milk yields back into the organized cooperative pool.

Operationally, the state has outlined an aggressive target to scale Aavin’s daily procurement from approximately 30 lakh litres back up to 39 lakh litres. The recovery strategy relies on expanding intake by an average of 100 litres per day across each of Tamil Nadu’s 9,500 functional village-level milk producers’ cooperative societies, securing approximately 9 lakh additional litres per day. However, this higher farmgate payout will introduce substantial balance-sheet pressure, increasing Aavin’s annual procurement expenditure by an estimated ₹580 crore to ₹590 crore.

Beyond volume recovery, the price increase is engineered to directly resolve quality non-compliance and farmgate dilution issues across southern procurement belts. Due to low historical baseline pricing, field assessments in districts such as Kanniyakumari and Virudhunagar revealed that nearly 90 percent of procured milk failed to meet minimum statutory thresholds of 4.0 percent fat and 8.0 percent solids-not-fat (SNF), largely driven by suspected water addition. Establishing a remunerative price floor linked to verified milk solids is expected to discourage adulteration and ensure consistent raw intake quality for downstream processing.