CHENNAI : Tamil Nadu’s state-run dairy cooperative Aavin is likely to increase the procurement price paid to dairy farmers by ₹5 per litre for cow milk and ₹7 per litre for buffalo milk, in a move aimed at reversing a sharp decline in milk procurement and strengthening farmer participation in the cooperative network.
The proposed revision is expected to be announced by Chief Minister C. Joseph Vijay under Rule 110 of the Tamil Nadu Assembly in the coming days, according to officials cited in the report.
Procurement prices could rise to ₹43 and ₹54 per litre
Aavin currently pays an effective procurement price of ₹38 per litre for cow milk and ₹47 per litre for buffalo milk, including a ₹3 quality-linked incentive.
Under the proposed revision:
| Milk | Current effective procurement price | Proposed price | Increase |
|---|---|---|---|
| Cow milk | ₹38/L | ₹43/L | ₹5/L |
| Buffalo milk | ₹47/L | ₹54/L | ₹7/L |
The increase is primarily intended to make Aavin’s procurement rates more competitive with private dairies, which are reportedly paying around ₹42–45 per litre for cow milk and ₹50–55 per litre for buffalo milk.
Aavin’s procurement has fallen sharply
Aavin’s average daily milk procurement declined from approximately 34.3 lakh litres during May–July 2025 to around 30.2 lakh litres during the corresponding period of 2026—a fall of about 4.1 lakh litres per day.
The cooperative wants to raise procurement to approximately 39 lakh litres per day.
Officials are also planning to increase milk collection from village-level milk producers’ cooperative societies by 100 litres per society. With nearly 9,500 societies, this could potentially add around 9 lakh litres per day to Aavin’s procurement network.
Around 3.6 lakh dairy farmers supplying milk to Aavin are expected to benefit from the proposed procurement-price revision.
Quality concerns add urgency to the move
The procurement challenge is not only about volume. Milk quality has also emerged as a major concern.
Since April, around 90% of milk procured by the Kanniyakumari and Virudhunagar district milk unions reportedly failed to meet the minimum requirement of 4% fat and 8% SNF.
Officials believe better procurement prices could encourage farmers to supply genuine, higher-quality milk to the organised cooperative system and potentially reduce the incentive for suspected water mixing.
For a dairy cooperative, this is important: paying more for milk is useful only if the additional procurement also delivers the required fat, SNF and microbiological quality.
₹580–590 crore annual financial impact
The proposed increase is expected to add approximately ₹580–590 crore annually to Aavin’s procurement expenditure.
However, the government has not yet taken a final decision on whether retail milk prices will also be increased.
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Aavin’s standardised milk currently sells at around ₹44 per litre, while toned milk is priced at around ₹40 per litre. The cooperative’s retail prices remain substantially below those of many private dairy brands.
Why the decision matters for Tamil Nadu’s dairy sector
The proposed procurement-price increase reflects a familiar challenge across India’s cooperative dairy sector: farmers increasingly compare cooperative procurement prices with private dairies before deciding where to sell their milk.
For Aavin, losing procurement volume can have a cascading impact because lower milk collection affects:
Farmer participation → milk procurement → plant utilisation → product availability → market share → cooperative finances.
The move therefore appears to be aimed at rebuilding the procurement base rather than simply increasing farmer payments.
Aavin last raised its basic procurement price in November 2022, when cow milk procurement was increased from ₹32 to ₹35 per litre and buffalo milk from ₹41 to ₹44 per litre. From December 2023, the Tamil Nadu government added a ₹3 incentive for milk meeting the 4% fat and 8% SNF quality benchmark, taking the effective prices to the current ₹38 and ₹47 levels.
Dairy-sector takeaway
From a dairy-management perspective, the proposed revision has three major objectives:
- Improve farmer retention by narrowing the gap with private dairies.
- Increase procurement volumes and move Aavin towards its 39-lakh-litre/day target.
- Improve quality compliance by linking farmer returns more strongly to milk quality.
However, the long-term success of the strategy will depend on more than procurement prices. Aavin will also need stronger village-level testing, transparent fat/SNF-based payment, efficient collection logistics, farmer services and tighter quality control.
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