The study was conducted to know the profitability of dairy farming, milk consumption pattern and marketing system of the dairy owners. Net return of dairy milk in commercial region was significantly higher than other regions due to rear cross breed cows and feeding them high quality food. Net return from dairy enterprise was 69 per cent of the gross cost and this figure was highest in semi-urban region (75%). The positive values of marginal value products indicate that addition of dry fodder, capital investment and labour would add positive returns through milk production. The regression coefficients using Cobb-Douglas production functions of dry fodder, capital investment, labour involved and breed dummy were positive and significant. Average per capita daily milk consumption by the dairy owners of different income classes and different regions were significantly different. Milk consumption function was higher for the dairy owners in commercial villages and for higher income classes. Education level, farm size, income and milk yield of respondents had positive and significant impact on milk consumption. Significant production elasticity was observed in rural areas whereas significant income elasticity was observed only in riverside village. Dairy enterprise may contribute to economic development of the country by increasing income of dairy owners, number of crossbred cows and extent of commercial farming. Lack of adequate market facilities, poor market infrastructure and low price of milk were the major marketing problems of the dairy owners.