The study examines the input-output relationship and resource use efficiency in milk production in Churu district of Rajasthan, a dry area. The results indicate a sub-optimal use of resources for milk production both from local cows as well as buffaloes. Milk production may be enhanced by increased use of concentrates and green fodder. Since production of green fodder in the area is contingent on rains. emphasis should be placed on the increased use of concentrates.