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### Abstract

The study focused on the economics of dairy farming operated through milk supplying process through the BRAC's milk supply chain. The BRAC Dairy Food Project collects milk from 25 districts through 72 local chilling centers. The study uses primary data from 60 milkproducing farms from two upazilas of Sirajganj districts. The dairy farmers are mostly illiterate and agriculture is their main occupation. The average farm size of the respondents is 1.45 acres. They rear one to three cattle in their own farms. The study showed that the annual average gross return and gross margin per cow were Tk. 105097 ($1545) and Tk. 39019 ($ 574), respectively. The net return was Tk. 30582 (\$ 450). Undiscounted benefit-cost ratio (BCR) of milk production was 1.41 implying that the enterprise was profitable. Functional analysis showed that concentrate feed was the most important factor for milk production. Estimated revenue function exhibited increasing returns to scale indicating that there is a bright prospect to earn more from milk production through use of more inputs. Major problems faced by the dairy farmers are lack of adequate capital, scarcityy of feeds, fodder and pasture land, limited milk collection by BRAC, irregular payment done by BRAC, limited coverage of veterinary services, housing problem for cattle, problem of appropriate breed and artificial, shortage of electricity supply, frequent occurrence of diseases and stealing of cows. The study argues that further growth in milk production will depend upon successfully addressing these problems.

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