In recent years, production and rural consumption of milk and milk products have decreased while import and urban consumption have increased. This paper shows that population pressure on land, increased draught use of cows and improper government food production policy are responsible for decreased production and rural consumption. Aggregate urban consumption has increased due to larger size of the urban population and faster increase in urban income. Detailed analysis of a sample of 191 households shows that milk products are more income elastic than milk. Moreover, actual consumption pattern of milk is influenced by, in addition to income, religion, age composition of family members, and ability to product milk at home. It is concluded that government food production policy should be corrected by giving ,:ire emphasis on foods of animal origin including milk.