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The total milk production in the Maharashtra State had increased from 19.09 to 74.55 lakh tons during 1981-82 to 2008-09. Per litre cost of purchase of milk (Rs.12.96) was relatively higher in private dairy than co-operative units (Rs.12.90), while per litre cost of collection (Rs.0.99), processing (Rs.0.75), distribution (Rs.0.65) and management cost (Rs.0.74) were relatively high in co-operative than private dairy unit (Rs.0.66, Rs.0.57, Rs.0.36 and Rs.0.19), respectively. The benefit cost ratio was relatively higher in co-operative (1.25) than private dairy unit (1.13). Per litre cost of milk production was worked out to Rs.9.44 and Rs.19.38 for cow and buffaloe milk, respectively. The benefit cost ratio was higher for cow as compared to buffaloe. The input-output ratio of milk production ranged between 1.24 and 1.27. The irregularity of electricity supply, high collection cost, administrative cost and overhead charges, etc. were the major problems of dairy units. Non availability of pure breed in local market, low prices, high wage rate of labour, high cost of feed and fodder etc. were the major problems faced by the milk producers.