An attempt was made to estimate the levels of efficiency in milk production for local and crossbred cows in the Union Territory of Pondicherry. Information relating to various aspects of dairy farming was collected from selected farmers by survey method with a well-designed and pre-tested interview schedule from 120 sample dairy farmers belonging to various categories selected by stratified random sampling method. The stochastic frontier function analysis was employed to find out the level of efficiency in milk production. The results of the analysis revealed that the mean technical efficiency of the sample farms was 82.28 per cent, and approximately 18 per cent of their technical abilities were not realized. The estimate of the variance ratio (γ) showed that the farm specific variability contributed more to the variation in yield among the dairy farmers, indicating that 80 per cent of the differences between observed and the maximum production frontier output were due to difference in farmer's level of technical efficiency by adopting different management practices. These factors were under the control of,the farm and the influence of which could be reduced to enhance technical efficiency of the dairy farmers in Pondicherry Union Territory.
