Hitihamu, H.M.S.J.M.Abayasekara, A.W.A.D.R.2026-09-152026-09-152025-09-11Peradeniya International Economics Research Symposium (PIERS) – 2025, University of Peradeniya, P 37 - 42978624570957123861568https://ir.lib.pdn.ac.lk/handle/20.500.14444/8053Introduction Dairy sector is a vital part of Sri Lanka’s rural economy, providing income, employment, and nutrition. Beyond supplying high-quality protein and essential nutrients, livestock also acts as a “living bank” for smallholders, offering financial security in times of hardship. Despite this socio-economic importance, sector’s overall contribution to GDP remains modest: agriculture accounted for 8.3% in 2023, with animal production at just 0.8%. With 77% of the population living in rural areas, dairy remains critical for livelihoods. Sri Lanka’s livestock population includes 1.57 million cattle & 0.47 million buffaloes, of which only 37% are milking animals. In 2023, domestic output totaled 370.32 million liters, but the country still imported over 50 million kg of milk powder at a cost of Rs. 63 billion. Productivity is limited by poor feed, breeding, management, & veterinary services, particularly in the Dry Zone, which holds 79% of livestock yet produces only half the milk. Addressing technical efficiency here is crucial for boosting productivity and rural welfare.en-USTechnical EfficiencyDry ZoneDairy FarmingSri LankaArticle