Technical efficiencies of cooperative member dairy farmers in Cukurova region were estimated with a stochastic frontier model. Effects of several factors on technical efficiency were analyzed. Farms were grouped based on their efficiency scores. Unit milk costs and gross margins per head cow were calculated for each farm group to give a sense what efficiency means in terms of some farm economic criteria. Concentrated feed and capital costs were found to have statistically significant contributions to milk production. Farm location, herd size, farming experience, on-farm feed growing, milking by equipment and grazing had effects on efficiency. However, only positive effect of farming experience and negative effect of grazing were statistically significant. Results show that 75% of the variation in milk production can be attributed to inefficiency. Mean efficiency score of the sample farms was estimated to be 68% implying there is plenty of scope to increase production under existing technology without incurring higher costs. Lower unit costs of milk and higher gross returns of efficient farmers show that technical efficiency is an important component of competitiveness. It was concluded that farmers should be encouraged and supported to increase use of concentrate feed and decrease share of grazing for obtaining higher milk yields. However, in the long run structural enhancements are required to transform small subsistence farms into more market oriented units. Economic analyses show that many farmers cannot cover full economic costs but they can still generate farm income since family labor does not incur cash costs.