This report represents a further extension of the activitles of the unit in cost of production studies. It is the result of a contract between the New Zealand Milk Board and the New Zealand Town Milk Producers' Federation and the Unit for the latter to undertake the annual cost and income survey, initially for three years. In the past, the major objective of these surveys has been to ascertain the average labour return being received by town milk producers in New Zealand. While this will still be the primary objective in the future, it is also hoped to collect and analyse some additional information. This will enable a more comprehensive account of the industry to be presented as well as exploring the implications for management of inter farm differences which emerge.