<jats:bold>Background</jats:bold> : Oman traditional dairy sector recorded cow population of 382k cows required about 872k tons of Dry Mater feed per year. The raw milk production of traditional sector is low due to un-availability of formal marketing channels facilities and limited sources of local feedstuffs. The poor animal nutrition in study area caused by multiple factors associated with lack of adequate quantity and quality of feed available. The pastureland in Dhofar Region are severely degraded due to over-grazing and lack of appropriate grazing and feed management. This situation not only cause financial losses but have social, environmental and animal welfare consequences.<jats:bold>Result </jats:bold>: The stochastic budgeting models examined three dairy cow feed strategies and found existing livestock farming system and feeding cows with Rhodes Grass hay and concentrate with low yield of 10 Liter, 8 liters and 6 Liters milk production per day obtain the lowest net return with high probability of negative Net Returns (NRs) of 28.86%, 44.29% and 54.11% respectively. The risk premium price of RO 0.223 per liter is required to be paid to convince farmers to switch from low milk production of 6 Liters/day to a higher milk production of 10 Liters/day and reduce negative NRs risk within current feed management strategy. The Government support program are needed to facilitate formal market channels and risk premium of RO 0.297 per liter is calculated as amount of money to be paid to farmer to compensate facing risk of un availability of market access promotion facilities and compensate farmers to switch from 6 liters to 12 liters milk production level per day and feed cow with risk efficient feed strategy with Maize silage, Rhodes grass and concentrate. <jats:bold>Conclusion</jats:bold> : The economics, risk efficient feed management are examined and result shows feeding cow with Alfalfa forage is good strategy for high milk production cows and reduce feeding cost at low milk production level. Feeding Maize Silage and Rhodes Grass hay and concentrate is risk efficient and mitigate and manage risk at downside level if forage quality and reasonable price are maintained to livestock farmers. The formal marketing access support and improve feed risk management strategies will enhance farmers' income, rural development and achieve environmental and economic sustainability.
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