In Brazil, a total of 807,587 farms are considered small-scale (family farm) establishments, where land property is less than 100 ha, work is supervised by the producer and family labor prevails over hired labor. Milk production is a socioeconomically relevant activity for many family farms and plays an important role for the regional development. The performance of small-scale dairy farms differing in cattle management and milk marketing strategies was studied in Rio Grande do Sul state. A baseline questionnaire was administered to 200 farm households to collect information on farm assets and activities. Using categorical principal component and two-step cluster analyses, farmers were classified into three groups: milk producers (M); cash crop and milk producers (CM); cash crop producers with surplus milk marketing (Cm). Cattle herd (heads) and pasture land were larger on M farms (114 ?71.9; 51 ha ?49.4) than on CM (31 ?13.4; 9 ha ?8.9) and Cm (12 ?7.5; 5 ha ?8.1) farms. Milk production (l/day) averaged 11.4 ?10.30 for M, 7.3 ?4.11 for CM and 5.0 ?4.30 for Cm farms. Livestock husbandry contributed 71%, 59% and 16% to family income on M, CM and Cm groups, respectively. Overall, marked differences existed for the various variables between groups M and Cm. Farmers in group M showed a more professional attitude when compared to farmers in groups CM and Cm. Considering that farmers in groups CM and Cm are the majority of farmers at study region, they play an important rule on milk production, results show that they must be supported in feed strategies and herd management in order to improve their milk production systems. Market liberalization and fierce competition within the dairy sector provoked a continued decline of small-scale dairy farms in Brazil since the 1990s. However, small-scale family enterprises still prevail in southern Brazil. Therefore we studied factors influencing choice of milk marketing channel, milk production, and contribution of milk production to farm income in 200 small-scale dairy farms in the south of Rio Grande do Sul state. A structured questionnaire was administered to the randomly selected farms in summer 2010.