BackgroundA cross‐sectional survey study was conducted from September 2020 to April 2021. A total of 217 households were randomly selected. The data collection instruments were structured questionnaires: focus group discussion and key informant interviews. Data were coded, entered and analyzed using Statistical Package for the Social Sciences (SPSS) version 20 software. Ranking indexes as well as binary logistic regression analysis were used to look for the relationship between dependent and independent variables.ResultThe present study showed that season of calving, disease and parasite challenges, housing conditions and shortage of land for forage production with an index value of 0.180, 0.154, 0.153 and 0.126, respectively, were the most important constraints affecting milk production potential. Likewise, foot and mouth disease [adjusted odds ratio (AOR) = 0.001, 95% confidence interval (CI) = (0.000–0.016)], internal parasites [AOR = 0.003, 95% CI = (0.000–0.046)], shortage of grazing land [AOR = 0.017, 95% CI = (0.002–0.148)], summer season of calving [AOR = 0.012, 95% CI = (0.002–0.088)], overall cattle herd composition [AOR = 0.002, 95% CI = (0.000–0.025)], straw shed [AOR = 0.046, 95% CI = (0.006–0.327)] and open yard [AOR = 0.003, 95% CI = (0.000–0.183)] housing conditions were significantly associated with milk production status at p < 0.001 and p < 0.05.ConclusionThe current study indicated that milk production status was poor. Therefore, suitable government policy support and provision of subsidies, genuine participation of dairy producers with governmental and non‐governmental organizations are imperative to improve livestock productivity. Furthermore, future research and development actions should find solutions to decrease the bottlenecks so that the massive potentials of the area could be exploited to its maximum and could advance the livelihood of the community.