Small-scale dairy systems are an option to alleviate poverty and contribute up to 37% of milk production in Mexico; however high costs affect their economic sustainability. Since grazing may reduce feeding costs, a participatory on farm experiment was undertaken to compare animal performance and feeding costs of the traditional cut-and-carry strategy or grazing cultivated pastures, during the dry season in the highlands of Mexico. Pastures of perennial and annual ryegrasses with white clover were utilised, complemented with maize silage and commercial concentrate. Five dairy cows were assigned to each strategy. The experiment ran for 12 weeks, recording weekly milk yields and fat and milk protein content; live-weight and body condition score every 14 days. Analysis was as a split-plot design. The adjusted (covariance) mean milk yield was 18.78 kg/cow/day with no significant differences (P>0.05) between treatments, and no significant differences for live-weight or body condition score. There were no significant differences for milk fat (P>0.05), but there were for protein in milk (P<0.95) Grazing cultivated pastures resulted in 25% less feeding costs, and 15% higher margin over feeding costs. It is concluded that grazing is a viable option to reduce feeding costs and increase the profitability of small-scale dairy farms.Instituto de Ciencias Agropecuarias y Rurales (ICAR), Universidad Autónoma del Estado de México (UAEM), Toluca, México Département des Sciences Animales, Université Laval, Québec, Canada CONACYT, Centro Universitario de Los Altos (CUALTOS), Benemérita Universidad de Guadalajara, Tepatitlán de Morelos, Jalisco, México. Servicio Regional de Investigación y Desarrollo Agroalimentario (SERIDA), Villaviciosa, Asturias, España