This is paper attempts to highlight the FFB milling cost in Malaysia over the period 1992-1995 based an a case study of three mills. It was found that although there was an occurrence of a cost-squeeze problem resulting from escalating annual operating cost, the problem had been managed by the mills quite efficiently. On the average, the annual operating cost had increased by 19% from RM 2.40 million in 1992 to RM 2.86 million in 1995. Nevetheless, the unit cost of production was found to remain almost unchanged from RM 2130 per tonne of FFB in 1992 to 21.20 per tonne of FFB in 1995, mainly brought about by improved utilization of miling capacity. Capacity utilization enhancement was purely triggered by the inflow of crop supply which had increased at the rate of 5% per annum. As such labour productivity as well as the total productivity measures (TPM) had increased quite steadily at the rates of 6% and 1.7% per annum respectively. Nevertheless, the gross margin (CM) per tonne of FFB was found to indicate a downward trend from RM 33.10 in 1992 to RM 26.50 in 1995. However, the overall milling cost elasticity (MCE) was found to be quite inelastic (0.8955) indicating that during this period a 1% increase in the crop supply would result in 0.89% increase in the operating cost.