The often-cited means to reduce poverty in rural areas is to push the sustainable intensification of the agricultural sector or to favor a livelihood diversification strategy. However, rural households that invest their resources in multiple domains can achieve contrasting livelihood returns and benefits. The present paper explores the contribution of livestock activities, especially dairy, in the various livelihood strategies of rural households, based on an evaluation of revenue repartition, poverty level, and nutrient input in the diverse households, using a simulation tool at the farm household level. Our research was carried out in a case study on the viability of rural households in the governorate of Beni Suef (Middle Egypt). The results show that the diversification of activities towards cropping activities and off-farm jobs in the household contributed more to poverty reduction than dairy activities. Householders with small herds and land access benefited weakly from milk price increases and more generally, from a specialization of dairy activities due to structural constraints. This calls for identifying new rural policies for small-scale (less than 2.5ha) units that represent more than 90 percent of family farms in Egypt. Notably, new job opportunities and diversification should be developed along the agro-food value chain process.