IMAGINE being paid to walk away from dairying.

You load your cows on to the truck with the idea of helping other farmers towards a better milk price.

This is called Herd Retirement and it has been a fixture of the US dairy industry for six years.

Run by Cooperatives Working Together, or CWT, the voluntary, producer-funded national program comes under the banner of the National Milk Producers Federation.

Its latest round of "bids to remove cows" was announced at the beginning of the month.

"We recognise that 2009 is shaping up to be among the toughest years on record for dairy farmers, but CWT will shorten the price plunge farmers face and speed the recovery," NMPF president Jerry Kozak said.

According to its website, CWT was designed to reduce milk production and increase demand for dairy products with the aim of providing meaningful financial returns to dairy US producers.

This is where Herd Retirement comes in.

Dairy farmers wishing to exit the industry supply a bid to CWT.

Their bid includes calculating the average value on the market and slaughter value per cow as well as 12 months' milk production.

Generally, the lowest bids are selected, as long as the farmer has made a correct bid.

Last year's herd retirement removed 186 dairies and 50,630 cows.

Up to 1220 bred heifers were also sent to slaughter.

Farmers bidding to exit their milking herd have the option to sell their heifers for $US700/head.

Reducing the US national herd should help dairy prices.

"Culling cows to reduce milk supply would hopefully be good news for the world market," Dairy Australia international industry analyst Michael Harvey said.

"(However) people are sceptical if the program works, there is still an oversupply of cows and they have done (it) before."

It would take time to see if the program would be successful.

Mr Harvey said it would have a short-term effect, because it was another form of market manipulation and did not operate in "the true commercial sense."

While herd retirement has worked in the US, Australian Dairy Farmers president Allan Burgess said it would not be good for the Australian market.

He said cutting herd numbers in Australia to boost the domestic market would encourage importers.

"In Australia if we were to push domestic prices up by reducing supply, immediately New Zealand would take the market," he said.