US AND European governments are digging deep to deliver multi-million dollar aid packages to their dairy farmers.

Just last month the US Department of Agriculture allocated $A320 million in direct payments to farmers as part of a new Dairy Economic Loss Assistance Payment Program.

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The program will deliver a one-off payment of about $13,500 to a US dairy farm with 220 cows.

The payments are on top of the $1.1 billion the USDA had already handed out in 2009 as part of its Dairy Product Price Support Program and Milk Income Loss Contract program.

USDA officials estimate these additional programs increased dairy farmers' revenue by about $267 million from August to October last year.

In the meantime, the European Commission agreed on December 4 to distribute $468 million in payments of up to $23,400 to its dairy farmers.

In its media statement at the time the EC stated: "The money will have to be allocated to individual farmers who are severely affected by the low dairy prices of this summer and who encounter liquidity problems."

Late last year the commission reported it expected to spend $937 million on market measures this year.

"Allowing national authorities to pay farmers up to 15,000 euro ($23,400) in aid should help overcome the serious cash-flow problems which some farmers are experiencing," said EU Agriculture and Rural Development Commissioner Mariann Fischer Boel.

"Added to the measures on offer at EU level, I believe this will help our milk producers out of the current difficult situation."

The Commission has generally moved away from direct market intervention towards direct farmer payments.

In the meantime, the only form of direct assistance available to Victorian dairy farmers has been $68m in exceptional circumstances drought support in 2008-09.

United Dairyfarmers of Victoria president Chris Griffin labelled the most recent US and EU assistance as "disappointing" and said the direct farmer payments meant its farmers didn't have to "face the reality that our Victorian dairy farmers have to".

Australian Dairy Farmers president Wes Judd questioned the motivation behind the latest round of money for dairy farmers.

"Is this part of the long-term restructure ... to get them competitive to deal with (their) business in a downturn, or is it just a short-term measure off the back of hardship created in any particular year?" he said.

The Federal Govenment has written to the USDA voicing concerns over the payments.

Trade Minister Simon Crean said agricultural subsidies linked to prices and production distort punish efficent farmers.