Vic, Commonwealth bicker over dairy loans

Victoria's dairy farmers have been offered $30 million in interim loans in the first tranche of the federal government's dairy assistance scheme.

But the state has hit out over the "dud" package and the repayment interest rates.

The details were revealed in a letter to Victorian Agriculture Minister Jaala Pulford from her federal counterpart Barnaby Joyce.

A $555 million loans package for struggling dairy farmers was announced last month.

In the scheme, $55 million will be made available for Australian farmers until June 30, and another $500 million will be set aside for loans in the following two financial years.

Ms Pulford has written back questioning the amount of money set aside for Victoria and the interest rate for repayments.

"Why is the Commonwealth government lending at a rate of 2.71 per cent to struggling dairy farmers, when I'm advised the Commonwealth is borrowing money at a rate of 1.5 per cent?" she wrote.

In comments to AAP, Ms Pulford said: "Barnaby Joyce's Victorian dairy support package is a dud".

A spokeswoman for Mr Joyce said the $30 million on offer was the first allocation and Victoria would get more loan funds in the next two financial years.

The interest rate was set to make the cost of borrowing and administration revenue-neutral, the spokeswoman said.

"The Commonwealth would be prepared to consider a lower interest rate if the Victorian government was to forego administration funding," she said.

The United Dairyfarmers of Victoria urged the two governments to come to agreement.