Large diaries are due to receive 1.5 kuna per litre for the production of milk powder and butter, while small diaries will get one kuna per litre for other milk products.
The government will sign agreements with diaries under which they will not be allowed to import raw milk and milk products at the same time.
The aim of the measure is to boost production and reduce import, Agriculture Minister Petar Cobankovic said.
Most of the 15 million litres, notably 13.3 million, will be bought off by eight large diaries, which will receive 19.98 million kuna in subsidies. Twenty-two small dairies will split 1.67 million kuna, with subsidies ranging from 1,800 to 305,000 kuna.
Prime Minister Ivo Sanader and Agriculture Minister Petar Cobankovic said that the present disorder on the milk market was actually the result of positive measures taken in order to increase milk production.
Increasing domestic production, along with usual imports, has resulted in a disorder on the milk market, Sanader said.
The 14 per cent increase in milk production is a satisfactory trend which we will support, Cobankovic said.
(1 euro = 7.29 kuna)