But they had surveyed the countries 8000 dairies and owners of more than half were "living in fear".
"How are you going to distribute [the $1.8m]? It's just peanuts."
Kaushal also called for tougher penalties for offenders.
Bennett said $1.8m would help owner-operated dairies pay for measures such as fog cannons and panic alarms.
"I want these cowards to know these crimes will no longer be tolerated."
High-risk dairies will be targeted for funding, she said.
Police will help decide the best prevention methods to be used. She estimated the cost would be around $3000 per dairy, of which police will pay half.
There used to be bank robberies and hold-ups on Armourguard vans and that no longer occurred to the same level because of measures taken, Bennett said.
"We are going to do what we can to help keep [dairy workers] safe" from cowardly thugs, she said.
Bennett was "not sure" if robberies had increased along with the price of cigarettes.
A security audit will be done for each business deemed at high risk and a decision will then be made over what measures will be taken.
She did not want to see dairy workers armed. Trying to have a bigger weapon than one that might be used against you would not be good for anyone, she said.
Police came up with the idea, and she was able to find the money.
Preventative work is already going on - working with truants and their families, Bennett told media.
But Act leader David Seymour said today's announcement didn't go far enough.
"Act already said dairy owners deserve relief from crime fuelled by rising tobacco taxes. The Government's proposal of giving a pittance to a minority of stores is a cynical attempt to be seen doing something without actually helping vulnerable shopkeepers.
"The Government should direct all of the extra tobacco tax revenue expected next year to dairy owners who have been suffering the consequences of tobacco crime. This will allow them to pay for security systems like strong-locked tobacco dispensers."
Retail New Zealand has welcomed the initiatives.
Spokesman Greg Harford said the funding was a good start, but dealing with the bigger picture of retail crime ultimately required the public to recognise that all crime was unacceptable.
"We know that petty crime is a gateway to bigger, organised and aggravated crime, and we think it's important that the Government and the police also deal with petty criminals before their life of crime becomes aggravated."