A FUNDING submission for a proposed $1.4 million new multi-species abattoir on King Island has been knocked back by a Federal Government committee.
Abattoir backers asked for $700,000 from the government's Innovation and Investment fund, part of its economic growth plan for Tasmania.
But a spokesman for the project Troy Smith said the proposal had been turned down.
"It's really, really disappointing for the island," Mr Smith said.
"We have put a lot of work into it and come up with a plan we think holds up.
"But a lot of applications went into this innovation fund and we have fallen short."
The proposed abattoir would have employed 25 people, starting by processing 100 tonnes a year and working up to 500 tonnes.
The main aim was to process wallabies, cattle and lamb, among other species.
Wallabies are a huge problem on the island and the facility could easily process 25,000 animals a year.
Mr Smith said investors had put money into the project and they would now have to be notified as to future plans.
"We've been on this road for a little while now and there is quite a bit of money in the co-operative," Mr Smith said.
"We've only just found out it hasn't been approved, so we will be going through the process of the reasoning behind it.
"We've got to go back to the shareholders and tell them what has happened, what we think we can do in the future and gauge reaction to raising money in the open marketplace."
He said wallabies were a "wasted resource", which were currently left to rot in the paddock.
"There's money to be made out of a resource that's just being wasted."
King Island Beef producers association president Rod Graham said graziers felt there was a need for a processing plant on the island, but were not quite sure what format it should take.
"How we fund it is the other question," Mr Graham said.
"If they can get it up, it's certainly worth looking at.
"It's got general grazier support and if they can make it viable, it is better than what we have got at the moment – which is nothing."
Wallabies would have to be processed for the gourmet market, as it would be too costly to do so for the commodity market.
"We had bush, with limited food for the wallabies; we knocked the bush down, provided grass and the wallaby population exploded," Mr Graham said.
King Island Regional Development Association president Greg Marsh said there was general support for the plan.
"We have to ship stock to Tasmania at the moment, paying a reasonable premium to cover freight costs," Mr Marsh said.
"We will always be at the mercy of mainland prices – it's $110 an animal and going up."
The potential to employ 25 people was also encouraging.
"The island has had a fair knock on employment and a lot of people with the skills required are still here."
