Primary Industries minister Jeremy Rockliff said King Island was an important contributor to the state’s agricultural sector and its world-renowned brand.
“The loss, in 2012, of the island’s major abattoir was a blow to farmers, and the local community has been looking at alternatives ever since,” Mr Rockliff said.
“This grant will allow the King Island community to fully explore a potential opportunity to process cattle, sheep and wallaby for local and interstate markets.”
King Island Multi Species Abattoir (KIMSA) executive officer Don Story said it was planned to use the existing facilities, at Currie.
The aim was to process prime beef for island consumption, for residents and tourists, as well as cattle which were deemed too old or big to travel.
It would also process lambs, pigs and wallabies.
“A significant pot of money has been pledged towards the construction of the abbatoir, by King Island residents, and – as a result of that support – the government has recognised something has to be done,” Mr Story said.
He said the meatworks would also process wallabies, which were “out of control” and posing a significant threat to the environment.
A number of studies had been done into the feasibility of a small abattoir, on the island, but they were now out of date.
“We really do need to have a serious look at the viability of it, in the modern market, and we will also be looking at some of the things that may impact on its construction, such as effluent control, that’s always an issue and cost of a rendering plant is astronomical.”
The current plant would require very little investment to refurbish and get up and running again.
Mr Story said approvals had been secured to re-open the abattoir, but it would depend on the feasibility study.
JBS Australia announced in September 2012 that it would close its abattoir on the island and concentrate on its meat processing facility at Longford.
The company said high operation costs on the island and freight costs were the reasons behind the closure.
JBS Australia said at the time its King Island operations were never profitable.
King Island general manager David Laugher said the closure of JBS Australia's abattoir impacted the community economically and socially with people leaving the island.
"That was a significant cost to the community," he said.
King Island mayor Councillor Duncan McPhie said an abattoir would help boost the island’s tourism industry.
There had been a substantial increase in tourist numbers, with the opening of a new golf course on the island, and new food outlets and a restaurant had recently opened.
“All these places want to use local product, we have the name and brand behind us, and we want to give visitors that food experience, whilst they are here.”
Mr Rockliff said development of the business plan would be managed by the council, which would work with a steering committee, including representatives from the local community, AgriGrowth Tasmania and the Department of State Growth.
A process to appoint consultants will commence soon, with the final plan expected to be completed by June 2016.