RuralCo's southern live cattle exporting business has had its licence to send cattle overseas cancelled by the Department of Agriculture and Water Resources (DAWR).

It comes as part of an investigation into how a shipment of 300 dairy heifers, some infected with Bovine Johnes Disease (BJD), was sent to Japan last month, a move that triggered Japanese authorities to suspend cattle trade with Australia.

RuralCo's southern export business, Frontier International Agri, which mainly trades in beef and dairy breeder cattle, was informed by the Department of Agriculture and Water Resources its shipment of cattle did not comply with the regulations set out in the legislation, and as such its licence would be cancelled.

In a statement the company said the cattle in question tested negative for the wasting disease BJD before leaving Australia, but "it has become evident that certain preparation and isolation procedures within the supply chain were not adequately followed".

The DAWR suspended the licence several weeks ago, with the company making the disclosure late last week.

In the last two years, the Department has investigated a range of animal welfare instances overseas, but no exporter has had their licence revoked.

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The industry's peak body, the Australian Live Exporters Council said in a statement recently: "This decision reflects a very serious exercising of the Department's livestock export oversight and control powers.

"We fully comprehend the gravity of the situation and the very specific consequences for the exporter and staff.

"ALEC is seeking a more comprehensive explanation from the Department to enable our members to fully analyse and absorb any lessons arising from the ruling, including the application and interpretation of the laws governing the trade."

FIA is far smaller than its sister company, Frontier International Northern (FIN), which exports feeder and slaughter cattle from Australia's north and operates on a separate licence.

FIN brings in around 80 per cent of the parent company RuralCo's live export profits.

As Japanese authorities continue to try to eradicate BJD, the temporary ban remains in place.