Government regulators have cancelled the licence of a Victorian abattoir after inspectors reported "appalling" incidents of animal cruelty.

Farmers have been sending their stock to the L.E. Giles abattoir in Gippsland for 60 years.

But that came to an abrupt halt after a video from Animals Australia surfaced.

It shows animals being stunned in the eye and ear, and being beaten to death with a sledgehammer.

It took more than four minutes for one pig to stop moving after its throat was cut.

Brian Casey, the chief executive of PrimeSafe, the body that regulates slaughterhouses, says he was appalled by the treatment of the animals as shown in the video.

"Based on that footage I immediately ordered to close the abattoir and all operations were ceased," he said.

Animals Australia spokesman Glenys Oogjes is outraged.

"If it's happening at this abattoir, then we can't be sure it's not happening elsewhere," she said.

"The footage that was captured was so shocking that I don't think a second chance is warranted."

PrimeSafe has now formally cancelled the operating license of owner Colin Giles.

"We've always tried to do the right thing," Mr Giles said.

"We don't condone what this employee has done. It's pretty horrific. You can't deny it."

The abattoir employs around 30 people. But many in Gippsland say the closure will have a great effect on the wider community.

Michael and Bronwyn Cowan fund their rare pig breeding business by selling a small number of the animals for slaughter.

"It only worked because we had an abattoir close by that allowed small producers to be successful," Mr Cowan said.

Ms Cowan is angry about the decision to close the abattoir.

"What is happening now to humans from the closure, to me, is just cruel," she said.

