The Department of Agriculture and Water Resources has taken the dramatic step of cancelling an exporter’s license after a consignment of Australian dairy heifers tested positive to Johne’s disease in Japan, prompting it to suspend all Australian cattle imports.

Ruralco Holdings confirmed this morning that the smaller of its two live export businesses, Frontier International Agri (FIA), which exports breeding cattle from Southern Australia, has been notified by the Department of Agriculture and Water Resources that its export license has been cancelled.

Ruralco’s largest export business, Frontier Northern International, which exports feeder and slaughter cattle from Northern Australia, and accounts for more than 80pc of its live export business, continues to operate as usual.

The Department suspended the FIA license several weeks ago in the wake of the Japanese market ban as it began investigating the circumstances surrounding the preparation of the consignment at the centre of the suspension.

In a statement issued to Beef Central early this afternoon, the department said its investigations had established that the consignment was “not prepared in accordance with Australia’s regulatory requirements”.

As a result the livestock export licence of Frontier International Agri had been cancelled under Section 24 of the Australian Meat and Livestock Industry Act 1997, the Department said.

The full cancellation of an export license is a dramatic reaction by the Department, and seemingly incongruent with other punishments handed out in response to previous live export investigations. No exporter’s licence has been suspended or cancelled by the department in response to the various documented breaches of ESCAS which have led to Australian cattle being mistreated in foreign markets and focused public outrage on the trade.

The Department said in the statement that its priority is “to solve this issue to the satisfaction of Japan”.

“The exporter has been notified; the department is unable to provide further detail on the evidence that informs this decision. Japan has also been notified of this outcome,” the statement said.

“Japanese authorities have completed a number of rounds of follow-up tests on the consignment in post arrival quarantine, which confirm the presence of bovine Johne’s disease (BJD) in the exported cattle.

“The department is now undertaking further investigations and laboratory work using samples collected in both Japan and Australia. Given the complexity of these investigations and testing for BJD, final results are estimated to be some weeks away.”

The Department said Japan was a highly valued trading partner and its priority was now to resolve the issue to the satisfaction of Japan.

“The Australian Government is continuing to work closely with Japanese authorities towards re-opening the trade.”

Ruralco said it is working closely with the Department.

“While the cattle tested negative prior to departure from Australia, it has become evident that certain preparation and isolation procedures within the supply chain were not adequately followed,” the company said in a statement.

“A review has commenced and appropriate action will be taken once concluded.

“Ruralco takes the obligations of its live export business extremely seriously and is working in close consultation with DAWR.

“Ruralco is also providing assurances around its feeder and slaughter business, which operates as a separate entity and serves a different part of the market.”

Ruralco said the Frontier live export business contributed gross profit of approximately $10 million to Ruralco’s reported gross profit of $307 million in the 2015 financial year.

BJD is a chronic disease that is endemic worldwide. Japan is actively eradicating BJD and applying strict import controls for this disease.

Blood screening tests for Johne’s disease are known to have a poor ability to correctly identify infections in young animals or those early in the onset of the disease.

One point that does not appear to be dispute is that the 300 Holstein dairy heifers tested negative to Johne’s in quarantine before leaving Australia.

60 of the same heifers then tested positive to the disease upon arrival in quarantine in japan, triggering the blanket ban on all Australian cattle exported to the market.

When contacted this morning a spokesperson for Frontier International said the company was involved in ongoing discussions with the department and declined to comment publicly.