Festival organiser Steve Halpin said while a number of bands were eager to play at GTM, organisers felt they couldn't deliver a festival to the standard crowds deserve.
"We tried really hard," he said. "But in six different states, with different jurisdictions, everyone has slightly different requirements.
"It does hurt. For the last year we have put the business in hibernation. JobKeeper has definitely helped keep all our staff on a basic salary while they find other work but there is just no work for anyone in this industry.
"Doing another year without Fresh Produce, we would have lost a lot of important staff and people over to other things. So I guess we were lucky to receive the (Restart Investment to Sustain and Expand) funding because it made the decision to put GTM aside again easier."
Mr Halpin said bands were happy to look towards a 2022 festival.
"We had lots of interest and bands were lined up. We had a strong line-up," he said. "A lot we have been talking to said they are happy to look at 2022 assuming we are getting back to normal. Fingers crossed the vaccine is rolled out and as effective as promised."
The Fresh Produce festival, which launched will be in Bendigo on September 24 and 25 will host a crowd of 2500 in COVID-safe conditions. The line-up will be announced next week.
"We are basically setting it to run in the conditions we are in now," Mr Halpin said. "(The aim) is to be able to run no matter the conditions, we won't have to postpone.
"Each site has a crew is that is state based. That's what we put in the application and we have been successful getting it. It means we will be able to deliver a re-imagined mini-event that can run in a COVID-safe way."
"It's been a tough year for everyone in our industry, especially Victoria. Hopefully Fresh Produce can be the start of (a proper) re-opening and a chance to have a bit of fun and break the shackles of what has been a tough 12 months."
Groovin the Moo will not go ahead for the second year in a row with uncertainty around what coronavirus restrictions will be in place preventing organisers from planning the event.
Cattleyard Promotions confirmed the cancellation Thursday morning.
GTM was set to go ahead in Bendigo on May 1.
The email said there were too many factors preventing the festival from touring the country and producing a show that crowds are familiar with.
Festival organiser Steve Halpin said music fans who kept their 2020 for this year's event would be able to apply for refunds.
"It is with a heavy heart that we need to postpone Groovin the Moo for the second year," he said.
"We're really going to miss GTM and not being able to spend another year with our crews, artists, team members, suppliers and (fans).
See photos of the 2019 festival:
"We know it has been a very strange and tough time for everyone.
"We are so grateful to all of you who kept your GTM 2020 ticket - refund information will be sent out soon.
"We know it's a big ask, but if you're able to hold on to your ticket a bit longer, it will really help us in welcoming GTM back next year. Thank you to each and every one of you for sticking with us - we can't wait to return in 2022."
While GTM may be cancelled for another year, Cattleyard Promotions are working to develop a new regional concert titled Fresh Produce
The limited-capacity show will feature in Bendigo, Townsville, Bunbury, Maitland, Canberra, Wayville, Toowoomba and Glenorchy.
Bendigo's Fresh Produce event is scheduled to take place on September 24 and 25 at the Prince of Wales Showgrounds.
It will use a single-stage setup that can feature seating to stay within the relevant state requirements and ensure a safe environment.
"Our team is very excited to be developing a new show that highlights the ripest pickings from multiple regions around the country," Mr Halpin said. "We can't wait to feature all things fresh and support local communities in our familiar stomping grounds and our two new regional spots."
For more details on ticket refunds visit www.gtm.net.au