Plans by Jonai Farms for a micro abattoir, to process 30 pigs or six cattle once a week, were approved by the shire but challenged in the Victorian Civil and Administrative Tribunal by neighbours.

VCAT senior member Rachel Naylor rejected the objections, lodged by nearby neighbours of the proposed abattoir, Anthony and Sharyn O'Neill and several of their supporters.

"There is no material before me to suggest that this proposal cannot operate acceptability within all of the various layers of regulation and control," Ms Naylor said in her ruling.

Jonai Farms intends to build an abattoir, boning room and butcher's shop on the site.

The O'Neills asked the tribunal whether or not the proposal was consistent with planning policy relating to the use, development and protection of agricultural land.

They also questioned if the proposal was acceptable when it came to land use compatibility, amenity impacts to nearby properties and environmental risks, as well as whether it was consistent with the objectives and decision guidelines of the Farming Zone.

The objectors claimed it was "objectively incorrect" to claim an abattoir was an agricultural use.

"They submit there is nothing inherently agricultural about an abattoir, that it is an industrial use and is a recognised use with potential adverse impacts under the planning scheme," Ms Naylor said.

"As such, they consider this proposal is no more than an opportunity to introduce an industrial land use on farming land with no intrinsic link to agriculture.

"They consider the proposed abattoir is an industry and, as such, it is an unacceptable land use in this farming area, particularly as this area contains agricultural land of high to very high quality.

"They also consider that the proposed abattoir is an 'agent of change', meaning it must demonstrate before being granted a planning permit that it will not cause unreasonable amenity impacts such as noise, odour, dust and air quality impacts as a result of the abattoir operation."

She said Tammi Jonas, of Jonai Farms, had explained some local abattoirs had closed, others were being purchased by multi-national corporations, and some were stopping the processing of particular livestock and/or the livestock from smaller farm holdings.

"This is increasing the stress and cost of longer travel times for livestock and difficulties in finding a suitable facility that meets a farmer's slaughter schedule," Ms Naylor said.

"For Jonai Farms, this proposal is just a part of its overall farming processes, and it enables the farm to provide greater welfare outcomes for the livestock (less travel, less stress and a smaller holding facility) as well as more farmer control in the processing of its produce."

Ms Naylor said she was not persuaded the proposed building and works were of a size or scale that adversely impacted on the protection of high quality productive agricultural land.

"Rather, the proposal is an example of facilitating rural land for a range of agricultural uses and compatible rural industrial uses," Ms Naylor said in her ruling.

Ms Jonas said the tribunal actually reduced the number of original conditions, imposed on the permit.

"Ironically for the objectors, if they had not taken us to VCAT, there would have been more conditions on our right to do this," Ms Jonas said.

She said she was hopeful of starting operations by Christmas.

"It's been quite a long delay and meanwhile access to local, large abattoirs is getting tighter and tighter, so we are pretty keen to get something built as soon as possible," she said.

"There are a number of farmers ringing or emailing us asking us when we are going to be up and running, because they are losing access.

"The need to support more and more local, small scale facilities is growing ever more obvious."

Ms Jonas said an abattoir was a permitted rural industry.

"The objectors tried to say an abattoir was not intrinsic to agriculture," she said.

"(But) there is no livelihood for us without an abattoir - abattoirs have no reason to exist if it wasn't for livestock farmers needing them."

She said it would set a positive precedent for small-scale abattoirs as a suitable use in farming zones.

"That doesn't make it open slather for large scale, industrial abattoirs, but this is a strong precedent that this is an appropriate use."