The future of the Mount Gambier saleyards upgrade project is in limbo, after the federal government knocked back a crucial $7 million funding bid.
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The District Council of Grant and the state government have both expressed disappointment with the decision.
Those parties had committed $4.3m and $2.7m respectively, but the project is reliant on the additional funding to be completed.
The Council's chief executive officer Darryl Whicker said he was notified on Wednesday that the funding bid through the Growing Regions Program had been unsuccessful.
"Council is disappointed with the announcement, however understands the importance of the saleyards to our community as it is a premium selling centre within our region helping to support our primary producers," Mr Whicker said.
"The saleyards strategy committee, Council staff and stakeholders have put a significant amount of work into this Transformation Project over the last four years."
The funding was to provide roofing for the cattle yards, a reconfiguration of holding pens, soft flooring for animal health benefits, new sprinkler systems and a rainwater harvesting system.
The work had been listed as a priority in the Mount Gambier and District Saleyards Masterplan 2018-2028.
Mayor Kylie Boston said while the funding wasn't guaranteed, the Council had been positive their business case stacked up given the support from state government.
"We were supposed to know (whether the application was successful) in March and the funding was supposed to start on May 15, so we're critical that everyone was only notified on May 16," she said.
"We are shovel ready and it's been a long time waiting so it's frustrating."
A spokeswoman for federal Infrastructure Minister Catherine King didn't detail why the funding bid was unsuccessful but said feedback would be available to unsuccessful applicants to assist them in "strengthening their proposal for future funding opportunities".
"Round 1 of the Growing Regions Program, which is competitive and merit-based, underwent a two-stage application process which included enhanced program integrity and transparency," she said.
More than $200m was allocated in Round 1.
Funding commitments for SA included nearly $7m to repurpose the Barossa Regional Gallery at Tanunda to create space for local artists, $1.4m for a cultural conservation project in Barmera, and $9.3m for a children's centre in Loxton.
'Funding needed now', says Kuhl
The saleyards' strategy committee's presiding member Barry Kuhl, a Kongorong farmer and councillor, says the project is critical for future agricultural growth within the district.
"It is disappointing not to have essential funding awarded to this development as the saleyards have a long history of supporting agriculture in our region and throughout Australia," he said.
"The saleyards are an excellent example of how Council infrastructure provides a necessary service to our local community but without upgraded assets in place, such a service cannot be delivered.
"To ensure the saleyards remains sustainable for future generations, appropriate funding is needed now."
The Council's elected members will meet in coming weeks to discuss a path forward and alternative funding options.
The state government appears to have been blindsided by the decision, with a spokesperson saying it was "very disappointed that the project has not received funding from the federal government".
"Our $2.7 million commitment demonstrated our support of the important project," the spokesperson said.
The future of that $2.7m will be unclear until the Council decides what approach to take with the project's future.
