The remaining slice of a 200-year-old farming property in Tasmania’s north-west is up for sale, following years of controversy, unrealised grand ambitions, allegations of animal cruelty and mismanagement, and the recent loss of a major milk contract.

The property last sold in 2016 for $280 million in a contentious purchase to a Chinese investment company after an eleventh-hour bid that staved off two rival bids by Australian companies.

The sale required signing off by the Foreign Investment Review Board, headed by then-treasurer Scott Morrison.

At the time of its sale, it was the largest dairy operation in Australia, spanning a vast 143,500 hectares, milking 17,890 cows over 7,062 hectares.

On Monday, billionaire Chinese businessman Xianfeng Lu announced he would sell off the last 9,500 hectares of his landholdings at remote Woolnorth.

“It is with disappointment that I will be placing our remaining landholdings of Woolnorth on the property market, in anticipation of the expiration of our long-term milk supply agreement,” he said.

The sale follows news that New Zealand dairy giant Fonterra cancelled its 25-million-litres per year milk contract with Mr Lu’s company, Van Dairy Ltd, formerly Moon Lake Investments, in February after a number of unresolvable commercial factors.

In the wake of the announcement, the ABC understands Mr Lu sent thousands of dairy cows to the nearby abattoir for slaughter. It was widely reported at the time that about 700 cows were killed, but sources have confirmed that number to be much higher.

Plan was to fly fresh milk to China

Initially, Mr Lu had a grand plan to fly millions of litres of fresh Tasmanian milk to Chinese consumers in Ningbo, Shanghai, Hangzhou and Beijing.

That did not eventuate.

The sale was supported by the then-federal treasurer Scott Morrison, who said the investment commitments from the buyer would result in more jobs in Tasmania.

Mr Lu’s approval from the Foreign Investment Review Board to buy the property was subject to five conditions, including employment in the area, investment in infrastructure and environmental projects.

However, the conditions were a voluntary agreement and were not met, which later led to calls to toughen the board’s powers.

In 2021, Mr Lu announced plans to build a milk powder processing plant at Woolnorth, which would then be packaged at a Burnie factory the company bought. The application was withdrawn in 2023.

Again in 2021, Mr Lu said he would put aside 1,800 hectares of land for Tasmanian devil conservation.

It is unclear what happened to that land in subsequent sales.

Former chief executive of Moon Lake Investments, Evan Rolley, joined the company with high hopes.

“A board was appointed with a lot of expertise … an excellent team of 25 dairy managers, it was all set,” he said.

Case study of ‘what not to do’

A critic of Van Dairy’s ownership, Greens Senator for Tasmania Peter Whish-Wilson, said the property became a case study in “what not to do” for a Senate inquiry into foreign investment proposals.

“They made undertakings that they would spend $100 million in capital upgrades,” Senator Whish-Wilson said.

“What we found five or six years later was that the investor hadn’t spent the money that they promised.

As the years rolled on, the property became subject to numerous reports and investigations into allegations of effluent management issues and animal cruelty, as well as the mass resignation of its board members in 2018.

Mr Lu denied any cruelty but confirmed a 2021 audit had found 83 per cent of the company’s 23 farms had failed to comply with the Farm Dairy Premises Effluent Management Code of Practice.

Farmland carved off

Over subsequent years, Mr Lu sold off portions of the property, whittling his holdings down to a final 9,500 hectares.

Last month, a further 700-hectare slice entered the market. It sold for $15 million to Prime Dairy, the dairy arm of Melbourne-based fund manager Prime Value Asset Management.

The current sale, listed by Nutrien Harcourts, includes an historic homestead, an 1830s workers cottage and multiple historic dwellings.

“It’s an ark and a refuge for the Tasmanian devil, there’s enormous potential for this to be a tourist attraction in a part of the world that does need jobs.

“I think the key lesson that we need to learn is that this part of Tasmania may not be suitable for intensive dairy farming.”