Images taken at the iconic Van Dairy farm at Woolnorth were released on Friday afternoon by the Sydney Morning Herald and The Age after being sent in by locals and employees.

The report also detailed an audit completed on February 28 this year, which found 83 per cent of the company's 23 farms had failed to comply with the Farm Dairy Premises Effluent Management Code of Practice.

Van Dairy (VDL) confirmed on Friday that the Tasmanian Dairy Industry Authority had recently suspended the operation licence for one of the farms due to an overflowing primary solids pond.

The 280 cows on the farm - 1% of the VDL herd - are now being milked on a licensed farm. VDL said the licence had been reinstated.

The news has sparked anger in the North-West community, including from independent Murchison MLC Ruth Forrest.

She pointed out it wasn't the first time the farm had been under scrutiny for animal welfare issues since being bought for $280 million by Chinese company Moon Lake Investments back in 2016.

An inspection by Tasmanian government officers was carried out in 2019 after about 20 staff aired their concerns about animal welfare.

A government spokesperson said "no issues'' of animal welfare were identified after the inspection on June 28, 2019.

Greens spokesperson for Agriculture and Rural Affairs Peter Whish-Wilson agreed with Ms Forest, saying long standing community concerns had been cemented by the "damning" audit report.

"The fact the Tasmanian and federal Liberal governments have known about this crisis for years but have chosen to sweep it under the carpet is a scandal of the highest magnitude," he said.

"In 2018 after years of community concerns Scott Morrison asked for annual updates relating to Van Dairy staff, and environmental, cultural and heritage undertakings. He cannot claim ignorance of this.

"It is the sheer incompetence of the State and Federal Liberal Governments that has resulted in these devastating animal and environment reports, and landed one of our most iconic dairy farms in this disaster."

Ms Forrest said she was glad the issue had again hit mainstream media, calling it an "absolute failing" by regulators that nothing had been done.

"It's really not shocking news, sadly," Ms Forrest said.

"There's been concerns raised about effluent problems and animal welfare issues and general land management for some time."

She said she was particularly concerned for those in the local community who relied on waterways for their income, such as oyster growers.

"I find it breathtaking that we have to get to this point before anything is done," she said.

"To constantly hear 'we're working with the company' is just inadequate. It doesn't matter who the owners are or where they come from, they should be held to the same standard that we have here."

She said many in the Circular Head community had raised their suspicions, but that some had been surprised by the news.

"The locals know what's going on to a point," she said.

"But (the dairy) is almost like this gated community. It's literally the end of the road, you're almost trespassing if you're going through.

"I think some of them feel like they've been misled.

"There was this great hope that this wonderful new company would deliver on all these hopes ... now they feel like they're being very let down by the promises that were made."

She said all levels of government would need to work together on the issue.

"It could actually harm Circular Head's reputation for some time," she said.

"And Tasmania trades on this brand of clean and green."

Ms Forrest last month questioned the government on what was being done with regards to monitoring the Welcome River - which runs through Woolnorth - for dairy effluent.

Leader of the government Leonie Hiscutt supplied answers.

"While there has been no dedicated environmental monitoring program in the past solely for the Welcome River, DPIPWE has done a range of water monitoring over the past two decades across Tasmania," she said.

"Given recent reporting of effluent issues in the North-West DPIPWE, with the support of the Environment Protection Authority, will be undertaking specific water quality monitoring of the Welcome River relating to effluent discharges."

Van Dairy Ltd, formerly known as Moon Lake Investments, released a public statement on Friday afternoon, flatly denying any issues of animal welfare but admitting there had been issues with effluent management.

"VDL cares about its animals and rejects any claim to the contrary," director Lu Xianfeng said.

"VDL is aware of claims about overstocking and poor animal welfare on the company's farms. A responsible dairy business does not treat animals badly.

VDL adopts accepted and standard animal husbandry practices for the health and welfare of its livestock. Workers and managers are directed to act quickly when an animal requires treatment, and we have a long-standing business relationship with local vets who respond promptly if the need arises."

He said the company was currently repairing effluent ponds and pumping systems on several farms.

"The Circular Head Council have issued Environmental Protection Notices in relation to effluent systems between December 2020 and March 2021," he said.

"VDL is undertaking repairs to the effluent ponds and pumping systems identified in council notices. This remedial action is monitored closely by council officers and the company provides the council with regular updates on this remedial work to comply with those notices.

"Most of the urgent repair work will be completed within the next two weeks. More intensive works that will provide a permanent solution will be completed by the end of April 2021."

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