AAco's new chief executive, David Farley, is said to have sent a memo to staff on Friday instructing them to cancel their trading relationship with Elders (although existing contracts will be honoured), according to The Australian Financial Review.

AAco, once Elders's largest client, remains a major customer of the rural services group and therefore tens of millions of dollars of sales contracts could be at risk.

The dispute over cattle feed supplements is believed to have begun about four years ago and although there were settlement talks, it is understood Elders's insurers did not agree to a payment because they thought no claim was warranted.

AAco says the supplement mix affected the fertility of its herd, and in the past it has floated the idea of seeking compensation of up to $40 million. AAco now wants to launch legal action, and as a result, its new business will be diverted to AWB's Landmark division and other suppliers.