Vic govt hangs onto Covino payment

Victoria won't start payments to Covino Farms until it is sure the salad and vegetable grower is complying with its contract after allegations of worker exploitation.

Covino has disputed allegations aired recently in a Four Corners program about the use of labour hire in the agricultural sector, saying it does not condone any form of underpayment or exploitation of workers.

Covino says it has terminated the last of its agreements with labour hire businesses that utilise migrant workers.

But Regional Development Minister Jaala Pulford says a $1.5 million grant awarded in 2013 to Covino under the previous coalition state government's Latrobe Valley Industry and Infrastructure Fund is on hold.

"I will be making no payment to Covino Farms until and unless I am satisfied that Covino Farms have complied with their legal and contractual employment responsibilities," the minister said on Tuesday.

Covino was initially to employ 60 new full-time equivalent workers and retain 200 existing jobs but that was later varied to include contract workers.

Covino Farms says it's in discussions with the state government to ensure the project is completed with 60 local full-time jobs created.

The grant payment is conditional on meeting the agreed project milestones, Covino says in a statement.

"We are confident of satisfying the government's requirements," it says.