General manager Dean McKenna said new rules which meant the city's biggest employer would have to operate at two-thirds of its usual capacity would be "disastrous" for the company.

Premier Daniel Andrews announced all abattoirs would have to scale back production on Wednesday.

"We're still going through the data from the state government, (but) in a nutshell it means we've got to put off 340 workers and none of those workers are eligible for job support," Mr McKenna said.

"Midfield can't afford to pay the wages of the 340 workers for six weeks as it relates to a direct cost of $3.8 million. These processes run like a bike chain and you can't run them with missing links."

He said the job losses would have a "dramatic impact" on the region's economy.

"We're in discussions with the state and federal governments as we speak and those talks will undoubtedly continue over the next few days," he said.

EARLIER: Warrnambool's biggest employer, Midfield Meat, will have to operate at two-thirds of its usual capacity under strict new state government COVID-19 regulations.

Premier Daniel Andrews made the announcement at a press conference on Monday afternoon.

Across the state all meatworks will have a 33 per cent reduction compared to peak capacity.

He said workers would be tested, have their temperatures checked and would have to wear full personal protection equipment (PPE).

Mr Andrews said meatworkers would wear "head-to-toe the same gear that hospital staff wear when they are treating COVID positive patients".

"We are reducing overall production by a third," he said.

"We have a strong partnership with this industry and they will step up and do even more. They will do less work but they will do more in contribution to safety. The alternative is mass food shortages."

Meatworks are the only regional industry subject to newly tightened stage four restrictions implemented in metropolitan Melbourne.

All other businesses will be subject to stage three restrictions.

Meat processing facilities have been the source of several Victorian COVID-19 outbreaks, a cluster at Colac.

The Standard is seeking further information.

MORE TO COME.

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