The alert was raised just before 12.30pm with more than 12 firefighting appliances attending the Peterborough Road mill, near the intersection with Emeny Street, at Terang.

The fire, which was still going at 2pm Tuesday, occurred less than three years after the devastating St Patrick's Day fire narrowly missed the mill as it raced in a south-westerly direction.

Incident Controller Andrew Smith said when crews arrived at the scene on Monday, a shed was "fully involved" in the fire.

"It was threatening other buildings so the first thing to do was to protect the surrounding infrastructure from further damage," he said.

"It was quite a technical fire given its location to other buildings. Our main aim was to just protect the assets.

"We knew the shed at that stage was a lost cause so it was more about protecting the remaining infrastructure rather that fighting the fire."

Mr Smith said crews were aided by Terang business W A Molan and Sons and the Warrnambool aerial appliance.

"Molans came with an excavator to help extinguish the fire and pull down the shed," he said.

"The excavator was mainly used to pull apart the hay to attempt to extinguish the fire, which is still going as we speak.

"It's been a big team effort and from a CFA point of view, I'd just like to thank everyone who has been involved so far, including the Ridley staff and Molans.

"A big job like this takes a lot of cooperation between companies and organisations."

Camperdown Fire Station group officer Chris Place said it would have been "devastating" if the fire had affected Ridley Agriproducts.

"This was a very large fire and there was definitely potential there to lose parts of the Ridley Mill which would be an enormous loss to the town and district," he said.

"At one stage there were a dozen appliances on the scene and the efforts stretched the water sources, the water mains weren't able to keep up and water was carted in from elsewhere."

Mr Place said it was "good management rather than good luck" that the fire was not worse.

"Grain dust is very, very explosive and it could have been a lot worse," he said.

A Ridley Agriproducts spokeswoman said the fire was located in the hay storage at the rear of the property, that the site was evacuated and no one was hurt.

"Production was temporarily suspended but the blending and milling facilities were not impacted," she said.

She said production resumed on Tuesday morning.

"There was no impact on supply to our customers," the spokeswoman said.

"The cause of the fire is being investigated."

The Country Fire Authority re-issued a smoke warning for Terang on Tuesday about 1.30pm. Smoke will be visible from nearby roads and communities with the fire expected to continue to burn for a number of days.

A CFA spokesman said there was no immediate threat to the community.

The fire is not yet under control.

It is believed the fire could be the result of spontaneous combustion.

For more information on hay fires visit: www.cfa.vic.gov.au/plan-prepare/hay-and-fire-safety.

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