The decision not to repair and reopen the Napier - Gisborne railway line has upset food processors and exporters who wanted to make more use of it.
KiwiRail has confirmed it is mothballing the line because it says the cost of repairing storm damage that closed the track north of Wairoa in March has made it uneconomic.
The Government will spend an additional $4 million upgrading the Napier to Gisborne road by putting in more passing lanes.
That has upset the transport arrangements of East Coast vegetable company LeaderBrand Produce which had started sending squash and sweetcorn by rail to Napier for export, after larger containers became available.
General manager Richard Burke says closing the line is a wasted opportunity for the region.
Gisborne-based chilled lamb company Ovation New Zealand had plans to use the railway.
"We'd done a trial, using rail ... and it was certainly looking like a very viable option as opposed to sending the containers by road," said plant manager Kevin Morrell. "We were quite serious about utilising that rail system."
Mr Morrell said there's a certain amount of urgency in getting its chilled lamb to market and road closures have caused it problems.
Produce company Heinz Watties says it wanted to use the railway as well, to shift product.