Thirty-seven workers at Camel Valley Poultry near Camelford have lost their jobs.

Last year the company opened a new plant and has already spent �500,000 of a �1.4m grant made up of European funding from Objective One.

David Rodda, Objective One co-ordinator, said the closure was very serious but added that the failure rate for projects given grants was very small.

Production suspended

"There are perhaps issues about what help can be given to businesses to help them through their development phase.

"I think both ourselves and Government Office South west will be looking over the next few weeks to see whether we can reduce the risks even further."

The NFU advisor for poultry in the South West, Paul Cooper, said he was shocked at the news.

"It's a state of the art plant for poultry," he said.

"It's been working very closely with lots of other businesses in Cornwall for the benefit of Cornish agriculture."

The administrators have suspended production while they look for a buyer.

Andrew Higman, who supplies the plant with 40,000 chickens a year, said he was now worried about the future of his company.