The original decision by a single judge of the Federal Court, if allowed to stand, could have compromised Australia's live export trade.

Today's ruling found that Ralph Hahnheuser's protest was against the live export of sheep and not, as his defence claimed, an act of environmental protection.

The appeal was initiated by exporters in October 2007, after the Federal Court cleared Mr Hahnheuser of causing financial loss to exporters, even though he contaminated the feed and water supply of sheep assembled for live export at Portland in November 2003.

The VFF president Simon Ramsay said today's finding sent a clear message that activists should not use protecting the environment as an excuse for acts of criminal damage.

"This case is a win not only for livestock producers, but for all Australian agricultural industries," Mr Ramsay said.

"Farmers can now feel confident that the law is on their side in preventing similar acts of agricultural terrorism in the future."

VFF Livestock Group president Ailsa Fox said would-be activists could take the finding as a warning, that they will be held accountable for their actions.

"The government needs to make sure that this apparent loophole in the Trade Practices Act is closed and that similar instances in the future cannot drag out for so long," she said.

The proceedings have been referred back to the original Federal Court Justice for further hearing, to determine damages.