Farmers are upset over Woolworths' decision to phase out the sale of eggs from caged hens over the next five years.
The supermarket giant says it will drop caged eggs by 2018 amid growing consumer pressure to address animal welfare concerns, but Coles and other grocers have not yet announced similar sweeping bans.
Caged eggs will no longer be used as an ingredient in Woolworths home brand products and hen stocking density will be displayed on its free range egg brands.
The announcement is expected to affect 12 Woolworths caged egg suppliers that will be forced to change to a cage-free system.
Victorian Farmers' Federation egg group president Brian Ahmed says the move would be costly for farmers.
"As an industry, it's very upsetting," Mr Ahmed said.
"We have invested in new cage systems that meet industry requirements and now, five years later, they want to ban cages with no compensation for farmers."
Mr Ahmed said farmers would be forced to change their systems to continue to be a part of the egg industry.
Woolworths spokesman Lyndsey Gordon said the company would work with farmers to lower the cost of barn-laid eggs.
Animals Australia campaign director Lyn White called the decision a win for animals and consumer power.
"Hens have been paying a terrible price for cheaper eggs. It's terrific that Woolworths has acknowledged this and taken an historic ethical stand on this issue," Ms White said. AAP