UPDATED: WOOLWORTHS will phase out all caged eggs sold in store by 2018, including those used as ingredients in its Own Brand products.
"We are working with our suppliers to support them through the transition period, including long term supply contracts so they can have the confidence to invest in infrastructure changes and reducing the cost of production to keep prices affordable," a Woolworths spokeswoman said.
While caged eggs are a cheaper alternative for shoppers, the spokeswoman said the company did not think the decision to phase out the eggs would hurt Woolworths' reputation for value.
"Woolworths is known for offering our customers the best value," she said.
"Over the past ten years, we have seen the price gap between caged and barn laid eggs begin to close."
The spokeswoman said it was hoped by the final transition in 2018, this trend will have continued enough for the phasing out of caged eggs to have no economic impact.
"We will work closely with the industry over the next five years to improve efficiencies and minimise cost which should see the price of barn laid eggs reduce by the time this change is introduced," she said.
The change will mean a rise in egg prices, with caged eggs being the cheapest option.
Battery hens lay half of the eggs currently sold by Woolworths - the phase-out will affect 12 caged egg suppliers that will have to shift to a sustainable cage-free model.
Victorian Farmers' Federation egg group president Brian Ahmed said producers had only recently upgraded infrastructure to meet industry requirements in the past five years, and the move would prove costly for farmers.
Woolworths said the treatment of meat chickens will also have to adhere to the minimum standards set by the RSPCA. This includes adequate access to water and food, adequate space and freedom from ''discomfort, pain, distress'', according to the guidelines.
Woolworths is not the only chain addressing the treatment of chickens.
Coles announced it would stop selling company branded caged eggs in October last year, accounting for 350,000 hens that were freed from cages.
Consumers can now buy ''welfare-friendly'' eggs from the Coles branded products.
The popularity of caged eggs has fallen noticeably in recent years as consumers demand a stronger commitment to animal welfare. In 2009, caged eggs made up 70 per cent of all eggs sold in Woolworths; it now comprises 50 per cent.
A Primary Industries Standing Committee report, published by CSIRO Publishing, on poultry standards show that chickens that are caged have a limited ability to perch, fully stretch or lay eggs in a nest. Diseases are also difficult to contain within caged environments, the report said.
But less than five years ago, consumers would not have known if they were buying free-range, barn-laid or caged eggs.
It was only in late 2009 that Woolworths started clearly labelling how their eggs had been farmed, clearly separating free-range, barn-laid and caged eggs.
A report by consumer group Choice found the average cost of cage eggs was 43¢ per 100g, while the cost of barn-laid eggs was 80¢ and free-range eggs was 93¢. The report, released this week, found free-range eggs cost more than double what caged eggs cost, but the number of chickens varied from the recommended 1500 chickens per hectare to 20,000 per hectare.
Woolworths' Select own brand of free-range eggs have 10,000 chickens per hectare.
Macro, another of Woolworths' brands, uses a chicken stocking density of 1500 birds per hectare - the recommended standard for free-range.
As of last week, the stocking density will now be labelled on all Woolworths Select free-range eggs.