The changes mean caged hens will be able to stand up properly.

By 2008, most egg producers will be required to increase cage sizes from 450 square centimetres per bird to 550 square centimetres in an effort to improve conditions for battery hens.

The new law means farmers would have to build bigger sheds, sell their businesses or move to new sites, all of which they say is prohibitively expensive for an industry already in decline.

South Australian Farmers Federation (SAFF) poultry section chair Warren Starick will stop producing eggs on his Cambrai farm by the end of the year.

"There used to be 80 producers in South Australia about three or four years ago and I'd say in 2008, we'll probably be down to about 10 at the most," he said.

Mr Starick says he simply cannot afford to upgrade his equipment to satisfy the new laws.

"The investment is literally millions of dollars, so that uncertainty has contributed," he said.

"Of course what happened when the new legislation was announced, equity in our farms virtually disappeared overnight.

"The illustration I often give, is imagination that every car in Australia had to have airbags in three years' time - those cars that didn't have airbags would simply become valueless."

Source: abc.net.au