According to ABC, the SA Government said there had not been a legal definition of the terms "free-range" or "barn-laid" in Australia and it was proposing a voluntary code for egg labelling.

Free-range would mean a maximum of 1,500 hens per hectare, in areas with unrestricted roaming in daylight hours and sufficient shelter.

There also would be a ban on induced moulting.

Angela McDougall of consumer group Choice said shoppers did not expect free-range to allow up to 20,000 birds per hectare in some cases.

"A lot of the product on sale at the moment doesn't have any accreditation whatsoever," she said.

"Consumers are just looking at pictures of green pastures and happy hens and having no idea really if the reality matches the image that's out there.

"They should have the right to have the certainty that they're getting what they pay for when they buy free-range eggs."

Lee McCosker from the group Humane Choice said shoppers may struggle to find appropriately-labelled eggs.

"Initially they may not find it because larger supermarkets generally stock the more intensive-style eggs from the larger producers in the industry," she said.

Kangaroo Island free-range egg producer Tom Fryar said his business had suffered because larger farms were making the same free-range claims.

"In the last couple of years we've noticed that there's a lot of free-range farms out there with 20,000 and even 40,000 birds a hectare on their range area and that is not free-range," he said.

"The consumers are getting ripped off. It's as simple as that."

Darren Letton runs the Glen View Poultry Farm in the Riverland, which produces both free-range and caged eggs.

He agreed there needed to be a standard, but said any guidelines introduced needed to be in line with other states.

"I mean the eastern states are running huge amounts of chickens in their free-range and calling it free range and then those eggs are coming across and being sold in South Australian supermarkets," he said.

"There is no real level playing field for South Australian free-range egg farmers, but I think 1,500 is not enough, we're not going to be able to compete."

Greens MLC Tammy Franks was pleased with the SA proposal.

"This proposed code is in line with best practices in animal welfare, the maximum density of 1,500 birds per hectare ensuring that birds will not have to be de-beaked and will have the opportunity to exhibit natural behaviours, outdoors as nature intended," she said.

The SA Government is accepting submissions on its proposal until the middle of July.

Queensland is the only other state to have moved to a free-range standard of 1,500 hens per hectare.