The free-range egg industry should come under greater government scrutiny following revelations a Whangarei egg farmer duped consumers, Bay business owners say.

John Garnett was sentenced to 12 months' home detention and 200 hours' community service in the Whangarei District Court after passing off 2.47 million eggs from caged hens as free-range between April 2010 and November 2011. He traded under the now defunct company Forest Hill Farm.

Doug Jarvis Traditional Butcher at Papamoa has been selling Otaika Valley Free Range Eggs for five years and said they were popular.

The Government should be regulating the industry, he said.

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"It is not the retailer or the wholesaler but the Government who should look after the consumer."

Mr McGregors Fruit Shop assistant manager Tina Bryant said it sold free-range eggs from Braemar Poultry Farm in Tauranga.

People paid more because they were free range and the industry should face regulations, she said. "You have to prove other stuff is free-range and organic, just as long as it doesn't cost a lot of money."

A tray of free-range eggs cost $14.20 and they sold about 40 trays a week, while one dozen free-range eggs cost $5.99.

Otaika Valley Free Range Eggs director Peter Sandle, of Mount Maunganui, said any bad publicity tarnished the industry.

The free-range sector had faced more stringent auditing over the past five years and they were often audited by other large companies, he said.

"We supply McDonald's and we are audited by them, and that is really stringent. It happens twice a year and involves six staff members being interviewed at random."

The Independent Egg Producers - a co-operative they belong to - also carried out audits, he said.

Tauranga resident Nicky Crane said other industries were regulated and audited to be correct as per government regulations. She kept three chickens of her own. "It's not just labelling, actual animal welfare is at stake and we have people taking advantage of that."

Ministry for Primary Industries animal and animal products director Matthew Stone said its role in regulating egg production related to ensuring the welfare of hens, and the safety and suitability of the eggs.

The Commerce Commission was responsible under the Fair Trading Act to ensure information provided to consumers was accurate and important information was not withheld, he said.

Poultry Industry Association executive director Michael Brooks said it had taken steps to improve traceability when the offending was discovered.

Free Range

- There are no regulations that control the definition of a free-range egg, and consumers are reliant on the honesty of egg farmers to identify eggs correctly.
- The Animal Products Act 1999 requires most egg producers to operate under a Registered Risk Management Programme.
- Most RMPs include a statement like "Eggs from different farm regimes like barn, free-range, cages, are kept separate at all times".
- Free-range eggs make up 12 to 13 per cent of the market.
- There are 130 egg farms in New Zealand, about 70 are free-range.
Chickens that go outside are defined as free-range.