The New Zealand Egg Producers Federation says the industry is going to need up to 20 years to completely phase out battery cages for hens and replace them with colony cage systems.
The National Animal Welfare Advisory Committee has proposes a ban on the use of battery cages from an unspecified date, but may allow egg producers to use the larger colony cages as an option, along with barn or free-range egg production.
The committee expects to decide on final recommendations for a new layer hen code to go to the Government at the end of this month.
Colony cages are becoming the international standard, with the United States now committed to banning battery cages and most European Union countries well along the way to phasing them out as well.
The Egg Producers Federation says the industry accepts battery cages have to go but will need 18 to 20 years to make the change-over and stay in business.
Chairman Michael Guthrie is managing director of the country's biggest egg producer, Mainland Poultry near Dunedin, and has been trailing the colony cage system.
He says it has the advantage of keeping egg production affordable while improving the welfare of the hens by giving them the space to behave more naturally.
He says it is natural for hens to live in colonies and the cages allow them to be sociable with the provision of nesting .boxes, scratch areas and perching areas.
Mr Guthrie says the bird is kept healthy and receives good nutrition.
But SPCA chief executive Robyn Kippenberger says she's seen colony cages in use in Germany and was not impressed.
She says the perches were not high enough and the scratching pads were too small to allow more than one bird to use it at one time if they could find them in the first place.
"It was just a joke," she says. "I couldn't see there was any advantage to these birds."
The SPCA has joined the SAFE animal welfare group and the Green Party in a campaign calling for all hen cage systems to be banned.