Jared Lynch

Australia is facing an egg shortage and rising prices ahead of the peak holiday season after an outbreak of bird flu closed two poultry farms.

About 450,000 chickens have been destroyed at a free range and caged egg farm in NSW, creating a national shortfall, which could leave some shelves empty and will take up to a year to abate.

The virus is not the highly pathogenic H5N1 strain, which has killed humans, nor is it closely related, the NSW Department of Primary Industries said. But it has significantly dented supply. Farm Pride Foods, one of Australia's biggest egg processors, has had to cancel orders, with its sales falling between 8 and 9 per cent compared with the same time last year.

NSW Farmers Association Egg Committee chairman Bede Burke said demand for eggs normally doubled in the week before Christmas ''but this year the eggs won't be there''.

''The comfort level for eggs in NSW is about 1.4 million dozen to fill the cool rooms at the end of the week. We are well under that now, down about 15 per cent,'' Mr Burke said. ''What it means is … retailers might not have 600 gram free-range packs, or 800 gram caged eggs. They might still have eggs but not exactly in that same category.''

Mr Burke said the shortage had already created a lift in farm gate prices, which have risen 10¢ a dozen. He said that would filter through to retailers.

The outbreak was detected in late October at the Langfield Pastoral Company, about 27 kilometres north-east of Young.

Mr Burke said the property was a ''world-class facility'' and an outbreak of an exotic disease is something all farmers feared, particularly as more birds become free to roam.

It is understood the virus originated at the property's free-range farm and soon spread to its neighbouring caged farm.

Farm Pride sales and marketing manager Ian Savenake said Langfield supplied between 3 and 4 per cent of the national market. He said stock in Farm Pride's cool room in Melbourne had dwindled significantly.

''I probably have a day's worth of fridge at the moment tops, whereas this time last year we had five days' worth of stock, so it's going to be a tighter Christmas,'' Mr Savenake said. ''There's quite a lift in demand with just people baking and entertaining. But we are cutting orders at the moment. We just can't supply everyone's order in full.''

The Department of Primary Industries has quarantined both farms, which will remain shut for several weeks.

Mr Savenake said it would take some time for the farms to repopulate their stock, because they couldn't replace the 450,000 chickens all at once. ''Normally you stagger 50,000 every month, so I'm guessing at least six to 12 months, depending on how quickly they can buy the day-old chicks,'' he said.

In a statement, the department said the NSW Food Authority confirmed there no food safety issues and poultry and eggs remained safe to eat.

NSW chief veterinary officer Ian Roth said it appeared the virus had been confined to the two farms. ''There is no indication that the virus has spread beyond the two properties, and the DPI is working with the owners to recommence operations,'' Dr Roth said.

A Woolworths spokeswoman said: ''Customers in NSW and Victoria may notice some gaps in egg supply in stores. We have been working with our suppliers to maintain supply and minimise any impact on customers.''