A company that says it might have supplied caged eggs to Palace Poultry says it always labelled its products as caged.
Countdown pulled Palace Poultry's eggs from its shelves yesterday after an investigation by the new website Newsroom concluded that millions of the brand's eggs sold before this year were likely caged, but labelled as free-range.
The Serious Fraud Office (SFO) is investigating the allegations.
Eco Foods owner Robert Hehewerth told Checkpoint with John Campbell he sold caged eggs to TK Produce Supplies and they were picked up by a man called Stu, who Newsroom reported was actually connected to Palace Poultry.
Mr Hehewerth said the eggs he sold to the men now believed to be connected to the company were always labelled as caged.
He said, if the allegations were true, it would be a betrayal.
"We feel betrayed and if these allegations are true then this man, or these people, are doing a disgrace to everybody in the poultry industry."
Mr Hehewerth said he stopped doing business with the company he knew as TK Produce Supplies in December when he was notified of the SFO investigation.
'We on-sold them in good faith'
Palace Poultry owner Terry Fletcher denied it ever knowingly sold caged eggs as free-range eggs.
He said his company had used eggs from Eco Foods but was always told they were free-range.
"We have got photos of the product being picked up in free-range wrappers and bits and pieces and were led to believe by this turkey that's what we were purchasing," he said.
"We on-sold them in good faith and now it's turned around and bit us in the arse."
Mr Fletcher said Eco Foods had supplied them for a number of years and he was not sure where the eggs came from beyond that.
Worst day of business life - Woodland CEO
A third company caught in the controversy, Woodland, said the majority of its eggs were its own but it had sourced extra eggs from Palace Poultry.
Woodland CEO Michael Guthrie said yesterday was the worst day of his business life.
He did not have any misgivings about the extra eggs until he was contacted by the SFO, he said.
"There was nothing that we saw untoward. They also have to give us copies of their risk management programmes, which is audited by MPI [the Ministry for Primary Industries]... and then we've got a declaration from them saying they were selling free-range eggs."
Egg stamping being considered
Consumer Affairs Minister Jacqui Dean said, despite the problems, she did not think eggs should have compulsory and regulated labelling.
"Somebody in the processing line sticks on the label - well, maybe somebody can take them off again. There will always be people trying to get around the system and I think we have to go back to the Fair Trading Act, because that provides the remedy for it."
Egg Producers Federation CEO Michael Brooks said egg stamping might be the way forward.
"If a determined individual wants to subvert the system, then that can be done, so we have looked at the options and egg stamping is the one that we are progressing with."
The Labour Party said a clear definition of free-range eggs was also needed.
Countdown said it would hire an independent body to trace where its egg products came from.