The fall underlines the importance to Glenrath of creating what it says will be one of the world's largest free-range egg enterprises. That project has put the Peeblesshire-headquartered business at loggerheads with animal rights campaigners, however, who have condemned Glenrath's plans to house more than a quarter of a million hens in huge sheds as "pseudo-free-range".

Owned by John Campbell since 1961, Glenrath Farms, with 200 staff, is Scotland's largest agricultural employer.

In 2006, Glenrath posted a pre-tax profit of £4.6m, down from £5m the previous year. Sales, by contrast, soared from £24.3m to £31.6m in the year to May 31, following £20m of investment in production and packaging facilities.

Glenrath's directors said the main reason for the profit fall was "the continued change in consumer demand for free-range and organic eggs with a corresponding reduction in demand for barn eggs". High energy prices also took a toll.

Last year, Campbell completed the acquisition of Blythbank Farm, near Romanno Bridge in Peeblesshire, with the intention of building 10 giant sheds housing 300,000 free range birds. Conventional battery cages, which provide 60% of the eggs sold in UK supermarkets, have to be phased out in 2012 under European law.

Glenrath says it will build the sheds to standards which will allow the eggs to be labelled as free-range.

Source: The Herald