The Versteden Egg Farm at Drouin in West Gippsland say an application to rezone part of the farm, to increase the town's urban boundary is currently being considered, reports ABCNews.

The farm has been in the family for 60 years and is now Victoria's fourth largest egg producer, supplying mainly to Aldi supermarkets.

The farm's manager Michael Versteden says they've spent about $9 million upgrading sheds in recent years, and relocating is not an option.

It's not just egg producers who are concerned.

Chicken meat producers say that Victoria is falling behind other states when it comes to chicken meat production, and that's because it's too easy to object to a new farm being set up.

Allan Bullen, president of the VFF chicken meat group, says that residents do need to have rights too, but that he is concerned that it's becoming too hard to set up a chicken farm in Victoria.