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To farmers' markets across the country they flock, foodies in search of free-range eggs fresh from the farm.

But they must move quickly because demand far outstrips supply. The eggs – laid by hens that roam free, eat bugs and live an existence that is antithetical to the life of the caged battery fowl that produce for supermarkets – sell out quickly. That is, unless you know who to ask and where to find them. Or, in some cases, the secret password.

Dawn Woodward, owner of Evelyn's Crackers, an artisan baked-goods company in Toronto, will show up at the market at seven in the morning for farm-fresh eggs or drive an hour out of town to find them. When she's leaving the city, she phones ahead to place an order with one of the hundreds of small farms in the country that sell pastured eggs.

"The flavour is better," she says. "They are fresher and richer. They're sweeter, a fuller flavour." She prefers eggs laid by hens allowed to scratch and wander – when she can get them.

This longing for farm eggs has pushed the price of a dozen to about $5, roughly the same price you pay for organic eggs at the supermarket. In California, where alternative eggs have reached cult status and where the farmers who raise them are stars – starmers – a carton can cost $8 (U.S.). The eggs offer smaller producers a good revenue source. But this growing market for a different kind of egg is creating tension between the small farms that raise them and the egg marketing board that has helped to develop the mainstream egg industry in Canada and its large chicken farms.

This tension now is putting the future supply of this sought-after product in question as what some call the "egg police" crack down on the grey market.

"It's a huge issue," says Tom Henry, a Vancouver Island farmer and editor of the magazine Small Farm Canada. "The right to sell eggs is the small-farm equivalent of the right to bear arms."

Egg farming is governed by a supply management system in Canada, which means provincial egg marketing boards control the number of eggs produced. This quota system maintains a constant price, and proponents say it ensures that farmers make a living and consumers have a steady supply of eggs. But the eggs produced on farms that hold the quotas are not the eggs that foodies desire. It's the small, often organic operator who is supplying the fresh eggs to farmers' markets.

Any farmer is permitted to keep 99 laying hens without buying quota, which is worth thousands of dollars, and they can sell their eggs from the farm gate without grading them, a process that evaluates quality. But they are forbidden from selling them elsewhere unless they are graded, which, for the small farmer, is a tough regulation to meet because grading stations are often a long way from the farm and it is expensive to set one up.

This has created a grey market for eggs. If you know the password, you can buy a verboten dozen at an Ontario health food store. Often those popular eggs at the farmers' markets are kept out of sight – for a reason. "It's more like Prohibition," Mr. Henry says, "with far more people ignoring the regulations and selling eggs."

But the risk may be high. There is talk of the "egg police" that keep track of who's doing what and rumours of farmers getting in trouble for breaking the rules. In 2008, a farmer was fined $3,000 (Canadian) for selling eggs to Ottawa-area restaurants. And in a notorious case in Eastern Ontario in 2006, the egg marketing board, the Canadian Food Inspection Agency and police officers raided one farm and pressed charges including unlawful possession of laying hens because the farmer allegedly owned more than the permitted 99.

Many small-scale farmers would rather not draw attention to their operations.

"I'd prefer not to be on the radar screen, period," says one Ontario farmer who raises slightly less than 100 birds and tries to follow the rules. "It's a bit frustrating because I know there is demand out there for the eggs we can produce."

It is not only the income that draws the small farmer to raise hens, says Karen Maitland of the Ecological Farmers Association of Ontario. "They are part of the ecosystem when you look at a diversified farm," she says, explaining that the birds add to a farm by producing fertilizer. Because quota is pricey, the system doesn't work for small farms who keep a few chickens, she says.

"We have to be careful because this is our system," says Laurent Souligny, chair of the Egg Farmers of Canada, regarding the rational behind the rules. "We have to make sure there are enough eggs out there and we don't to flood the system." Supply management keeps prices fair for both farmers and consumers because it controls the amount of product for sale. His organization is worried that too many eggs on the market could disrupt this balance.

Mr. Henry sees it differently. He believes the egg marketing boards aren't anxious to make room in the marketplace for these alternative eggs because they invite the consumer to compare and contrast the two different products. "There are a lot of tough questions being asked of conventional egg producers because of an increased awareness of how chickens are raised," he says.

The solution, however, is not to get rid of supply management, says the small farmer in Ontario, but to figure out how to fit this kind of operation into the existing system. He would like to be able to sell his eggs without having to grade them, as has recently been allowed on Vancouver Island after the health authority instructed its inspectors not to distinguish between graded and ungraded eggs. You can now buy the sought-after eggs at the store and they can be used in restaurants and commercial kitchens.

"It's ultimately going to be a political decision to change this," the farmer says. "If consumers could taste the alternative, they'd want more."

Special to The Globe and Mail