Animal activists say they have obtained disturbing footage from a Hunter Valley battery hen farm showing thousands of birds in poor condition stacked inside cramped cages.

The footage from the Henholme facility at Buchanan near Cessnock shows many of the birds have lost feathers and also shows dead birds on the floor near a garbage bin.

Chris Delforce, who is the operations director from the activist group, Aussie Farms, says despite the poor condition of the birds, the facility does not appear to be doing anything wrong.

"One thing that's most concerning is what we're seeing is entirely legal," he said.

"So we've got one shed that we've got footage of, there's about 80,000 birds crammed into tiny wire cages.

"There's about four or five birds in each cage.

"A lot of them show signs of malnutrition; a lot have feather loss. All these hens have been de-beaked, which is quite a painful process. It is fairly standard in these battery hen systems.

"If you show this to any compassionate person, they'd say there is nothing OK about it, there's nothing moral about it, however, they are still getting away with it under the law."

The ABC has contacted the farm operator, Pace Farm, for comment.

Cessnock MP Clayton Barr, whose electorate covers the Buchanan farm, says the operation is complying with regulations and the industry needs high-density, low-cost production to satisfy consumers.

"For most families across the Hunter, the bottom line in terms of purchasing and eating their food is price," he said.

"There'd be a number of people in the community that would be concerned by the images, but equally there would be a large number of people who make their decisions based entirely on price. They just want to feed their family.

"So we have to get the balance right."

Layer hens in cages at the Henholme farm in the Hunter Valley ( Supplied: Aussie Farms )

He says banning battery cages would raise the prices of eggs.

"There's always the opportunity to talk and rethink regulation but it needs to happen not just in response to the lobbying efforts of a vegan group, but also in conversation with the industry and what's sustainable," he said.

The New South Wales Greens say the footage only strengthens their call for the state to follow the ACT's example and ban such high-density laying.

Greens MLC Mehreen Faruqi says the footage is disturbing and shows NSW needs to rethink its regulation of the industry.

"The Greens have had a very strong policy on phasing out and banning battery cages," she said.

"We got encouragement earlier this year when the ACT passed legislation to ban battery cages and that's what we'd like to see in NSW as well."

