Thousands of chickens could be put down after an outbreak of avian influenza (bird flu) in central-west New South Wales.

The Langfield Pastoral Company (LPC) property which houses 400,000 layer chooks in infected with the H7 strain, which is not the highly pathogenic H5N1 strain that kills humans.

A neighbouring poultry farm is in quarantine and the Department of Agriculture has established control restrictions 10 kilometres around the infected farm.

Food Authorities have confirmed that the eggs are still safe to eat and there's no threat to human safety.

The NSW Farmers Association’s Egg Committee chair, Bede Burke, says the farm owners would be devastated.

“Gutted, gutted. I know it sent shivers down my spine and I still get tingly when I speak about it.”

The outbreak of H7 avian influenza on LPC's egg farm at Bendick Murrell, on the south west slopes of NSW, has already wiped out more than 2,000 birds and that number is rising fast.

Mr Burke says the family who run the farm are still coming to terms with a very grim reality.

“Our heart goes out to the families involved. They've been a world leading farming family in terms of their ability to adapt.

"Their free range farm, that we understand has come down with this initially before it subsequently spread to the cage farm, was of world class standard.

"For them to get an incursion just says to the rest of the farmers, we need to beef up our biosecurity and be vigilant."

The Langfield family which operates the farm has been recognised for its innovative work in egg production, including efforts to improve chook welfare and adopt free range farming techniques.

The H7 strain of bird flu is believed to have been spread by wild ducks.

Authorities are still conducting tests to determine just how infectious it is.

The New South Wales Department of Primary Industries has quarantined the farm. Officials went to the farm today to decide whether birds will need to be destroyed.

Ian Roth, the DPI’s chief veterinary officer, says precautions are already in place.

“We've set up a little, what we call state control centre here, and we'll set up a local control centre at Young and we'll start doing that tracing and just see where it's gone to."

Dr Roth says it could spread elsewhere, and may in fact have done that already. The DPI is investigating if that is the case.

Dr Peter Scott, a poultry veterinarian and senior research fellow at the University of Melbourne, expects this strain of H7 is highly infectious.

“The fact that there are mortalities involved, it's most likely it'll be a highly pathogenic H7. (It is) quite common in a sense.

"I think what people aren't quite aware of is that in our wild water fowl in Australia, H7 and H5 and other H types are regularly identified in those ducks.

"Maybe up to 70 per cent of those ducks have had exposure to AI (avian influenza) at some time and probably at any one time maybe one per cent of those ducks are shedding H7 or H5 or something like that."

There is no evidence of a human health risk from H7 avian influenza in regards to food products, but Peter Scott says people handling the birds must take care.

"There is the possibility of some illness in people and that's why we have very strict programs in place. When we do have these birds, people handle them wearing protective equipment."

He says while this is an isolated case near Young in New South Wales, it could also affect the poultry business nationally and internationally.

“It's always a concern and when we have these outbreaks one of the most difficult things for us is trade. So when people are exporting poultry or poultry products overseas, then certain countries assess their relationship in regard to this and invariably a lot of that implication will stop for a period of time."

The bigger concern for Australian egg farmers are their domestic egg sales to supermarkets.

The ABC understands that the farm in question supplies eggs to the Pace Farms brand, and that egg supplies in stores will be affected

Woolworth says it working to minimise the impact on customers.

"Customers in NSW and Victoria may notice gaps in some stores as supply is no longer coming from the affected farm and they were a large supplier."

Coles has also released a statement:

“The authorities have confirmed an outbreak of bird flu at an isolated farm in NSW. This farm is not a Coles Brand supplier and no Coles Brand products are affected.

"The farm, which has now been isolated, does supply branded eggs to Coles and other retailers, but the NSW Food Authority has confirmed that there are no food safety issues or risk of contamination from any eggs or poultry products which remain safe to eat.”

Bede Burke, from the NSW Farmers Association, says this incident could potentially ruin the NSW egg farm involved.

"Financially it's in the millions. I just don't know how you pick up the pieces when things like this happen.

"The stark reality of your business being closed down, your operation preoccupies your mind, to have that completely shut down overnight without having destocked the farm would just be devastating."

Langfield Pastoral Company is yet to comment publicly.

The Federal Department of Agriculture has released a statement regarding the outbreak.

"Some importing countries have certification requirements for avian influenza. The Department of Agriculture will work with overseas trading partners to manage any market access issues for poultry, poultry products and eggs."

It's unclear at this stage which overseas markets may be affected.

A high level meeting is being held today with representatives from all states and territories to determine how to deal with the bird flu outbreak at the Langfield Pastoral company.

NSW DPI Chief Vet Ian Roth says it is "highly likely" that control measures will be approved today, including the culling of all the birds and that federal funds will be released for the clean up and eradication of bird flu.