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The egg market in Thailand is dominated by large corporates, who sell eggs at low price points due to their economies of scale. The low prices lead to HTO barely earning any margin on egg sales. Compounding this problem is that up to 20% of the eggs purchased from farmers are sold at a loss in the local market. These are those that are either too small or too large or with inconsistent color. All eggs however, regardless of color or size, are purchased at the same unit price that ensures a sustainable livelihood for the farmers. The eggs being sold at a loss continue to be a significant financial burden for HTO, which then prevents any further expansion (waiting list is currently 150 hilltribe families). For HTO to further scale, there is a need to attain higher margins from the eggs, especially those that are sold in the market.
As HTO founders do not want to decrease the purchase price of each egg (instead the company hopes to increase this over time), the solution determined was to create higher value products from the eggs currently being sold at a loss in the local market. Through higher value egg products, HTO will be able to increase its margins per egg and diversify its revenue stream. HTO began experimenting with higher value products and funded a pilot program for the small-scale production of egg-tofu. The pilot allowed HTO to come up with an initial product that was launched in the market in early October. HTO is now looking to scale the production further and venture out into other higher value egg products. This move will allow HTO to increase the organization’s financial sustainability and expand its work to be able to contract more hilltribe farmers.