4.1.5.4 Market growth potential and substitution possibilities

For the reasons mentioned above, there is little doubt that the market potential for neem pesticides in Kenya is much higher than the market existing at the end of 1999.

Assuming that the volume of conventional pesticides used will be stable or increase in the future, it is clear that there will be an increasing demand for neem-based pesticides in the future.

The following reasons are given (dynamic scenario):

· An increasing population will lead to an increase in agricultural production, which will result in increased pesticide application.

· This will increase the problem of resistant pests and further typical results of the "pesticide treadmill".

· The growing concern of consumers and decision-makers will lead to stricter controls of MRLs, in the short run for the export market and also in the medium-term for internal markets.

· Currently the market share of neem pesticides is low, leaving sufficient space for exponential increase of sales of neem pesticides.

· The potential of neem in farming systems is not exploited to its full extent (see below). Research will open new market opportunities.

Potential new markets:

Fungicidal effects

Trials are currently being conducted on the control of Alternaria and Phytophtora in potato and fusarium in tomato. (These are not formal trials which could be used for registration, but are demonstration trials on farmers fields, coordinated by Saroneem staff.)

Further potential target diseases are the coffee berry disease (Colletotrichum) and coffee rust (Hemileia).

Effects promoting plant growth

In addition to the fungicidal and insecticidal effects of neem pesticides it has been reported that the application of neem has growth-promoting effects. If these additional properties of neem pesticides could be communicated to small horticulture cropping farmers this would greatly increase their demand for neem products.

Veterinary uses

Preliminary trials on tick control with neem conducted at ICIPE have revealed excellent effects on cattle, sheep and goats. The price would be lower than synthetic control agents and the potential market is about KSH 250 million.

Control of malaria vector (mosquito)

A further potential must be seen in using neem products to control mosquitoes in water and housing areas. Preliminary tests conducted in Mali and at ICIPE revealed good control properties of neem.

The market potential of all neem pesticides applicable in this field is estimated at about KSH 100 million.

Storage

The treatment of stored agricultural produce such as pulses and corn is only advisable if the products are guaranteed free of aflatoxin.

Aflatoxin degrades fast under UV rays, but these do not penetrate storage rooms. Currently Kenyan neem products cannot be guaranteed free of aflatoxin.

Currently 500 t of insecticides are used in Kenya to control storage pests.

Pesticides

Apart from describing the potential market, one comparison with synthetic pesticides could be based on the price and recommendations concerning the registered neem products.

For an economic evaluation, a product/target pest/crop matrix is required. The effects of further active substances in neem (i.e. in addition to azadirachtin) and synergistic effects of substances added to the formulations must be taken into consideration. Further criteria such as the abundance of resistant pests, pesticide management, and limits on pesticide residues are also of importance. To compare the product prices alone is not very helpful if the additional information is not provided. Even comparison of the price per application per ha is only of limited information value. The best thing would be to compare cropping systems which make use of different neem products. However, hardly any models or studies exist on this topic.

The recommended application of azadirachtin on vegetables and ornamentals is 25 g/ha. If the azadirachtin content of the pesticide is 0.5% this comes to about 5 l Neemroc or 5 kg Neemros per ha.

Based on the retail prices, this amounts to KSH 2000/ha for Neemroc and KSH 1000/ha for Neemros.

The following (22) compares the price with that of competing synthetic pesticides.

Table 22: Price comparison analyses for neem insecticides versus conventional pesticides.

This survey indicates that Neemroc is competitive with other pesticides in 16 cases and Neemros is competitive with other pesticides in 28 cases.

If future demand is restricted to the present applications such as large ornamentals, vegetables and tobacco farms, the market potential will be somewhat restricted. There is, however, no doubt that this potential alone justifies neem production.

To open up this market at least to a certain extent it is necessary to promote neem for other purposes too. Further advantages of neem products should be demonstrated, such as promotion of plant growth, no negative effects on health and soil fertility.

Further market potential exists in the neighbouring countries such as Uganda, where all Neemroc and Neemros products are registered as insecticides for all crops. A further promising country is Tanzania, as are other countries where neem pesticides have been registered, such as Israel.