|Case Studies of Neem Processing Projects Assisted by GTZ in Kenya, Dominican Republic, Thailand and Nicaragua (GTZ, 2000, 152 p.)|
|4. Case studies of small-scale semi-industrial neem processing in Kenya, Thailand, the Dominican Republic and Nicaragua|
|4.1.5 Market potential, investment possibilities, marketing and development strategies|
In 1999 economic analysis of horticultural and agricultural practice with and without the application of neem-based pesticides was not easy and was based on niche applications with only a few examples. The reasons were the following:
· Neem-based pesticides are not regularly applied in standard crop production.
· The market for neem pesticides is still a niche market. Neem pesticides are only applied on a few crops and under certain frame conditions.
· Only very few ICM or IPM concepts exist which integrate neem products; however, no evaluations from the fields were available.
For these reasons no detailed data based on field experience were available at the end of 1999.
The current and potential market for neem-based pesticides can be defined according to following criteria:
Parameter for the application of neem as a commercial pesticide:
1.) tested and registered for crop species
2.) production methods, e.g. organic farming, IPM
3.) access to information on neem-based pesticides
4.) farm size
5.) efficacy of conventional pesticides
6.) market for agricultural and horticultural products
7.) significance of pesticide residue level on agricultural produce
8.) price compared to conventional pesticides
The different criteria are discussed below:
1.) Crop species:
Neem-based pesticides are only registered for and applied to the few crops listed above (see page 34). At the end of 1999 neem had been tried in other crop species on a trial basis only. With continued testing and registration of neem-based products in further crops against further pests, both market and demand will increase.
Also due to the limited time which has elapsed since neem products were registered and have been marketed, there is only a little experience from farming practice available. It is well known that the most important flow of information is from farmer to farmer.
2.) Production methods:
The NGO Kenyan Institute of Organic Farming (KIOF), among others, is promoting organic farming in Kenya. So far organic certification and separate market chains are not very well developed in east Africa, including Kenya. To date neem has been applied in Kenyan organic farming systems only to a very limited extent. However, there is considerable potential for integrating neem products into organic farming systems. No data is available on the total area under certification which is cultivated with the crops suitable for the application of neem pesticides. According to KIOF the main constraint for the restricted use of neem in organic farming in Kenya so far has been the limited access to neem products.
It can be stated, however that there is potentially a higher demand for neem products in organic farming systems in the future.
No systematic integration into the ICM or IPM systems has been worked out so far, except for very few crops; nothing from the ICM or IPM has been transferred on a large scale and tested in practice. This aspect is also related to point 3 below:
3.) Access to information about neem:
Only farmers who have sufficient information on the potential and mode of action of neem pesticides apply these pesticides. Information on the following aspects is essential:
· Which crops is the neem product registered for?
· Which crops can be treated?
· Which pests can be controlled with neem pesticides?
· What is the expected efficacy?
· What is the mode of action?
· Easy access to suppliers of the neem pesticides;
· Training and knowledge about how to apply neem pesticides.
At the end of 1999 the following groups in Kenya were well informed about the potentials of neem:
· farmers who had already applied neem pesticides, mainly large flower and vegetable
· organic farming associations, the agrochemical industry, exporters on administrative level;
· some farmers using organic farming systems;
· large multinational agrochemical companies.
In general most of the small farmers, most of the large farmers not producing flowers and vegetables, the government administration, the extension service on district level and a great number of the flower and vegetable producers had insufficient information on neem-based pesticides.
With the "trickle down" effect of information and more intense marketing, the demand for neem products will increase in the future.
4.) Farm size:
At the end of 1999 Saroneem Biopesticides Ltd realised 99% of its turnover with large farms, while only between 100 and 200 kg of neem pesticides were sold to small farmers over the last 3 years. The main consumers of neem-based products are large growers of ornamentals and vegetable-producing farms.
It can be assumed that also small flower and vegetable-producing farms would apply neem, e.g. around Mt Kenya and near Nairobi, where approx. 10 000 to 15 000 small farmers are cultivating plots of 1/2 - 5 ha in size. This, however, would require more intense marketing activities and an efficient distribution system.
In 1999 the British American Tobacco Company (BAT) purchased a large amount of neem products which were distributed to small farmers in Kenya and Uganda who were growing tobacco.
This aspect is also very much related to the access of information.
5.) Efficacy of conventional pesticides:
Indiscriminate use of pesticides leads increasingly to the appearance of resistant pests (see Chapter 2.1). Despite sophisticated pesticide management, especially in ornamentals and vegetables, conventional pesticides are increasingly losing their efficacy against a range of pests. Neem pesticides are regarded as an effective tool to break the cycle.
Table 21: Lists those pests which have often shown resistance to conventional pesticides:
Leaf miners (Diptera)
Plutella xylostella (Lepitoptera)
Spider mites, caterpillars (Lepidoptera)
Leaf miners, aphids
Whiteflies, leaf miners, nematodes
Neem pesticides were successfully applied against all the pests mentioned except spider mites.
It can be concluded that neem pesticides are increasingly used where conventional pesticides are no longer effective. This market is expected to increase in the future.
6.) Market for agricultural and horticultural products, and
7.) Significance of pesticide residue level on agricultural produce:
Agricultural production in Kenya can be divided in two sectors: production for the domestic market and for the export market, which is of some relevance for the demand for neem.
The majority of the agricultural produce exported is designated for the European Union and has to fulfil the strict requirements for minimum residual levels of pesticides (MRLs). The guidelines for MRLs will be even stricter and better enforced in future. Since neem decays very fast in the environment, the demand will be related to the export volume of agricultural produce. Based on both factors (MRLs and volume) it can be expected that the demand will rise in future.
At the end of 1999 the agricultural produce in Kenya assigned to domestic markets was not checked against the MRLs and most of the consumers did not show any concern or sensitivity with regard to this problem. Recently, however, the authorities have appealed to farmers to reduce the application of conventional pesticides (see Chapter 2).
It can be expected for the future that as in many other countries the consumers will show increasing concern about the contamination by pesticides. In the long-term it might be expected that the Kenyan authorities will pass and enforce MRLs for internal markets.
An increasing demand for neem-based products can be expected on both the domestic and foreign markets.
8.) Price of neem products relative to conventional pesticides
The relevance of the prices to the demand for neem-based pesticides depends on the specific situation of the farmers.
If the farmers have severe pest problems, e.g. due to resistant pests, the price of neem products is of secondary importance. The same holds in cases of pest gradations in (certified) organic farming systems, e.g. according to IFOAM standards.
The price relative to conventional pesticides could be of some importance for other producers applying pesticides not for the sole reason of resistant pests. The medium and long-term effects of switching to neem have to be taken into consideration, including the avoidance of side-effects such as intoxication, costs arising from environmental hazards and water contamination. One good example is described above (see pests of cut flowers).
More information and more knowledge about such benefits will improve the cost-benefit relationship and will certainly increase the demand for neem products in the future.