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close this bookCase Studies of Neem Processing Projects Assisted by GTZ in Kenya, Dominican Republic, Thailand and Nicaragua (GTZ, 2000, 152 p.)
close this folder4. Case studies of small-scale semi-industrial neem processing in Kenya, Thailand, the Dominican Republic and Nicaragua
close this folder4.4 Small-scale commercial neem production in Nicaragua
View the document(introduction...)
View the document4.4.1 Introduction
View the document4.4.2 Previous activities and other projects in relation to neem
Open this folder and view contents4.4.3 Small-scale commercial neem production in Nicaragua
Open this folder and view contents4.4.4 Economical assessment of COPINIM's processing plant in Nicaragua
Open this folder and view contents4.4.5 Market potential for neem pesticides in Nicaragua
View the document4.4.6 ''Lessons learnt'', recommendations and development strategies
View the document4.4.7 References
View the document4.4.8 Units

4.4.6 ''Lessons learnt'', recommendations and development strategies

In the past it was attempted to set up a strategic partnership between the collectors/farmers and Copinim, and to integrate farmers' associations as investors in neem production and processing. This concept failed - as in the Dominican Republic - due to the poverty of the farmers. Farmers accept planting neem trees and to a certain extent they process the seeds if they get a fixed price for pre-dried seeds (in 1999: US$ 0.63/kg, which comes to US$ 1/kg of seeds with a moisture content of 8%).

NGOs are good customers and strategic partners for neem processing but not good as co-investors, since their aim is not to maximise the profit.

It is questionable whether international investors would invest in small industrial neem processing in developing countries since turnover and profit margin are limited. Only small ventures from industrial countries with social and ecological intentions might be interested, but these often have capital restrictions or no contact with a suitable partner in developing countries.

For making neem processing in Nicaragua more profitable and successful the following recommendations should be considered:

· Increasing of the product price
· Increasing the total production to enhance capacity utilisation of the plants

The minimum processing volume for processing neem as a profitable venture is about 75 t of neem seeds. Since currently not even this capacity is fully used it seems that small industrial processing is preferred to large-scale processing to minimise the risk. The reasons for not using the full capacity of the neem processing plants in Nicaragua and the Dominican Republic are, however, the lack of investment capacity and organisational issues.

Additionally, the costs of raw materials have to be reduced, which can be achieved, e.g. by importing cheaper neem oil from abroad.

National investors, on the other hand, are prepared to go into neem processing if they have raw material available for processing (as the Spencer Group) or see a chance for selling the products.

Copinim has identified 7 areas for investment:

· Purchase an oil expeller with a capacity of 100 l oil/day
· Laboratory for quality control (analysis of azadirachtin)
· Solar drying
· Raw material
· Advertising
· Training in economics and optimising the techniques
· Product development

In the long run decorticating and packing units have to be improved, along with storage rooms and offices.

Development strategies

Neem-based products have to match farmers' expectations of pesticides. Farmers expect that an insecticide should be cheap, permanently available, easy to apply, show fast action and save labour. Neem pesticides could not fulfil all these ideal characteristics. The poorer the farmers are, the less important they consider aspects such as ecology and health.

Neem products cannot successfully compete with cheap broad-spectrum insecticides which are applied on staple crops. Normally farmers with low income are not prepared to use relatively expensive neem pesticides even if they recognise the impacts of synthetic insecticides on health and soil fertility.

Subsistence farmers tend to accept neem pesticides only if they get them free or - if no alternatives are available - they can produce them themselves. Those farmers collecting and processing neem fruits to be sold for pesticide production are using synthetic pesticides because neem is too expensive and because the additional value of cropping (IPM) systems with neem are not obvious to them.

Prospective customers for neem-based pesticides in conventional agriculture are farmers with a medium or higher level of education, who are able to calculate the economic benefits of integrated pest control.

This group is taking part in the development of IPM concepts because they have severe problems with resistant pests or pesticide residue levels on their crops are too high.

Therefore the marketing strategy should be to convince export producers of the properties and advantages of neem pesticides. Wide application of IPM principles in Nicaragua will lead to a stronger demand for neem pesticides. A higher production volume will decrease the price for the pesticides and subsequently increase the market share.

Further biocontrol or biotechnical control strategies are needed for organic farming systems.

Although the properties of neem pesticides are the best advertisement concepts should be worked out which clearly reveal the positive medium-term and long-term impacts of neem. This should be demonstrated and advertised to the farmers.

In addition, the farmers should have easy access to neem pesticides. Therefore it is important to integrate neem pesticides and products into the conventional agricultural supply trading on large scale.

Small enterprises are producing neem pesticides in small volumes more cheaply and are more flexible in responding to market demand than large-scale industrial neem manufacturers. Small industrial neem processing ventures are therefore a good opportunity and are of special importance for developing countries.

Technical cooperation (TC) organisations should therefore assist such forms of production.