Neem - A Versatile Tree

Introduction :

Neem (Azadirachta indica) A . Juss

Family : Meliaceae

Neem (Azadirachta indica) is one of the most suitable and valuable tree species found in
India. It can grow on wide range of soils upto pH 10 which makes it one of the most
versatile and important trees in Indian sub-continent. Due to its multifarious uses, it has
been cultivated by Indian farmers since vedic period and it has become now part of
Indian culture. In India, it occurs throughout the country and can grow well in every
agro-climatic zones except in high and cold regions and dam sites. In fact in India, Neem
trees are often found growing scattered in the farmers fields and on the boundaries of
fields without much affecting the crops. Farmers practice this system just to meet the
local demand for timber, fodder, fuelwood and also for various medicinal properties. Due
to its deep tap root system, it does not compete with annual crops for scarce soil moisture.

Neem tree can be labelled as wonder tree for its multi purpose uses in real sense. This has
been used as a medicinal plant for long time and provides almost all the requirements of
rural areas - be the timber, fuelwood, fodder, oil, fertilizers, pest repellant or the
ubiquitous 'datun'.

Today, it has been recognised as the most potential tree of India due to its ever green
nature (deciduous in drier areas) and ability to grow in even the most arid and nutrient
deficient soils as well as for its many commercially exploitable by-products and
environmentally beneficial characteristics (it has therefore been labelled as tree of the
future). If plantation of this tree has to be taken up on large scale, it has to be integrated
as an important component of agriculture under various agro-forestry systems.
It has been estimated that India's Neem bear about 3.5 million tonnes of Kernels every
year. From this about 7 lakh tonnes of oil might be recovered. The annual production in
the late 1980's was only around 1.5 lakhs tonnes. To increase the amount of oil
harvesting, Khadi and Village Industries Commission (KVIC) has pioneered various
aspects of processing the fruit and seeds of neems over the past two decades. The major
difficulty as observed in most of the tree borne oil seeds including neem is that neem
fruits must be harvested during the wet season. Without locally available drying facilities
the fruit and seeds rapidly deteriorate and become contaminated with aflotoxin. Ideally,
the fruits should be depulped without delay and the seeds have to be thoroughly dried.
KVIC has popularised simple methods for depulping, drying and decorticating neem
products even in the rearmost villages of the country. The sales and turnover of neem
seeds in India has been estimated by various agencies. Based on random survey at major
neem seeds market by independent agencies the quantity of neem seed sold during 1996
was 5.5 lakh tonnes with turnover of Rs.137 crores.

Distribution :
It is grown from the southern tip of Kerala to the Himalayan hills in the tropical to sub
tropical and semi arid to wet tropical regions and from the sea level to about 700 m
elevation. It has been widely cultivated in India and African countries. In India, it occurs
throughout the larger parts of the country in the states of Uttar Pradesh, Bihar, West
Bengal, Orissa, Delhi, Maharashtra, Gujarat, Andhra Pradesh, Tamil Nadu. The tree is
mostly evergreen except in dry localities where it becomes almost leafless for a short
period during February - March and the new leaf appears immediately. Flowering spread
over January - March in the southern parts of the country and later towards the north.
Neem is a light demander and in the young stage it grows very fast. It is hardy but frost
susceptible and cannot withstand excessive cold especially during seedling and sapling
stage. In the international and national provenance trials raised by Arid Forest Research
Institute, Jodhpur it was observed that all neem trees had branches near the base because
of frost damage. It coppices well and produces root suckers and withstands pollarding
well.

Description :

A large evergreen tree, 12 to 18 meter in height and 1.8 to 2.4 meter in girth with a
straight bole and long spreading branches forming a broad crown as much as 20 metres
across, commonly found throughout greater parts of India.

• Bark Grey or dark reddish brown with numerous and scattered tubercles. The
bark exudes a gum known as East India gum. Leaves alternate 20 - 30 cm long,
leaflets 8 - 19 alternate or opposite ovate glossy, bluntly serrate.
• Flowers : white or pale yellow, small, scented, numerous on long axillary
panicles, have a honey like scent and attract many bees.
• Fruit : Fruit is a ovoid bluntly pointed, smooth drupe green when young and
turns yellow with a very thin epicarp, mesocarp with scanty pulp and a hard bony
endocarp, enclosing one seed.
 • The timber is relatively heavy with a specific gravity varying from 0.56 to 0.85
(average 0.68) when freshly cut, it has a strong smell.

The flowering season of neem varies from place to place. Generally it flowers from
January to May and the ripening time of fruits is from May to August. The fruit pulp is
edible.

Uses :

Neem extracts as insecticides. Neem products are unique in that they are not outright
killers. Instead, they alter an insects behaviour or life processes in ways that can be
extremely subtle. Eventually, however, the insect can no longer feed or breed or
metamorphose & can cause no further damage.

• Azadirachtin : One of the first active ingredients isolated from neem,

Azadirachtin has proved to be the trees main agent for battling insects. It appears
to cause some 90% of the effect on most pests.
• Fungicides : Neem has proved effective against certain fungi that infect the
human body. Such fungi are an increasing problems & have been difficult to
control by synthetic fungicides.
• Antibacterials : In trials neem oil has suppressed several species of pathogenic
bacteria including Staphylococcus & Salmonella spp.
• Antiviral agents : In India, there is much interesting, but anecdotal information
attributing antiviral activity of Neem. Its efficacy particularly against pox viruses
is strongly believed, even among those of advanced medical training. Small pox,
chicken pox have traditionally been treated with a paste of neem leaves - usually
rubbed directly on to the infected skin.
• Dermatological Insects : In India, villagers apply neem oil to the hair to kill head
lice, reportedly with great success. Neem seed oil and leaf extracts may be the
wonder cure for psoriasis. It relieves the itching and pain while reducing the scale
and redness of the patchy lesions.
• Dental Treatments : In India, millions of people use twigs as "tooth brushes"
every day. Dentists have endorsed this ancient practice, finding it effective in
preventing periodontal disease.
• Malaria : Practitioners of the Indian Ayurvedic Medicine system have been
preparing neem in oral doses for malarial patients for centuries. Neem's
antimalarial activity was reported in Ayurveda books as far back as 2000 BC (by
Charaka) & 1500 BC (by Sushruta).
• Pain Relief & Fever Reduction : Neem may also be a ready source of low cost
analgesic (pain relieving), or antipyretic (fever reducing) compounds. In trials,
positive results have been obtained for significant analgesic, antipyretic & anti-
inflammatory effects.
• Contraceptive Agents : Indian scientists from the Defence Institute of
Physiology & Allied Sciences (DIPAS) have applied for patents on chemicals
isolated from the neem oil which have proved to be promising contraceptive
agents which are DK-1 & DNM-5. A third active agent coded as DNM-7 acts as
 an abortifacient causing abortion if administered orally after implantation has
already occurred. A Neem oil formulation called "Sensal" is now sold in India for
contraceptive purposes.
• Veterinary Medicine : Ancient practice & initial testing of neem derivatives
against various livestock pests indicated that this is an area of particular promise
for the future. Insects of veterinary importance are obvious targets for neem
products.
• Cosmetics : Neem is perceived in India as a beauty aid. Powdered leaves are a
major component of atleast one widely used facial cream. Purified neem oil is
also used in nail polish & other cosmetics.
• Lubricants : Neem oil is non drying and it resists degradation better than most
vegetable oils. In rural India, it is commonly used to grease cart wheels.
• Fertilizers : Neem has demonstrated considerable potential as a fertilizer. Neem
cake is widely used to fertilize cash crops particularly sugarcane & vegetables.
Ploughed into the soil, it protects plant roots from nematodes & white ants,
probably due to its contents of the residual limonoids. In Karnataka, people grow
the tree mainly for its green leaves & twigs, which they puddle into flooded rice
fields before the rice seedlings are transplanted.
• Other products
• Resin : An exudate can be tapped from the trunk by woundings the bark. This
high protein material is not a substitute for polysaccharide gum, such as gum
arabic. It may however, have a potential as a food additive, and it is widely used
in South Asia as "Neem glue".
• Bark : Neem bark contains 14% tannins, an amount similar to that in
conventional tannin yieldings tree (such as Acacia decurrens). Moreover, it yields
a strong, coarse fibre commonly woven into ropes in the villages of India.
• Honey : In parts of Asia neem honey commands premium prices & people
promote apiculture / apiary by planting neem trees.
• Neem fruits : The fruits are recommended for urinary diseases, piles, intestinal
worms, leprosy etc. The dry fruits are bruised in water & employed to treat
cutaneous diseases.
• Soap : India's supply of neem oil is now used mostly by soap manufacturers.
Although much of it goes to small scale speciality soaps, large scale producers
also use it, mainly because it is cheap. Generally, the crude oil is used to produce
coarse laundry soaps.
• Neem Leaf Tea : Several companies have started processing neem leaves for Tea
production and selling as neem leaf Tea. Although it tastes bitter, in the long run it
may catch up with the masses especially to the health concious people.

Agro-climatic Requirements

It generally performs well on areas with annual rainfall varying from 400 - 1200 mm. It
thrives under the hottest conditions where maximum day temperature reaches 500 C. But
it cannot withstand freezing or extended cold.

Soil
Neem grows on almost all kinds of soils including clayey, saline and alkaline soils but
does well on black cotton soils. It thrives better than most other trees on dry stony saline
soils with a waterless sub-soil or in places where there is a hard calcareous or clay pan
near the surface. It does not tolerate inundation. It has a unique property of calcium
mining which changes the acidic soil into neutral. Neem also grows well on some acidic
soil. It is said that the fallen neem leaves which are slightly alkaline are good for
neutralising acidity in the soil.

Nursery Practices

Nursery Site : Nursery could be either a temporary or permanent one. Site in either case
should have a perennial water source and located on a flat ground with well drained soil.
On a hilly site, a moderate slope preferably on the northern aspect has to be chosen.

Seed collection and storage

Only fruits at the yellow green colour stage are pricked from the branches by hand or by
using ladder. After collection the fruits are depulped immediately. Soaking in cold water
for a few hours helps in removing pulp. Fruits are then rubbed over a coffee weir and
floated in water to separate seed from pulp. Storing neem seed for 5 months at 40%
natural moisture content at 16 degree centigrade is possible. For short storage the seeds
are closed in polythene bags and exposed to air once in a week to keep them viable. Long
term storage of Neem seeds for more than 10 years is done at 4% moisture content and
-200 Centigrade temperature. For this purpose seeds are dried very quickly i.e. within a
few hours after depulping in a mono layer at temperature more than 20 degree centigrade
to prevent chilling damage under a fan. Shade drying and storage of seed in cloth bags at
a temperature upto 4 o Centigrade is also done to improve seed viability. Storage of seed
in earthern pot containing wet sand (30% moisture) helps to retain viability upto 60% at
the end of 3 months. On an average 5000 seeds weigh one kilogram.

Sowing of Seeds

Germination rate of Neem varies between 15% (stored seeds) and 85% (fresh seeds).
Hence, to ensure higher viability of the seeds, their immediate sowing in nursery is
recommended. Pre-soaking the seed for 24 hours in cold water and removal of the
endocarp or cutting of the seed coat at the round end with a sharp knife also increase its
germination capacity. Examination of seeds at the time of sowing is also necessary. Seeds
are cut across with sharp blades and the cotyledons are examined. If the cotyledons are
found green, seeds are sound and suitable and if they are yellow or brown, then seeds are
not suitable for sowing .

Sowing of seeds in nursery beds made up of fine river sand is done in drills 15 c/m apart.
Seeds are sown 2.5 cms deep at distance of 2 to 5 cms in the lines and lightly covered
with earth to safeguard against birds and insects which often eat radicles of the
germinated seeds on the surface. The beds are sparingly watered to prevent caking.
Alternatively seeds can be sown directly into pots. Germination occurs in 1/2 weeks time.
Once the hypocotyl is erect the seedling is transplanted into the containers. Seeds are
sown 3 / 4 months before planting date. Potting mix comprises of 50% sandy loam, 40%
river sand and 10% compost by volume.

Pricking :

Seedlings are pricked out at 15 cms x 15 cms when about 2 months old. They do not
require any shade. Soil working and weeding are very beneficial. In frosty localities
plants are protected by means of screen. When the seedlings are 7 to 10 cm tall with tap
root about 15 cm long, these are transplanted with balls of earth around them. In dry
areas, it is necessary to plant larger seedlings of at least 45 cm height since smaller ones
are unable to tide over the drought period. This is the reason why seedlings are kept in the
nursery beds for another year before planting in the next range.

Planting Techniques :

Neem can be easily raised through direct sowing, entire / polypot seedlings or root-shoot
cuttings. For degraded areas direct sowing is more successful and economical provided
adequate protection is given during early stages. Entire / polypot seedlings or root-shoot
cuttings are more relevant for agro-forestry / silvi pasture and road side avenue
plantations. Direct sowing is done either by dibbling in bushes, broadcast sowing, line
sowing, sowing on mounds or ridges, sowing in trenches in sunken beds in circular
saucers or by aerial sowing. The choice varies with edaphic, climatic, biotic and
economic conditions of the site. Planting in pits is carried out by using 20 to 45 cms tall
seedlings. Taller ones promise better survival. Planting of stumps prepared from a year
old seedlings in crowbar holes also gives good results.

Dibbling in bushes :

In Ajmer Neem seed is successfully dibbled in Euphoribia bushes. For this purpose, small
pits are made and 3 to 5 seeds sown in each pit and covered.

Broadcast sowing :

This is generally done on ploughed land. Very good results are obtained by ploughing of
the ground twice. In Tamil Nadu, early ploughing during premonsoon showers gives
better results than ploughing after monsoon has set in. In arid areas ploughing is done in
early spring when the soil is just moist after winter rain.

Sowing in lines :

In Maharashtra, Neem is grown along with Babool in line sowings in combination with
field crops. Here Neem is used as a buffer species to control the insect attack to which
Babool is susceptible.

Sowing on mounds and ridges :

This is prescribed for heavy soils. In Maharashtra, sowing on mounds (about 70 cm high
60 cm dia. at the top and 2 mtrs dia at the base) in poor soil on trap formation has given
satisfactory results. The plants reached 90 cm height 16 months after sowing. In
Karnataka, sowing on mounds 3.7 x 1.2 mtr x 46 cm in rows 2.7 mtr apart on black
cotton soil has been successful with plant attaining a maximum height of 1.4 mtr in one
year after sowing.

Sowing in Trenches : On dry sites for conserving moisture continuous or interrupted

trenches are made on which direct sowing is successful. In Tummala method of Tamil
Nadu, the trenches are aligned at an angle of 450 to the contours. Similarly, sunken beds
are in vogue in Karnataka and Saucer Method in Andhra Pradesh and Tamil Nadu.

Entire / polypot planting :

Seedlings which have attained 20-25 cm height by the beginning of the rainy season are
planted out in pits of 30 cu. cm at a spacing of 3x3 mtrs. or any other spacing depending
on the purpose of plantation. Pruning of leaves except at the tip and roots has been
proved successful in Nagpur district of Maharashtra. In Tamil Nadu, plants of 45 cm
height are used for this purpose, since smaller plants are found incapable of bearing the
stress of drought period. Planting is, however, done during the rainy season.

Planting Root-shoot cuttings :

The stumps are prepared from 12-13 months old seedlings, keeping 2.5 cm of shoot
portion and 23 cm of root and are planted in crow bar holes at the break of rains. In Tamil
Nadu stumps from two years old plants have given higher survival and better height
growth than one year old root stock. 53% success from root-shoot cuttings has been
reported from Maharashtra. The success of root-shoot cuttings depends upon rains,
prolonged drought may affect survival to a great extent.

Irrigated Plantation :

In desert areas of Rajasthan, Neem has been planted along with canal area and watered
for the first 5-7 years. Under Saudy-Arabian Arid condition, Neem is usually watered for
the first 10-12 years, after which it taps ground water.

Farm forestry plantations :

For raising a block plantation under farm forestry a closer espacement of 5mx5m
accomodating 400 trees per ha may be followed. This may vary from field to field and
also depending upon the objective. The wider espacement of 7mx7m accomodating about
200 trees per hectare may be on the broader side where Agro-forestry can also be
practised.

Viable unit for small farmers :

At least 100 trees should be raised by the farmers interested to avail of micro credit. For
this about 1 acre land is required.

Care of Young Plantation :

Strip weeding of young plantations has a positive effect on health and survival. Two
weedings are sufficient in the first year and one weeding during the second year. First
mechanical thinning in the case of transplanted seedlings is done at the age of 5 years. In
arid region Neem planted along the canals are watered for the first 5-7 years.

Plantation Growth :

The rate of growth of Neem in plantation varies with the quality of soil. It is fairly rapid
upto the age of 5 years after which it slows down. The plant attains a height of 4 m at 5
years and 10 m at 25 years. The mean annual girth increment is 2.3-3.0 cm. More rapid
growth is attained under favourable conditions. In Karnataka naturally grown Neem trees
of 10 years age give an average height of 6.58 m and girth of 68.1 cm.

In alkaline soils of U.P. Neem attains an average height of 170 cm at the end of first
season and 264 cm at second season. Seven month old root suckers give the average
height of 65.7 cm. Because of its international importance, there have been many
provenance trials at several places. In 1993, the first international consultation on Neem
was held in Bangkok where a panel was formed to aid and co-ordinate the work for
genetic improvement of Neem. At Arid Forest Research Institute, Jodhpur in 1992 a
provenance trial of the Indian Provenances of Neem was established in the experimental
fields. The provenance trial was supported with additional investigations like the seed
characteristics and storage priorities of Neem seed. The trial which is established very
well at Jodhpur, consists of 40 provenance representing 10 states of India wherein effort
has been made to successfully represent other agro-climatic zones of India. Preliminary
results on the trials have indicated that there is immense variation and hence, scope of
selection and breeding for genetic improvement of Neem. The Institute hopes to utilise
both sexual and asexual methods of selective propagation.

Variation in seed characteristics of Neem :

It is essential to identify the best provenance (seed origin) suitable for cultivation in a
particular agro-climatic region. Since neem seed is the main constituent for its cultivation,
studies have been initiated by various research organisations of the country. Study of seed
characteristics was made in 10 provenances collected from Karnataka and AP which
indicated that there were wide variations in seed length, seed width and weight. The data
was analysed statistically and the following observations were recorded. It showed that
Ramnagar "H" provenance represented highest value of range and lowest of C.V. for all
the three characters studied. The highest C.V. of seed length was recorded in Ramnagar -
"Y" provenance (73%) for seed width and seed weight, it was Hosakote provenance.
Details of the provenances are given below :
Provenance Neem Seed - Neem Seed - Mean 100 seed

Mean length Mean width weight (mg)

(mm) (mm)
Warangal 13.4 0 193.0
Tirupati 13.1 6.3 190.0
Hyderabad 14.7 6.7 240.0
Rajamundry - A 15.5 6.5 279.5
Rajamundry - B 14.8 6 255.5
Rajamundry - C 14.2 6 216.5
Ramnagar - Y 15.2 5.6 163.5
Ramnagar - H 16.7 6.5 374.1
BR Hills 14.3 6.3 263.2
Hosakote 14.1 10.9 235.5

Plant Protection :Pests & Diseases: Tip borer (Laspeyresia koenigiana), Tea mosquito
bug (Heliopeltis antonii) affect seedlings and young plants. Pulvinaris maxima is a scale
insect now regarded as key pest & Heliothrips haemorrhoidalis a potential pest of neem.

Neem seedlings get severely affected by damping off Rhizoctonia leaf web blight, leaf
spot & blights induced by Colletotrichum, Alternaria & Pseudocercospora.

Environment :

Considering the versatile nature, uses & growing global importance of neem the United
Nations declared it as the "Tree of the twenty first century". Its large scale production
promises to help alleviate several global environmental problems : deforestation,
desertification, soil erosion & perhaps even global warming (If planted on a truly large
scale). Its extensive, deep root seems to be remarkably effective at extracting nutrients
from poor soils. Large scale neem plantations can help in rehabilitation of degraded forest
lands & vast tracts of wastelands & greening the environment.

Neem in Agro-forestry
The tree component in the agro-forestry systems is preferred to be of local use, easily
marketable with good economic value. Although Neem is not considered as the best tree
species under agro-forestry systems nevertheless, in many parts of India it has been found
to be suitable as agro-forestry species. In semi-arid conditions at Indian Grassland and
Fodder Research Institute, Jhansi, Neem alongwith other tree species increased the
productivity of a silvicultural system upto 8.5 tonne / hectare. It has been reported that
the fodder production can be increased from 0.5 to 3.6 tonne / hectare in arid zone of
Thar Desert by growing suitable grasses and legumes along with Neem and several other
tree species.

Neem is one of the tree components used in "Taungya system". In Maharashtra, Neem is
grown alongwith Acacia in lines in combination with agricultural crops like cotton,
sesamum, arhar, etc. Here neem is used as a buffer to control insect attack on Acacia.
Neem tree is also planted on farm lands in Karnataka, AP and Tamil Nadu. It has been
reported that reduction in grain production under Neem during 2nd and 3rd year varied
from 13 to 33% while this reduction under Subabul varied from 66 to 99% for 3rd year.
Under semi-arid conditions at Hyderabad, grain yields of Sorghum was the maximum
under Neem. Neem has been found to be very effective in wind break /shelter belts in dry
areas particularly on sandy soils to protect the crops. It has been reported that three rows
of Neem Tree 250 to 300 km long have been planted in West Africa to check the advance
of Sahara desert. Neem has also been extensively planted in and around the desert areas
of the Holy places of Mecca in Saudi Arabia. Neem is known to increase the soil fertility
and water holding capacity as it has a unique property of calcium mining which changes
the acidic soil into neutral ones. It has been recommended to plant Neem trees with
intercrops for the management of effected soils. Above experiments have shown that
Neem might be a good agro-forestry species, however much more experiments with large
number of agricultural crops are necessary.

Neem as a Timber Tree

Neem is a large ever green tree 15 to 20 M. high with semi-straight and straight trunk 30
to 80 cm in diameter and spreading branches forming a broad crown. It has a long life of
100 years. Neem tree has several economic advantages over other multi-purpose tree
species grown in India. Although the main use of the tree is for production of seeds for
extracting oil, the tree can be harvested for timber after 35 to 40 years of planting. The
sap wood of Neem is greyish white and heart wood is red to reddish brown resembling
Mahogony. The wood is aromatic moderately heavy with uneven grains, durable and not
easily attacked by insects. Timber is medium refractory and seasons well even when swan
wet. It is easy to work with the timber but does not take good polish.

Wood is used for building houses, as posts, beams, door / window frames, furnitures,
carts, axles, yorks, naves, ship and boat building, helmes & oars, oil mills, cigar boxes,
carved images, toys and agricultural implements.

Export Potential :
Among the forest produce, Neem is perhaps the only tree that has potential of producing
several items that can be exported, besides of course few medicinal plants obtained from
forest. That is why many developed countries like USA, Japan, Germany, France and
Netherlands which do not possess much Neem wealth have developed research
laboratories exclusively for Neem. On the contrary, India has a very high resources of
Neem wealth with millions of trees scattered throughout the country but we are yet to
start Neem research systematically except that some sporadic research are being carried
out in several laboratories.

Main active principle of Neem is Azadirachtin which is obtained from open column
chromatography or pressure liquid chromatography. Maximum yield from Neem seeds is
3 gm. Azadirachtin per kg of Neem seeds. Neem is advocated to be a potential export
item, yet not much attention has been paid to the tree for its improvement specially on per
kg. yield of Azadirachtin and other components. In India, Neem cultivation is still in its
infancy. Hardly small few plantations have been raised here and there. Whatever Neem
seeds are available, those are collected from individual trees through unorganised sector.
Hence, it is highly advocated that government organisations like ICFRE, ICAR,
Agricultural Universities and NGOs must come forward to undertake coordinated
research on all aspects of the tree and its products to reap the benefits from huge export
market.

Cost of cultivation :

The cost of cultivation will depend upon the extent of the area to be planted. The cost of
cultivation for one hectare at an espacement of 5mx5m i.e. 400 plants/ha has been
worked out at Rs.32813 / ha which is given below:

Cost of Neem cultivation in one Hectare:

Espacement : 5M x 5M Wage Rate : Rs. 50 / MD

No. of Trees / Ha : 400 Casualty Replacement: 20%

Survival / Ha : 320

N Particular Unit Cost per Year (Rs.)

o s
1 2 3 4 5 6 7 8 9 10 Total

1 Site 10 MD 500 500

Preparatio
n

2 Initial LS 1,00 1,000

0
Ploughing

3 Alignment 2 MD 100 100

& staking
 4 Digging of 11 MD 550 100 650
pits &
refilling of 2 MD
pits after
mixing
FYM &
insecticide
s

5 Cost of Rs.150 180 180

FYM @ /ton
3Kg/pit

6 Cost of Rs 5 / 200 200 200 200 200 200 200 200 200 200 2,000
Fertilizer @ Kg
100
gm/plant

7 Cost of Rs. 5 2,00 400 2,400

0
Plants per
including plant
transport
(400, 80
plants)

8 Planting & 4&1 200 50 250

Replanting MD
@ 100
plants per
MD

9 Weeding 10 MD 1,00 1,50 1,50 1,50 1,50 1,500 1,500 1,500 1,500 1,500 14,500
0 0 0 0 0
cum Soil per
Working workin
(2,3) g

10 Seed 10 ,15, 500 750 1,000 1,000 1,000 1,000 5,250

plucking 20, 20,
from 5th 20 MD
year
onwards

11 Irrigation Rs 200 1,00 1,00 1,00 3,000

0 0 0
@ 5 times / per
yr during Irrign.
dry
months
only (Life
saving
Irrigation)

12 Sub Total Rs 6,730 3,250 2,700 1,700 2,200 2,450 2,700 2,700 2,700 2,700 29,830

13 Contingenc Rs 673 325 270 170 220 245 270 270 270 270 2,983
y 10%
 Grand Rs 7,403 3,575 2,970 1,870 2,420 2,695 2,970 2,970 2,970 2,970 32,813
Total

Yield & Rotation

Tree starts bearing fruits after 3-5 years and comes to full bearing at
the age of 10-12 years. Fruit yield is 10-25 kg per tree per year in the
initial years. A mature tree produces 30-50 kg / fruit / year. However, we
have presumed a conservative yield of 5,7,10,15,20 Kg / tree
respectively from 5th year onwards. Yield stabilises from 9th year. Sale
price of seed has been considered @ Rs.3 / Kg.

S. No Year Kg. Income (Rs)

1 5 2,000 6,000
2 6 2,800 8,400
3 7 4,000 12,000
4 8 6,000 18,000
5 9 8,000 24,000
6 10 8,000 24,000

Harvesting, Yield & Returns :

Neem starts bearing fruits after 3-5 years and comes to full bearing at the age of 10-12
years. Fruit yield is 10-25 kg per tree per year in the initial years. A mature tree produces
35-50 kg fruit/year. Oil yield varies from 40-43% of seed on dry weight basis. Highest oil
content has been reported from Banswara region of Rajasthan (43.2%), while the lowest
oil yield of 32.4% has been reported from Jaisalmer region. It has been observed that as
rainfall in an area increases oil content also increases. Among the International
provenances tested, Bangladesh provenance has yielded maximum oil content (48.6%).
However we presume a conservative yield of 5,7,10,15, 20 kg/tree respectively from 5th
year onwards. Yield generally stabilises from 9th year. Sale price of the seed may be
considered @ Rs.3/kg.

Irrigating the young stock, keeping the field clear from competing weeds & soil
loosening have been reported to produce good results in neem.

Neem seed price is projected to be Rs.10000 / ton in the near future. So, it is high time to
exploit the potential of this hitherto neglected tree & to manage neem for higher
economic returns to farmers. It has been estimated that 10 yr old tree can yield a timber
of 5-6 c.ft / tree.

Economics :
The financial analysis with the above parameters of the investment cost and yields, the
IRR works out to 32.71% which is given below:

Economics of Neem plantation in one Hectare:

Years 1 2 3 4 5 6 7 8 9 10 11 12

Cost(Rs 7,403 3,575 2,970 1,870 2,420 2,695 2,970 2,970 2,970 2,970
)

Benefit 6,000 8,400 12,000 18,000 24,000 24,000 24,000 24,000

s (Rs)

Net -7,40 -3,57 -2,97 -1,87 3,580 5,705 9,030 15,030 21,030 21,030 24,000 24,000
Benefit 3 5 0 0

PWC @ 18,196.73
15%

PWB @ 39,409.23
15%

BCR 2.17
IRR 32.71%

Margin Money:

NABARD stipulates beneficiaries contribution to the project cost in order to ensure his
stake in the involvement. Such margin money varies from 5% to 25% depending upon
the type of investment and the class of borrowers.

Interest Rates: The rate of interest to the ultimate borrowers will be decided by the
financing banks which are subjected to revise by RBI / NABARD from time to time.

Repayment of Loan :

The loan would be repaid in an annual graded instalments with a moratorium / grace
period of 4 years. The entire loan amount with interest can be repaid in 10 years from
planting.

Review of Private Plantation Companies & Follow up action by SEBI:

Recently private investments are forthcoming from companies raising plantations with or
without involving public equity. As such this is a welcome effort to meet the objectives
laid down in National Forest Policy. However, the promises made by such companies are
apprehended to be unrealistic. Hence, it is essential to look into the claims made by these
companies to prevent exploitation of investors as well as to provide adequate safeguards
that the investment raised are properly utilised and the confidence of investors in
afforestation activities does not get a jolt.

Therefore, Ministry of Environment and Forests constituted an inter departmental

committee to study the growth rate and Economics of private plantation companies and to
ascertain the truth behind their claims.

On the basis of the detailed analysis of the data collected, technical information available,
and observations, the committee made strong recommendations. Based on these, SEBI
has cautioned the investors through a public notice which may be followed.

Source: http://www.keralaagriculture.gov.in/htmle/bankableagriprojects/fw%5Cneem.htm