Illegal Trade Threatens Industry Profits
3 May 2011 An estimated 5% to 10%, or about $4 billion of the global pesticide market is taken up by counterfeit products.
“The incidence of global counterfeiting and illegal traffic in plant protection products has been growing substantially over the past years, especially with the increase in generic manufacturing capability, computerized manufacturing processes, computerized graphics for labeling and the relaxation in global and regional trade laws,” says Utz Klages, Bayer CropScience spokesperson for crop protection and environmental science.
Farmers using counterfeit and other illegal crop protection products containing poor quality or illegal active substances could affect not only themselves because of potential health and risk of damage to their crop but also to the environment and consumer health. In addition, an increase in counterfeiting has in turn created growth in organized crime as a lack of enforcement and strengthening of current laws has yet to be addressed.
Defining Counterfeiting
Defining the act of counterfeiting and the exact laws it violates is the first step to combating illegal pesticide trade. While the pesticide industry is against the practice, a difference in opinion between multinational and generic companies exists, according to Dr. Roman Macaya, president of AgroCare, which represents generic companies internationally.
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“Multinational companies have been very aggressive in promoting anti-counterfeiting enforcement measures,” he says. “These will have support from the generic industry as long as the definition of counterfeiting is properly defined and not used as a weapon of abuse.”
The issue that exists is whether patent infringement falls within the definition of counterfeiting and also how to properly enforce currently existing counterfeiting laws when different issues exist across companies and around the world.
International intellectual property rights are addressed under the Anti-Counterfeiting Trade Agreement. Thus, patent infringement is usually handled by civil courts, including the act in the definition of counterfeiting in ACTA. So, opening individuals up to criminal charges would not be appropriate.
“As with most legal issues, there should not be a “one-size-fits-all” enforcement strategy,” Macaya says. “No serious organization is going to be for counterfeiting. Likewise, no serious organization should try to create confusion as to what is counterfeiting in order to broaden the scope of enforcement actions to other areas that do not fall under the definition of counterfeiting.”
For instance, developing countries and developed countries have different needs. Different strategies about how to handle counterfeiting within these countries is essential to effectively slowing down counterfeit pesticide use, Macaya says.
Legislation
Eastern European countries, such as Russia and the Ukraine, are allegedly some of the largest contributors to illegal pesticide trade, according to Phil Newton, senior manager of communications for the European Crop Protection Association (ECPA).
Once a shipment of counterfeit products crosses the border, they are shipped to countries where European organized criminals label them inappropriately and initiate the selling process. Approximately $435 million of Europe’s pesticide industry is lost to counterfeiting each year, and little is being done on the legislative side to combat the problem, he says.
“They haven’t figured out a bracket of the law that adequately addresses the shipping of chemicals,” Newton says. “There could be a situation where something can be seized by customs if it has a phony brand name attached to it.”
However, pesticide bottles with labels are usually shipped separately than the contents of the barrel. European customs is only able to seize the bottles with labels. So, barrels with products are able to go through and are usually labeled as soaps or emulsifiers instead of their actual contents.
“Shipping does not require very stringent regulations,” he says. “Most do not come in labeled or shopped as pesticides. It is very common for accidents and spillage to occur when these products are shipped in containers other than what they are.”
Stopping shipments before they get into the intended country is one of the most crucial steps to ending counterfeit pesticide. However, because most laws are aimed at intellectual property rights and branding, shipping remains an area of serious weakness in the legislative environment, Newton says.
Farmer Education
One of the most effective methods of stopping counterfeit pesticide trade is farmer education. Because farmers are the end users of counterfeit products, teaching them about purchasing from trusted pesticide dealers and the potential adverse effects of using counterfeit products is essential to slowing down illegal pesticide trade. Farmer might not know the bottle they are purchasing could be a threat to both human health and their crops, Newton says.
A lack of quality controls during the manufacturing of counterfeit pesticides poses the biggest problem. The potential consequences of using counterfeit pesticides include loss of crop, legal ramifications and loss of trustworthiness for the farmer using the product.
“There is enough fear about the use of pesticides and the reputation of the product,” says Newton. “The anti-counterfeiting situation accentuates those fears because it could essentially destroy the reputation of farmers. The only way advanced tech applications can be trusted by the consumer is if the farmer appears accountable, professional and responsible.”
Not only could counterfeit products destroy farmers’ reputations, crop loss is a significant risk because of mislabeled products and incorrect formulations. In Nigeria, farmers have been urged to stop using fake products after illegal pesticides compromised cocoa yields in 2010.
“It takes a farmer to buy the stuff,” says Newton. “Many may not know it’s counterfeit, and training farmers to avoid illegal products by showing the risks and how to avoid risks is important.”
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