The true threat of counterfeit pesticides

Date:04-30-2014

With recent figures from Europol stating that in some EU member states over 25% of pesticide products may be counterfeit, it is important to look at the broad spectrum of risks and at what’s being done to combat this insidious danger to the industry.

Counterfeit products are a threat to all legitimate agrochemical businesses, both generic and patented. Fake products may pose a relatively higher risk to the small to medium size enterprises (SMEs), however, because these companies have a smaller base of products and tend not to own well-established brands.

Threats to the market

In the past, the larger agrochemical companies have made the running on raising the profile of the risk of counterfeiting, with limited input from smaller companies who are equally at risk. With this in mind, at the European Crop Care Association (ECCA) – which represents about eighteen SMEs – we took a really clear stance and aligned ourselves in a series of conference presentations and workshops with the anti-counterfeit campaign initiated by the European Crop Protection Association (ECPA). Members of ECCA, with Rotam, are categorically on the offensive against counterfeit products. We aim to lead by example and highlight to our fellow members that just because they’re a new brand, it doesn’t mean that their products aren’t being counterfeited. Data from Europol states that in certain EU member states, the percentage of counterfeit products could be up to 25%. These states are likely to be the central and eastern EU members whose borders are still potentially quite porous (although all major ports of entry need continuous surveillance, wherever they are). Products tend to enter from countries bordering these states, which are seen as holding areas for fake products arriving overland from the main manufacturing bases in the Asia-Pacific region. Once a fake product is within the EU trading area, its ability to move is much easier as custom controls are more limited once inside the regional frontiers.

The overall global estimation, based on ECPA’s data (www.illegalpesticides.eu), is that up to 15% of the crop protection products in the open market of unknown provenance are fake (in Europe ECPA cites this as somewhere between 7- 10%). Globally, this loss is equivalent to a single company with sales in the region of US$4 billion and a top 5 ranking in the industry.

The primary threat posed by counterfeit chemicals is their deceptive destruction of market value. Because of their low detectability, fake products may go unseen for a very long time or may never be discovered. Other forms of law breaking are much more prone to detection; they tend to be more opportunistic – for example, products being sold without approvals or products that have been dumped. Counterfeit networks, however, are sustained businesses which are run in an almost orthodox manner and often use conventional channels to market.

Threats to the end user

The financial threats to legitimate businesses posed by counterfeit products run right through from the supply-chain to end user. A farmer using a fake pesticide or herbicide is taking a huge risk. Often the counterfeiter makes money from reducing the content of active ingredient, or substituting inferior coformulants, resulting in sub-optimal efficacy and even harm to the crop. Counterfeiters may also save money by removing coformulants which will impact storage stability or crop safety.

Part of our campaign is to educate all players in the supply-chain, from the distributors to the growers and agronomists in the field, to help them identify a product that may be questionable before it reaches the end user. In the UK, a campaign supported by the Voluntary Initiative (VI) and Red Tractor Assurance, called ‘Watch Out!’ is now under way.The year-long, nationwide industry campaign has been launched to raise awareness of the risks of illegal pesticides.

VI Chairman, Richard Butler, explains that the initiative is all about responsible pesticide use: “As every farmer, operator and agronomist knows, responsible pesticide use starts with using an approved product and following the information on the label. It is really sad that farmers now have to be aware of the danger posed by unscrupulous professional counterfeiters who want to undermine the professionalism and competence of UK farmers and sprayer operators.”

Leading the fight: What can be done to combat counterfeit products?

The exact extent of the problem is unknown, but through risk management every grower should start with an assumption that up to one in 10 products are fake, and confirm the provenance of each delivery of product with their distributor.

When counterfeiting is detected, the penalties can be significant, although in many cases only fake product is confiscated without getting to the heart of the network involved. In the case of successful prosecutions there can be fines, and the companies involved may lose their trading licences. The directors of those companies could also be prevented from directing any further company, possibly for life. Because the detection levels are very low, however, determined counterfeiters clearly show by their continued existence that these are risks worth taking.

The industry campaign being waged against counterfeit products has only been overtly active for the last few years in Europe, although clearly the problem dates much further back. ECPA has developed a website, www.illegalpesticides.eu, which allows suspicious activity to be reported. ECCA regularly reminds its own members of the dangers of their products being “knocked off” and to report any suspicious behaviour to the relevant authorities.

Improving detection is a key area of focus, but that is a long-term goal. A more straightforward approach which will help detection rates is to improve partnerships with authorities and cross industry co-ordination and co-operation. Partnership with enforcement officials is extremely important. In other words it’s a good idea for companies to inform customs of any major shipments, so that any shipments coming through without that information will quickly be identified as anomalies, and therefore merit further investigation.

The future aim is to continue increasing awareness of the threat from counterfeiting, right from the origin of the product through to delivery. Currently, businesses are aware of the threat, but they underestimate the scale of the problem. If they haven’t detected one of their products as having been counterfeited, they may assume the problem doesn’t apply to them. In reality, counterfeiting may well be happening, it’s just that no one is aware of it yet.

For smaller businesses in particular, the goal is to invest in product identification technology that can be readily utilised by individuals right through the supply chain. For example, in China there is now the ability to phone a number and key in a unique numerical code that generates an immediate text response detailing whether or not that product is legitimate.

Within China, Rotam is one of the leading organisations actively combating the counterfeit market. The organisation is extremely proud of what it has achieved in recent years, becoming one of the leading post patent businesses and constantly investing in new quality products. An absolutely essential part of this is to fight against counterfeit products. As a business, as a member of ECCA, and as part of the wider industry, it’s in all our interests that Rotam takes a very robust stand and is highly vocal about the threat of fake products to our businesses.

The article was initially published in Volume 56 Number 2 of International Pest Control magazine.