Pesticide Regulations Part-4 : Illegal Pesticides & Provisions of Pesticide Management Bill’ 2020

Pesticide Regulations Part-4

(To read earlier parts, please search on this blog with 'pesticide')

Why Pesticide Management Bill’ 2020 not addressing issues of Illegal pesticides?

By:

Vijay SARDANA

Advocate, Delhi High Court

Techno-legal Expert on Agribusiness 

& Consumer Products Industries

& 

Priyanka Sardana, Advocate, Supreme Court of India

& 

Aastha Sardana, Researcher on Legal Matters

Once again we are re-emphasizing that food security and food safety are essential for any healthy and progressive society. Illegal pesticides are a serious threat to both. 

Sources of Illegal pesticide:

Several factors have contributed to an increase in trade in pesticide products. The global growth in demand for agricultural production – due to rising world population and increasing per capita wealth – has led to an increase in demand for pesticides. As a result, cross-border trade in legal pesticides has been dramatically increasing, especially in the last decade. These growing trade flows have put strong pressure on border authorities who often lack the resources to ensure proper oversight, leading to a corresponding rise in illegal pesticide trade. While not all illegal pesticides are the result of trade, many are also the result of “homegrown” providers with the support of corrupt practices of enforcement officials within authorities. PMB'2020 must address this issue effectively.

Why Illegal pesticides business flourish?

Illegal pesticides are attractive to farmers because they are less expensive than legitimate products. Their price can be as low as 60% of the price of legitimate, branded pesticides. 

Another key driver of trade in illegal pesticides is the high-profit margins associated with this criminal activity. The margins on non-genuine, illegal pesticides can be as much as 25-30%, compared to 3-5% for legitimate products. Several factors contribute to these high-profit margins. 

First, through the production of illegal pesticides, criminal actors avoid all the costs associated with the development and marketing of a new brand name product like R&D costs, sales and marketing, compliance cost, infrastructure costs, manpower cost, etc.

Furthermore, illegal producers do not face the high regulation costs associated with pesticide authorization. Pesticide registration is a long and costly process that can act as a barrier to entry for new businesses, making illegal activities attractive for criminal actors.

Besides, illegal producers might incur considerably lower production costs due to the poor composition of their products. Illegal pesticides are usually less concentrated than legitimate products, contain cheaper or smaller quantities of active ingredients, and can be made of diluted and obsolete pesticide stocks or even water or talc.

Demand for illegal pesticides can also be explained by end-users’ lack of awareness of the risks associated with their use and on how to identify them. It can be extremely difficult for farmers to differentiate between authentic and illegal pesticides as counterfeiters use elaborate techniques to make their products appear genuine.

Demand also exists for unauthorized pesticides, including broad-spectrum pesticides that are being banned in many markets across the world. This happens due to fictitious documentation in trade and lack of systems to trace fake documents.

No mandatory traceability in the law to prevent illegal trade:

Besides, the shape of pesticide supply-chains is changing and global supply chains are becoming increasingly complex, involving up to a large number of middlemen and different entities – ranging from manufacturers to shippers and distributors – with production, shipment, assembly and distribution points scattered over multiple geographical locations. The number of parties, transfers and stops involved in pesticide trade has complicated regulatory and control efforts, as well as the identification of illegal products. There is no system in the laws and regulations to ensure the traceability of the consignments.

The poor capability of enforcement departments, both poor skill and outdated inspection methods, adding to the problem:

The way trading volume increased, the Inspection and tracking systems have not kept up with this growing complexity of trade and its volume. As a result, a large share of illegal pesticides has been moving through legitimate supply chains without detection or seizure. This low risk of detection – together with the badly designed legal or financial consequences associated with the seizure of illegal pesticides in most jurisdictions – have encouraged the wrongdoers and increased opportunities and incentives for fraud, enabling this criminal activity to expand globally. Unfortunately, due to no formal arrangement meets between importing and exporting countries, exporting country has no incentive or reason to stop the trade of illegal pesticide in buying countries. 

Methods used in smuggling illegal pesticides:

There are many actors engaged in trade in illegal pesticides range from loosely organised groups – sometimes just a few individuals – to highly organised criminal networks. 

There is growing evidence that sophisticated counterfeits are produced and distributed by large organised criminal groups (OCGs), who conduct the majority of illegal trans-border shipments.

1. Misrepresentation of product content is one of the main methods and most common method used by illegal actors to avoid risk-profiling measures at custom borders, as well as regulatory and customer scrutiny. 

2. Relabeling and repackaging of pesticides by illegal actors or refill in illegal products in legitimate pesticide containers to make their products appear genuine. 

3. Forged transport documents are also used to conceal the content of containers and packages. 

4. As importing unbranded and unlabelled items is not illegal, criminal actors might further avoid border detection by sending products and labels separately – possibly through different ports – and printing counterfeit trademark labels on their products just before the sale. 

5. Use of weak border points and free trade agreements to avoid traceability: Criminal networks also import active ingredients to be formulated, packed and labelled near or within the country of destination, which prevents detection at the border and complicates the traceability of finished products.

6. Use of multiple channels and port shopping from free trade zone areas to minimize paper trails: Criminal groups also rely on various sophisticated techniques to disguise the origin and provenance of illegal pesticides and hinder product traceability along the supply chain. This includes the use of deliberately complex and long transit routes, crossing borders of multiple countries and relying on several transportation modes (e.g. sea, air, overland transport). 

7. Conceal the Point of Origin by manipulated documents in various free trade zones: Forged transport documents are also used to conceal the point of origin. Moreover, criminal actors can avoid detection by using distribution warehouses and self-storage facilities in transit countries for the assembly and distribution of illegal pesticides. They can also fail to declare a product for customs control at checkpoints or reroute a shipment.

8. E-Commerce promoting illegal pesticides: Now it is much easy. Illegal actors also directly sell their products to farmers via the Internet, which has become a major enabler for the distribution and sale of counterfeit and illegal pesticides. For instance, illegal pesticides imported in the US because of online sales on Amazon are estimated to be quite large in number, with about 1000 violations of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) every year. What is the trend and numbers in India, this should be investigated? 

Moreover, online sales of pesticides usually involve small parcels that do not always follow the same pathway as large shipments and often cross borders via postal or express services, reducing the effectiveness of traditional detection and seizure strategies established by the authorities.

Pesticide management Bill'2020 must understand the complexity and transnational character of trade in illegal pesticides. If the bill is not addressing these issues, it will be a missed opportunity and relevant of the pesticide bill will not achieve its desired objective, 

People involved in illegal pesticides are using advance technologies to avoid detection and also increasingly using sophisticated fraud system and making it difficult for traditional system of reporting, documentation, record keeping, inspection, traceability and risk management systems ineffective and in fact useless. They are struggling to control and corruption within the system makes it further vulnerable. 

Consequently, government agencies have to reconsider their fraud detection and enforcement tools and develop a range of policy responses to these new challenges. The use of modern technologies like blockchain and other options, if implemented can be of benefit.

Pesticide management Bill'2020 must be redrafted to include these dimensions to remain relevant for the coming years. In the present format, it is of little significance and may not address the issue faced by farmers, manufacturers and consumers. Policymakers will continue to struggle these challenges with little success.

New Pesticide Management Bill'2020 is an opportunity, let it not go waste in a hurry.

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