Chemical industry estimates that illicit market in Brazil amounts to between $2.9bn and $3.7bn

04/11/2024

---

Agricultural pesticides originating from Paraguay and Argentina seized by the Federal Revenue of Foz do Iguaçu and by the police of Paraná and Santa Catarina — Foto: Divulgação/Receita Federal

Just over a year ago, state and federal law enforcement agents uncovered a smugglers’ warehouse in a raid in Americana, 140 kilometers away from São Paulo. Spacious and well-lit with fans on the walls, the property hid 75 tonnes of pesticides that had illegally entered Brazil.

One product stood out as it contained Paraquat, an active ingredient associated with Parkinson’s disease in people who handle it, and banned in Brazil in 2021. Before the ban, the chemical was widely used to dry soybean crops to accelerate grain ripening, allowing for early harvesting.

The seizure, which took place in February 2023, only confirmed what authorities had already been detecting: the advancement of criminal groups in the sale of pesticides in the black market. This explains the increase in the number of seizures of illegal pesticides in the country. Last year, the Federal Police alone seized 575 tonnes, nearly 180% more than in 2022.

The batch of products seized in Americana—packaged in sacks and blue plastic barrels— was valued at the time at R$43 million. Authorities said the cargo would be sold to rural producers in Mato Grosso and São Paulo states.

Federal and state agencies have been making successive seizures of both Paraquat and other illegal pesticides—many of which come from Paraguay, Uruguay, Paraguay, Bolivia, and Argentina, countries with less stringent regulations than Brazil’s regarding agrochemicals. The active ingredients are generally imported from China and India.

The trade of these products is primarily attractive due to the lower prices compared to agrochemicals produced and sold within the standards of the Agrochemicals Act, passed in 2023.

In addition to price, the illicit market also exploits the possibility of selling products in Brazil with concentrations much higher than those considered safe. An example is Emamectin benzoate, an insecticide for pest control. Authorized on an emergency basis in the country with a concentration of 5%, the insecticide is found in Paraguay with concentrations reaching 90%.

Enforcement agents involved in tackling the illegal market said that many retailers and rural producers who acquire clandestine pesticides are aware of what they are doing, either because of the below-market price or because of the Spanish-language packaging. They warn of the health and environmental risks posed by these clandestine products.

The Ministry of Agriculture said it does not have an estimate of the size of the illegal pesticide market. The agrochemical industry estimates that the share of the market served by illicit products ranges from 20% to 25%.

The estimate was based on 2021 data and amounted to between $2.9 billion and $3.7 billion that year.

The numbers are from CropLife Brasil, the entity that brings together pesticide, seed, biotechnology, and biological product companies, including GDM, BASF, Bayer, Sumitomo Chemical, and Syngenta.

“This is a global problem. In Europe, according to OECD data, illegal inputs represent on average 14% of the local market. Brazil suffers greatly because it is a major agricultural producer,” said Nilto Mendes, CropLife Brasil’s manager for combating illegal products and a former federal police officer.

A study released in 2021 by the Institute of Economic and Social Development of Borders (IDESF) also estimated the share of illegal pesticides in the country at 25%.

Illegal pesticides can be those smuggled, adulterated through dilutions and additions of other inputs, counterfeited using products not intended for plantations, and may also be those resulting from thefts.

In the case of smuggling, Paraquat has become a more prominent problem. In 2022, law enforcement agents had already made a major seizure in Santa Catarina. In 2023, again in Americana. Last month, the Federal Revenue Service in Foz do Iguaçu seized 36 tonnes of illegal pesticides. Of this total, about 70% was Paraquat.

When health regulator ANVISA decided to ban the sale and use of this chemical in the country, it cited the risk (although, according to the agency, still under discussion in other countries) of Parkinson’s disease and the potential for the substance to cause mutations that could be passed on to future generations or even cause cancer. In 2020, the agency issued a note saying that the risk was for those who handled the product. Those who consume food, however, are not susceptible to exposure to the substance.

For the industry, the entry of criminals—smugglers, counterfeiters, money launderers— into the pesticide market represents unfair competition, tax evasion, a threat to the reputation of legal products, and risks to health and the environment.

For regulatory agencies, the clandestine pesticide chain raises several alarms.

“Considering that illegal products have not undergone the official registration procedure of the federal government, it is conceivable that residues in the food of those who use these products may generate residues above what Brazilian legislation predicts,” said the Ministry of Agriculture.

ANVISA stressed, “Irregular pesticides do not offer safety guarantees for the worker and the environment, nor do they have the efficiency and quality required for these products. Without these minimum requirements, irregular products represent a high risk of damage and threat to the health of the worker and people who consume the food in which irregular products were used.”

Brazil’s environmental protection agency IBAMA, which participated in the Americana raid, said that illegal products originating from smuggling do not undergo evaluations of efficacy, agronomic feasibility, environmental impacts, and human health, and that “therefore, their environmental impacts are uncertain and may cause severe adverse effects on non-target organisms of these substances, negatively interfering with environmental balance.”

The Ministry of Agriculture said that it has been acting against the illegal market and that in 2023 it carried out 35 operations with seizures of pesticides, fertilizers, seeds, and other products.

In addition to increased inspections, another significant measure was implemented. Last year, the new Agrochemicals Act strengthened penalties for illegal businesses involving these products, with sentences now ranging from three to nine years in prison.

But there are still two obstacles. One is to raise awareness among producers about the origin of agrochemicals. Another obstacle lies on the other side of the borders, said economist Luciano Barros, president of IDESF, “It is necessary to improve the regulatory environment in neighboring countries and seek an alignment of agrochemicals regulations among Mercosur countries.”

The Brazilian Confederation of Agriculture (CNA) did not respond to a request for comment.

*Por Marcos de Moura e Souza — São Paulo

Source: Valor International

https://valorinternational.globo.com/