Counterfeit pesticides cost EU €1.3bn a year, says EUIPO

Fake pesticides cost EU businesses around 14 per cent of their revenues each year, and cause an estimated 2,600 people their jobs.

That is the conclusion of the European Union Intellectual Property Office's latest Observatory study on counterfeiting – the tenth in the series - which covers sales of pest-killing chemicals, agricultural disinfectants, plant growth regulators and other agrochemicals, but excludes fertilisers.

Counterfeiting carves some €1.3bn off the €12bn sector in terms of lost sales, says the EUIPO report, and cuts the number of employed workers – estimated at around 25,000 people in 2014 – by some 10 per cent.

Moreover, if the knock-on effects on other industries and on government revenue are added, both direct and indirect, counterfeiting in this sector causes approximately €2.8bn of lost sales to the EU economy, which in turns leads to employment losses of about 11,700 jobs and a loss of €238m in government revenues.

The biggest producers of pesticides – and therefore the most affected by illicit trade – are Germany and France, which account for €4bn and €3.5bn respectively of the overall market. But this is not an industry dominated by big business – there are more than 600 companies in the EU pesticides industry, employing an average of just 35 staff apiece.

Two-thirds are small- and medium-sized enterprises, and around 200 are micro enterprises with fewer than 10 workers. Of course, SMEs generally lack the resources to combat counterfeiting of their products.

The European Crop Protection Association (EPCA) notes that the perils of counterfeit pesticides go beyond economic damages.

Some contain chemicals that are either banned or restricted in the EU due to the potential risks they may pose to human health and/or the environment, and/or untested products and undeclared active substances that may result in unacceptable residue levels, making the products unmarketable.

Use of the counterfeits can sometimes lead to a total loss of treated crops, compromising farmer livelihood.

"As our reporting series has shown, counterfeiting can affect every economic sector, and the pesticide manufacturing industry, which includes a large number of small and medium enterprises, is no exception," said executive director of the EUIPO António Campinos.

"This, the tenth report in our study series, outlines the economic effect of counterfeiting on sales and jobs, and how legitimate producers are impacted by the presence of counterfeit products in the market."

Observatory studies, and annual lost revenues:

Cosmetics and personal care – €4.7bn
Clothing, accessories and footwear – €26.3bn
Sports goods – €500m
Toys and games – €1.4bn
Jewellery and watches – €1.9bn
Handbags and luggage – €1.6bn
Recorded music industry – €170m
Spirits and wines – €1.3bn
Pharmaceuticals – €10.2bn
Pesticides – €1.3bn

Subtotal to date - €49.4bn

The EUIPO Observatory completed a joint study with the Organization for Economic Cooperation and Development (OECD) last year that estimated the value of international trade of counterfeit goods in 2013 at €338bn, corresponding to 2.5 per cent of world trade.