Markets Institute: Understanding Illegality
Illegal activity in commodity production, processing, and trade is an issue with significant social, economic, and environmental risks. No person, country, ecosystem, or product is immune.
Defined as when a product or raw material is produced in a way that breaks the laws, policies, and regulations of the country of origin, illegality poses a risk to the environment, governments, traders, retailers, brands and consumers.
WWF research suggests that from 5% to 50% of globally traded food commodities, such as shrimp, beef, and palm oil, may be produced illegally according to existing laws in the country of origin.
For companies alone, it presents significant reputational, legal, and business risk. In fact, the financial costs of illegality are huge and largely undocumented, with figures ranging from $40 billion to $600 billion per year.
From a conservation standpoint, illegality is jeopardizing our ability to meet the growing need for more food and soft commodities. It's linked to deforestation, biodiversity loss, resource degradation and depletion, diminished water quality, and overfishing.
That is why the Markets Institute at WWF is exploring how best to engage the issue of illegality in the production of food and soft commodities.
Despite its impacts, there has been no systematic effort to understand and address illegality. It's time to change that, starting with a precompetitive process to understand the magnitude of this issue, close knowledge gaps, document what has worked and what hasn't, and gain an overall better understanding of its impacts.
To that end, The Markets Institute at WWF is dedicated to convening relevant stakeholders to collaboratively work toward understanding and solving this critical issue.
Through collaboration, research, and planning, we can eventually eliminate the social, economic, and environmental risks of illegality.
Only through knowledge can we keep up with the speed of life.
What is Illegality and Where Does it Occur Across the Supply Chain?
Illegality is a major driver of deforestation, biodiversity loss, resource degradation and depletion, among other things. It can take place at any stage along the supply chain – from when production begins until a final product hits the shelves. And, just like illegality affects all types of food and soft commodities, no region or country is immune.
Click the various types of illegality to learn what can occur along different stages of the supply chain, and explore some recent examples of the social, economic, and environmental impacts of this critically important issue.
- Labor Violations
- Resource Rights
- Other Laws
Resource rights, including legal concessions: Producer does not have right to harvest, catch or produce in area where production is occurring.
Example: Estimates of the extent of illegal, unreported and unregulated (IUU) seafood by country/region reveal that from 13% to 31% of reported catches worldwide are IUU, and over 50% in some regions.
Labor rights: The producer uses slave or bonded labor, employs people who are not legally allowed to work or are underage, or otherwise violates employees' rights.
Example: A recent survey of West African cacao production found that 2.1 million children had been engaged in inappropriate forms of child labor in Ivory Coast and Ghana combined—a 21% increase over the previous five years.
Other laws (Health/Safety Violations, Lacking/Exceeding Permit, Packaging, Smuggling, Tax Evasions, Theft): Producer does not meet other legal requirements, such as ignoring legislation (e.g. using illegal inputs, transships to another country, doesn't pay taxes, etc.).
Example: In Brazil up to 90% of beef production is from ranches that have not complied with the country's Forest Code.
Fraud: Deliberate dilution or substitution of either illegally obtained or falsely marked/identified products.
Example: Estimates are that 80-85% of all oil labeled extra virgin in Italy is adulterated.
Corruption: Producer bribes or otherwise subverts the system to produce products illegally or to enter his/her product into existing trade flows.
Example: Interpol has estimated that corruption in the forestry sector is costing governments worldwide some $30 billion in revenue.
Want to learn more about the issue?
- Infusing Product Production with Transparency, Accountability" Brink, by Jason Clay
- Operating in the Dark: How Climate Change Will Affect Food. Brink, by Jason Clay
- Out of Sight, Out of Mind: Illegal Production and the Global Food Chain. Brink, by Jason Clay
- Palm-Oil Migrant Workers Tell of Abuses on Malaysian Plantations. The Wall Street Journal
- ‘Sea Slaves’: the human misery that feeds pets and livestock. The New York Times
- The Wheels of Crime Are Greased With Olive Oil. The Atlantic
- Palm Oil Is In Everything—And It's Destroying Southeast Asia's Forests. The Huffington Post
- U.S. Closing a Loophole on Products Tied to Slaves The New York Times
- Bringing blockchain to the world of food traceability Silicon Republic, March 3, 2017
- Fighting Illegal Fishing With Big Data Smithsonian, February 28, 2017
- Counterfeit pesticides: Industry fears in wake of Indonesian tariff axe Weekly Times, March 1, 2017
- Police Scotland warn of risks to public health from illegal pesticide use Farming UK, March 2, 2017
- Slavery in the Palm Oil Industry Human Rights First, March 1, 2017
- India Acts to Curb Unsafe Milk Production The Cattle Site, October 12, 2016
- More complaints of illegal herbicide use in Missouri Bootheel KRCU, October 14, 2016
- Global collaboration needed to combat illegal fishing: Jokowi The Jakarta Post, October 10, 2016
- Cheese Executive Sentenced to Food Bank for Fake Parmesan Bloomberg, October 12, 2016
- Arrests of dairy workers raise questions on enforcement Addison County Independent, October 13, 2016
- Warning to forest destroyers: this scientist will catch you Nature, October 4, 2016
- S. Korean coastguard kills 3 Chinese fishermen in confrontation over illegal fishing IB Times, September 30, 2016
- The Fight Over Transparency in the Meat Industry NYTimes, October 5, 2016
- A Former McDonald's Supplier Was Just Reportedly Fined Millions By Watchdogs Fortune, October 3, 2016
- Fears Brexit will make illegal fishing hard to police BBC, October 3, 2016
- Free TVs Can’t Mask Human Rights Violations in Uzbekistan Cotton Fields TriplePundit, September 15, 2016
- WGS capable of revealing food fraud but limitations identified FoodQuality, September 13, 2016
- Farmers Switching from Coffee to Poppy in Mexico's Heroin Hub InsightCrime, September 16, 2016
- Why legal timber matters Reuters, September 16, 2016
- Global Fishing Watch: New Digital Tool To Track, Prevent Illegal Fishing International Business Times, September 16, 2016