The Environmental Risk Management Authority, ERMA, is recommending banning the use of the insecticide, trichlorfon, on plants and crops.
However it says it would still allow the chemical to be used as a veterinary medicine to control worms in sheep, horses, pigs and poultry.
ERMA is reassessing trichlorfon's use as part of its review of all hazardous substances.
General manager for hazardous substances Andrea Eng says the substance is harmful to humans and very toxic to the aquatic environment.
She says it's use in this country is very low, and industry groups have indicated they would support it being restricted to veterinary medicine.
Trichlorfon-containing formulas have been withdrawn in Europe, and the substance is also restricted in the United States and Canada.
Submissions on ERMA's recommendations close on 1 September.