K-green biotech firms use mostly domestic ingredients but fewer than 1 in 10 have gone global

South Korea's "green biotech" industry — which turns domestic agricultural produce into high-value products such as health functional foods and cosmetics — is growing rapidly, but fewer than one in 10 companies in the sector have entered overseas markets, a new report shows. Domestic ingredients account for nearly 76 percent of raw material use, but analysts say the industry's middle layer — spanning stable ingredient sourcing, research and development, functional verification, certification and export — remains underdeveloped.

A study released Friday by the Korea Rural Economic Institute titled "Research on Strategies for Growing the Green Biotech Industry" found that only 9.6 percent of 156 surveyed companies in the natural substances and food ingredients sector had experience entering overseas markets. Just 19.9 percent had a dedicated R&D unit.

On the ingredient side, domestic sourcing was dominant: 75.5 percent of raw materials used by surveyed firms came from domestic sources, more than triple the 24.5 percent share of imports. The challenge lies in how companies secure those domestic ingredients. Purchasing through external suppliers was the most common method at 43.5 percent, while self-cultivation accounted for 16.5 percent and contract farming — where volumes and terms are agreed with growers in advance — was limited to 13.9 percent. Only 44.4 percent of firms operated standard contracts.

Key indicators for South Korea's green biotech natural substances and food ingredients companies Source: Korea Rural Economic Institute

Category | Share Domestic ingredient use | 75.5% Ingredient procurement via external suppliers | 43.5% Ingredient procurement via contract farming | 13.9% Use of standard contracts | 44.4% Quality database established | 58.0% Dedicated R&D unit | 19.9% Quality control unit | 31.4% GMP certification | 31.4% ISO certification | 18.7% Experience producing functional products | 68.6% Licensed health functional food products | 15.0% Experience entering overseas markets | 9.6%

Even companies that secure quality agricultural produce face another barrier when trying to convert it into premium products. While 68.6 percent of firms had experience producing functional products, only 15 percent held products licensed as health functional foods. General food products made up the largest share of output at 38.9 percent, followed by cosmetics at 28.1 percent and household goods at 10.6 percent.

Internal research and certification capabilities were also found to be insufficient. The rate of dedicated R&D unit ownership stood at 19.9 percent, and quality control units at 31.4 percent. Good Manufacturing Practice certification was held by 31.4 percent of firms, while ISO certification coverage was 18.7 percent. The figures point to relatively weak R&D and quality management capacity at the very stages where ingredients must gain value as finished products and, ultimately, export goods.

The institute identified these gaps as key obstacles to the growth of South Korea's green biotech industry. The markets for functional ingredients and health functional foods are expanding quickly, but underdeveloped supply chains, quality standardization, functional verification and certification systems are making it difficult for companies to develop high-value products and break into overseas markets, the report said.

The fragmentation of support systems across multiple government ministries was also flagged as a problem. An institute analysis of cases in Japan and the EU found that functional labeling regimes, integrated certification systems, and support structures linking R&D to commercialization were central to industry growth in those markets. In South Korea, by contrast, individual ministries pursue separate policies, limiting the ability to translate research outcomes into actual business results.

As a solution, the institute proposed an end-to-end support framework connecting upstream raw material production, midstream ingredient development and downstream product commercialization and market entry. It argued that the entire process — from stable agricultural sourcing and quality standardization through functional verification, certification and overseas market entry — must be linked as a single continuum. The report also recommended strengthening overseas certification and export support, and building regional hub facilities and contract development infrastructure.

"The green biotech natural substances and food ingredients industry is a future growth engine through which agriculture expands into the food, biotech and healthcare sectors," said Yun Jong-yeol, a research fellow at the institute. "If we build an end-to-end support framework that organically connects government policy design with on-the-ground implementation by local governments, we can not only raise the added value of agriculture but also significantly strengthen the global competitiveness of South Korea's green biotech industry."