How will new regulation PLS affect biological markets in South Korea?

South Korea is an attractive country for the crop protection industry, as well as its world-famous K-Pop group, BTS. In 2018, the Korean crop protection market was valued at US$1.28 billion. In terms of the pesticide category, insecticides have the highest market share, accounting for 37.2%, followed by fungicides with 34.3% and herbicides and others with 25.9% and 2.7%, respectively.
 

In comparison to the substantial overall crop protection market size, the bio-pesticide market is still insignificant, accounting for less than 1% of the total crop protection industry, despite the fact that biological products have gradually been accepted by farmers and distributors.
 

The lower popularity of bio-pesticides in the market is a result of several factors, including a small overall crop planting area, an intensive cultivation style using large quantities of agrochemicals, and a poor awareness of sustainable agriculture among farmers and retailers.

 

One of the key reasons for the small bio-pesticide market is Korea’s specific registration category, known as, “Eco-Friendly Agricultural Input List Registration.” This process is a quick and simple way to register biological products. All the components of a product applied for registration should be guaranteed for organic ingredients, as well as approved and listed by Korean agriculture authorities. Once an applicant can prove their product’s organic composition, it will be exempted from various toxicological and residue studies, as well as efficacy tests. Compared to the conventional chemical registration period, which usually takes at least three years to complete, this special fast-track registration takes only three to six months to complete if all preparations are properly in place. 
 

The low cost and convenience of this easy and quick registration process lowered the entry barriers to the market. Eventually, small companies numbering over 600 applied to this registration category instead of the relatively expensive and time-consuming bio-pesticide registration category, to rush their products into the market. There are no official statistics on this specific market segment, but it is estimated to be valued at around US$100 million annually, exclusively for product groups related to control diseases and insects, based on market consensus.      
 

These types of biological products have been used not only on organic farming areas but also for conventional farming, which uses chemical pesticides. The successive fruiting and harvesting of fruits and vegetables, such as peppers, cucumbers, strawberries and leafy vegetables, are major markets, especially during the harvest period, since the usual chemical pesticides must not be used, due to PHI observance and residue issues. 

 

Because of restricted application timings and applicable markets, the eco-friendly agricultural input market in South Korea is still niche one. However, new growth motivation for this market has been fueled by the new regulation, PLS (Positive List System), which came into force in 2019.
 

The new regulation, which aims to promote pesticide residue safety, stipulates that farmers should strictly follow product labels and guides in terms of application on crops, application frequencies, application rate and other important safety precautions. When reside issues occur or when unregistered agro-chemical components with no tolerance on crops are detected, farmers using such pesticides will be punished accordingly. If retailers involved in distribution channels provide farmers with incorrect information, whether intentionally or not, they will also be punished. 
 

The implementation of this new regulation means that the use of unregistered pesticides should disappear in the market. This strict control on pesticide use made some crops isolated from agro-chemical use, due to the lack of registered agro-chemicals. Consequently, markets where unregistered agro-chemicals were conventionally used have been rapidly replaced by eco-friendly products, which are totally free from residue issues.

 

This new driving force is now creating a favorable market environment for agricultural bio-companies that provide competitive biological products. Reflecting such market trends, major agrochemical companies are also accelerating their bio-product development strategies and are becoming more active in terms of marketing. With growing demand and increasing interest in the bio-market triggered by the implementation of PLS, the South Korean agricultural bio-market is entering a new era and is increasing in both market size and product quality. It seems certain that the combination of PLS implementation, a Korea-specific eco-friendly agricultural input market and increasing pressure for quality improvement is now bringing the Korean agricultural bio-industry to a strange but promising position.