Food Industry on High Alert
Raw Material Sourcing Emerges as Key Issue Beyond Labeling
With the implementation of the full labeling system for genetically modified organisms (GMO) approaching, domestic food companies are re-examining their entire raw material sourcing strategies. This is because changes in labeling standards are seen as more than just a matter of label descriptions-they could disrupt the structure of raw material supply and undermine production stability. Given the industry's reliance on imports for key grains such as soybeans and corn, supply chain risks have emerged as a critical variable.
According to the food industry on December 16, the "Partial Amendment to the Food Sanitation Act," which passed the National Assembly plenary session, mandates GMO labeling even for certain items in which genetically modified substances or proteins do not remain after the manufacturing or processing stage. The specific items subject to labeling will be determined by the head of the Ministry of Food and Drug Safety after review and resolution by the Food Sanitation Deliberation Committee under the Ministry.
The industry believes that the full GMO labeling system is likely to function as a regulation that effectively influences raw material selection, going beyond the existing labeling system. Until now, labeling was only required if genetically modified DNA or protein was detected after manufacturing or processing. Going forward, however, labeling will be required if the raw material itself is GMO, regardless of whether it is processed or not.
As the labeling standard shifts from the end product to the raw material, food manufacturers now face a critical decision. They must either continue using GMO ingredients and accept the "GMO used" label, or switch to non-GMO ingredients to reduce the labeling burden. However, there is a prevailing sentiment in the industry that the former is not a viable option. This is due to concerns that GMO labeling is likely to be perceived negatively by consumers, which could directly damage brand image and lead to a decline in sales.
A view of cooking oil displayed at a large supermarket in downtown Seoul. Photo by The Asia Business Daily Database
The challenge lies in sourcing non-GMO ingredients. In the global grain market, non-GMO soybeans and corn account for only a limited share. Strict segregation from GMO ingredients is required throughout the production and distribution process, resulting in supply sources being concentrated in specific countries or regions. This makes the supply chain more vulnerable to disruptions caused by weather anomalies or geopolitical factors.
Supply chain management costs are also a burden. Using non-GMO ingredients requires a comprehensive tracking and management system from production to distribution, storage, and processing. The industry views this not as a simple switch of raw materials, but as a structural change that requires a complete overhaul of supply sources and management systems. This is especially challenging for small and medium-sized food companies, which face relatively higher conversion costs and management burdens.
The pressure of rising costs is another practical concern. Non-GMO soybeans and corn are often traded at prices more than 20% higher than their GMO counterparts in the international market. Given that the domestic food industry relies heavily on imports for major raw materials such as soybeans, corn, and canola, switching to non-GMO ingredients is inevitably linked to increased production costs.
Industry forecasts suggest that if the transition to non-GMO ingredients becomes widespread, the prices of primary processed foods could rise by 5% to 15% or more. Furthermore, if these costs are passed on to secondary and tertiary processed foods such as snacks, beverages, and instant foods, the impact on consumer prices could be even more pronounced.
An industry insider stated, "If the full GMO labeling system functions as a de facto regulation on raw materials rather than just a labeling system, we must closely examine its impact on overall prices and industrial competitiveness. Unless the enforcement ordinance is carefully designed with a grace period, phased implementation, and precise exception criteria, policy side effects will be unavoidable."
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