Research and agriculture ministers Anja Karlizcek and Julia Klöckner will oversee the scheme that is set to back more than 1,000 projects and last until 2024.
Farming is to benefit from €2.5 billion of the total, while a little more than one billion euros is to be devoted to research.
“Renewables can be developed around the corner, in our meadows, fields and forests, whereas we have to import many fossil raw materials,” Klöckner told reporters.
The term bio-economy refers to the practice of using plants, microorganisms or fungi to develop chemical products, medications and other inputs for consumer goods, rather than deriving them from fossil deposits like gas or oil.
The ministers highlighted different examples of bio-economy products, including car tyres made from dandelions, a flax-based car door as an alternative to carbon fibre, spider-silk trainers and a lightweight wooden cycle helmet.
“Sustainable bioproducts will be economically competitive over the long term,” Karlizcek said, given the scheduled ratcheting up of prices for emitting carbon dioxide (CO2) in Berlin's latest climate protection plans.
Klöckner noted that “conflicts” must be avoided between the bio-economy and traditional farming, warning that “growing demand for renewable raw materials shouldn't endanger food security.”