Minister MacAulay launches new program to support the Canadian dairy sector

SAINT-HYACINTHE, QC, Sept. 29, 2023 /CNW/ - Today, the Honourable Lawrence MacAulay, Minister of Agriculture and Agri-Food, announced the launch of the new Dairy Innovation and Investment Fund. With an investment of up to $333 million over the next 10 years, the Fund will help the Canadian dairy sector increase its competitiveness and adapt to new market realities. The Fund is part of the Government of Canada's commitment to support supply-managed sectors for the impacts of the Canada-United States-Mexico Agreement (CUSMA).

Like most dairy-producing countries, Canada is facing a growing surplus of solids non-fat (SNF), the remaining component once cow's milk is processed and the fat is removed for use in products like butter and cream. Limited processing capacity for SNF results in lost opportunities for dairy processors and farmers.

Through the Dairy Innovation and Investment Fund, Canadian dairy processors will have access to support for medium to large-scale projects that will help the sector better manage the surplus of SNF in Canada. The Fund will support activities that help modernize, replace and/or increase processing capacity for SNF and minimize skim milk that is not marketed.

The Government is also exploring how the Supply Management Processing Investment Fund can support small-scale projects to address SNF issues within the objective of the program, by focusing on competitiveness and productivity.

With today's announcement, all compensation programming to producers and processors for lost market share under recent international trade agreements has been launched. The Government of Canada will continue to preserve, protect and defend Canada's supply management system and is committed to not making any additional market access concessions for supply-managed products in future trade agreements.

"We will always stand up for the supply management system and we have delivered on our commitment to compensate our hardworking producers and processors who have been impacted by recent trade agreements. This Fund will help the sector manage the growing surplus of solids non-fat, create more opportunities for dairy processors and farmers, and build a more sustainable dairy sector."

- The Honourable Lawrence MacAulay, Minister of Agriculture and Agri-Food 

"The dairy sector is an integral part of Canada's economy and rural landscape, supporting strong and vibrant communities across the country. This new Fund will drive innovation and increase processing capacity, enabling the sector to stay competitive by maximizing the full value of solids non-fat."

- Francis Drouin, Parliamentary Secretary to the Minister of Agriculture and Agri-Food

"This new program will support the much-needed investments in milk processing capacity in Canada. As it is a matching fund program, dairy processors must commit to investing in plant capacity expansion to access government contributions. These investments will not only benefit the dairy industry, but ultimately the entire Canadian economy."

- Phil J. Vanderpol, Chair, Dairy Processors Association of Canada

"Dairy Farmers of Canada welcomes the announcement of the Dairy Innovation and Investment Fund and is pleased to see the federal government honouring its commitment. This initiative will help the industry identify and implement solutions to better manage solid non-fats and contribute to the future of a vibrant Canadian dairy sector."

- David Wiens, President, Dairy Farmers of Canada

• The new Dairy Innovation and Investment Fund, originally announced in Budget 2023, will provide Canadian dairy processors with non-repayable contributions to help the dairy sector better manage the structural surplus of solids non-fat in Canada.
• The Canadian Dairy Commission will deliver the Dairy Innovation and Investment Fund on behalf of Agriculture and Agri-Food Canada. The two-stage application process launches today, September 29, 2023. For information on eligibility, funding and how to apply, please visit the Dairy Innovation and Investment Fund website.
• The Dairy Innovation and Investment Fund will consider costs eligible for reimbursement retroactive to November 17, 2022.
• Canada's supply management system supports producers by providing the opportunity to receive fair returns for their labour and investments, brings stability for processors, and benefits consumers by providing them with a steady supply of high-quality products.
• The dairy sector is a vital pillar of rural communities and a key driver of the economy. Located across the country, these 9,739 farms and 507 dairy processing plants generated $8.2 billion in farm cash receipts and $17.4 billion in sales respectively in 2022. Together, dairy production and processing activities account for more than 70,000 jobs.
• Cow's milk contains two main components: solids non-fat and butterfat. Solids non-fat are essentially protein and lactose. There are more solids non-fat in milk than butterfat. With the increase in consumption of butterfat, a surplus of solids non-fat has been created, a challenge for the entire dairy industry.
• The Government of Canada has delivered on its commitment to fully and fairly compensate producers and processors who have lost market share under the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Canada-United States-Mexico Agreement (CUSMA). The total compensation will reach over $4.8 billion.
  • This includes the Supply Management Processing Investment Fund which helps processors of supply-managed commodities increase their competitiveness and resilience in the face of evolving markets. Under this program, priority consideration is given to small- and medium-sized enterprises (SMEs).

Dairy Innovation and Investment Fund

Supporting Canada's supply-managed sectors

Dairy Innovation and Investment Fund

September 29, 2023 – Saint-Hyacinthe, Quebec – Agriculture and Agri-Food Canada

The new Dairy Innovation and Investment Fund, announced in Budget 2023, will provide Canadian dairy processors with non-repayable contributions to help the dairy sector better manage the structural surplus of solids non-fat in Canada. This Fund will be delivered by the Canadian Dairy Commission on behalf of Agriculture and Agri-Food Canada.

Eligibility

Eligible applicants are for-profit organizations, including corporations, cooperatives and partnerships, and are Canadian dairy product manufacturers who process milk. Only projects involving milk from cows are eligible.

Eligible activities

To be eligible, projects must:

• result in a net increase in solids non-fat processing capacity of at least 50 million litres of skim milk per year, organization-wide in Canada (in the case of building of new facilities), or
• result in a net increase in solids non-fat processing capacity of at least 25 percent and 30 million litres of skim milk per year compared to the current facility and organization-wide in Canada (in the case of projects involving the replacement of existing equipment coupled with an increase in capacity or in the case of an expansion of an existing facility).

The program will support eligible costs of capital assets and contracted services, including:

• removing and disposing of existing equipment,
• purchasing, shipping, installing, and commissioning of new equipment, software and production lines,
• installation of new, or expansion of existing, milk reception and milk storage area as required to meet the objectives of the project,
• retrofits/renovations of existing facilities related to the installation and operation of eligible equipment,
• construction of a new facility,
• training necessary to operate eligible equipment, and
• translation of materials related to training on the new equipment.

Costs related to the purchase of land or research and development are not eligible.

Funding

Funding for projects will be allocated across Canada by region. Unused funding may be reallocated from one region to another.

Cost-sharing

The Dairy Innovation and Investment Fund contribution for construction costs will be up to 25 percent whereas the contribution for other eligible costs will be up to 33 percent.

Contributions under the program are non-repayable. The maximum contribution is $75 million per project or the funds available in the region of the project, whichever is lower.

The program will consider costs eligible for reimbursement as of November 17, 2022, if the Project Summary Form is received on or before November 3, 2023.

Application Process

The program will use a two-stage application process. 

A Project Summary Form will be used to screen the applicant's and project's eligibility, fit and readiness to apply for funding. Proposals that meet the program's priorities and eligibility criteria may be invited to submit a full project application.

Visit the Dairy Innovation and Investment Fund website to apply. Applicants have until November 3, 2023 to submit a Project Summary Form. Should there be funds remaining, additional application dates may be announced in the future.

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SOURCE Agriculture and Agri-Food Canada