Agriculture funding update

May 21, 2020 | Heather L. Jones

In early May, the Canadian Federation of Agriculture (the “CFA”) sought further funding from the federal government in the amount of $2.6 billion. On May 5, 2020, Prime Minister Justin Trudeau announced a grant of $252 million. An outline of this funding was provided in our previous blog post.

Though this money will go towards crucial measures to assist the agriculture industry, it drew mixed reactions including critiques that the government has not gone far enough to assist the agriculture and food industries in Canada.

As seeding and planting season has now arrived for most of the country and farmers are finding it difficult to find appropriate workers and meat producers are considering culling herds, other parties within the government have critiqued the funding as falling short of the needs of Canadian agribusiness.

Details regarding the specific industries whose products will be eligible for this funding and how to access the funding are to come.

Allocation of the funds

$77 million has been allocated to food processors to assist with retrofitting factories, obtaining PPE and increasing capacity to help deal with a backlog of livestock. The funds are to be used for buying PPE, adapting to social distancing measures and other changes needed to comply with health protocols.

$125 million has been added to the AgriRecovery fund aimed at assisting meat and pork producers with the increased cost associated with the need to extend the animal stays in feedlots.

$50 million has been allocated to a purchase program for surplus foods. The government will buy large quantities of certain products at risk of going to waste to be redistributed to organizations addressing food insecurity.

In addition, the Canadian Dairy Commission has had their borrowing limit increased by $200 million for the temporary storage of such things as cheese and butter. This initiative, however, requires further legislation to be passed before it can be made available.

Potential for further aid

The funds fall desperately short of the CFA’s request for $2.6 billion; however, they are an indication that the federal government is looking at the agribusiness.  Trudeau has stated that the government knows “there is more to do and we will keep working with [the CFA] to determine exactly how we can best help… This is an initial investment and if we need to add more, we will.”

Funding currently available

On March 23, 2020, the federal government announced, as part of its omnibus bill to provide funding to Canadians, that $5 billion will be provided to Farm Credit Canada (“FCC”) to increase lending capacity for the agriculture and food industry. This funding is to focus on companies that have suffered a “significant disruption” to their business model. These companies must be able to show a “well-defined need” for new capital.

In addition to increasing lending capacity, the federal government and FCC have announced that all Advance Payments Program loans currently due by April 30 will be granted an automatic Stay of Default for six months. This represents approximately $173 million in deferred loans.

It was also announced that all current interest free outstanding loan holders will be eligible to apply for an additional $100,000 interest free so long as the total Advance Payments Program advances remain under the $1 million cap.

On April 13, 2020, the federal government announced that $50 million of federal funds would be provided to cover $1,500 per temporary workers brought into Canada while they are in quarantine. Temporary foreign workers are required to spend 14 days in self-isolation.

We are expecting to hear further from the Government as to how these various funds will be administered and will provide further information on the process once it is announced. We can also recommend the Federal Government website at https://www.canada.ca/en/department-finance/economic-response-plan.html which provides an overview of the programs established by the government.

 

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