Funding programs and resources for agribusiness in Alberta

May 25, 2021

The agribusiness industry holds great potential for investment and growth, and Alberta is well-positioned to support this growth given to its abundance of expertise and world-class research and training institutions. As discussed previously by Dentons here, Alberta is a global leader in this multi-billion dollar industry and a frontrunner in the development and implementation of agricultural technology.

As a result, there has been an abundance of programs created to support and fund the agribusiness industry in Canada, and more specifically in Alberta, over the last five years. These programs focus on supporting economic development and encouraging technological innovation on-farm and in value-added facilities.

This article provides a summary of certain key provincial and federal programs that are currently available to the agribusiness industry in Alberta. Further project-specific funding may also be available depending on the project qualifications.

Provincial

The Canadian Agricultural Partnership (CAP) - Alberta

CAP is a CA$3 billion, five-year (2018-2023) federal-provincial-territorial government (FPT) investment initiative in the agriculture, agri-food and agri-based products sector. It aims to generate economic growth, job creation and innovation within the sector. It provides a suite of government funding programs to businesses and initiatives in the sector, and seeks to address region-specific needs. These programs are cost-shared between the federal government and the provincial/territorial government, with each party contributing 60% and 40%, respectively.

In Alberta, CAP has committed CA$406 million towards strategic initiative programs over five years. It has resulted in various streams of funding for businesses and organizations that produce, modify, manufacture, and advocate for Alberta-made agricultural products. The programs offered under CAP are the agriculture and food sustainability assurance initiative, environmental stewardship and climate change, irrigation efficiency, products to markets, public agriculture literacy, value-added products to markets, youth agriculture education, and many more. These programs were updated in 2021, and are scheduled to be in effect to March 31, 2023. Visit the CAP Alberta website for a full list of programs currently accepting applications.

AgriInsurance, AgriStability, AgriInvest and AgriRecovery

AgriInsurance, AgriStability, AgriInvest and AgriRecovery are business risk management programs offered under CAP.

AgriInsurance is a federal-provincial-producer cost-shared program that aims to mitigate the financial impact of production losses caused by severe and uncontrollable natural hazards. Examples include drought, flood, wind, frost, excessive rain, heat, snow, uncontrolled disease, insect infestations and wildlife. The program is available to most producers in all provinces, and eligibility is established by the respective provinces. For more information regarding the program and other means of crop insurance in Alberta, visit the Agriculture Financial Services Corporation website.

AgriStability is a FPT program that provides Canadian agricultural producers with an ongoing risk management tool. It protects Canadian producers from large declines in farming revenue due to production loss, increased costs or market conditions. Under the program, a producer is eligible to receive a payment if their production margin in the current year falls below the historical reference margin by more than 30%. For more information regarding the program in Alberta, visit the Agriculture Financial Services Corporation website.

AgriInvest is a self-managed savings account between agricultural producers and the federal government. It aims to help producers manage small income declines, and make investments to mitigate risk and improve market income. The account builds as annual deposits are made, by the producer, up to 100% of its allowable net sales, and will receive matching contribution of 1% of allowable net sales from the federal and provincial/territorial governments. For more information regarding the program in Alberta, visit the Agriculture Financial Services Corporation website.

AgriRecovery is a FPT disaster relief framework that allows all levels of government to work together to help agricultural producers recover from natural disasters by offering joint initiatives that provide assistance beyond what is available through existing programs. It aims to help agricultural producers recover by providing financial assistance for the extraordinary costs necessary to mitigate the impacts of the disaster and resume farming operations as quickly as possible. For more information regarding the framework, visit the Government of Canada website.

Federal

Accelerated Investment Incentive

The Accelerated Investment Incentive was introduced in 2018 as a means to encourage investment in capital assets. This temporary incentive provides an enhanced first-year allowance for certain property that is subject to capital cost allowance rules. Manufacturing and processing machinery and equipment acquired after November 20, 2018 (until 2024) and available for use before 2028 will be eligible for a 100% deduction initially. A phase-out will begin for property that becomes available for use after 2023.

In relation to agribusiness, this incentive allows businesses to immediately write off the full cost of machinery and equipment used for the manufacturing or processing of goods. This measure are scheduled to be phased out between 2024 and 2027.

Advance Payments Program

The Advance Payments Program is a federal loan guarantee program administered by Agriculture and Agri-Food Canada. It provides agriculture producers with easy access to low-interest cash advances, allowing them to meet their financial needs until they are able to sell their agricultural products. Producers can access up to CA$1,000,000 per program year in advances based on their agricultural product, with the federal government paying interest on the first CA$100,000 advanced to a producer, and preferential interest rates on advance amounts over CA$100,000. This program is available to all Canadian farmers.

AgriInnovate Program

AgriInnovate offers repayable contributions that aim to accelerate the demonstration, commercialization and adoption of innovative technologies, products, processes or services in the agricultural sector. In order to be eligible for funding, applicants must show how the proposed project will demonstrate, commercialize or adopt an innovation that is novel to the sector or country. Projects that strengthen Canada's value-added agri-sectors, or focuses on the adoption of new or world leading clean technology (including precision agriculture) will be prioritized. Projects must be completed by March 31, 2023 in order to be eligible.

AgriRisk Initiatives - Research and Development Contribution Funding Stream

AgriRisk Initiatives Research and Development Contribution Funding Stream aims to provide funding for projects involving new financial tools that allows producers to manage business risks. Eligible activities include: data collection, analysis and modeling, actuarial work into potential financial tools, or testing the feasibility of implementing financial tools. Total program funding is CA$55 million over five years, to 2023. Project summaries are accepted on an ongoing basis until program funds have been allocated, or otherwise posted on the Government of Canada website.

AgriScience Program - Projects

The AgriScience program provides funding and support for pre-commercial science activities and cutting-edge research. The AgriScience Projects component aims to support specific shorter-term research activities and mitigate high-risk opportunities that have the potential to yield significant returns. This program is set to run until 2023, or when funding has been fully committed.

Canadian Agricultural Loans Act Program

Agriculture and Agri-Food Canada offers the Canadian Agricultural Loans Act (CALA) program, designed to help beginning farmers (less than six years of farming experience), existing farmers, and agricultural co-operatives with their financing needs. Under the CALA program, the federal government guarantees loans issued by financial institutions, enabling borrowers to benefit from advantageous interest rates, lower equity requirements, and flexible repayment terms. The maximum amount a farmer may be eligible for is CA$500,000 for land and equipment combined. Farmers can use these loans to establish, improve and develop farms, while agricultural co-operatives may also access loans to process, distribute or market their farming products.

National Research Council of Canada Industrial Research Assistance Program

The National Research Council of Canada Industrial Research Assistance Program aims to stimulate wealth creation for Canada through technological innovations, by providing assistance to small and medium-sized businesses at all stages of the innovation process. It seeks to accelerate the growth of small and medium-size businesses by providing financial assistance, advisory services, and connections to business and R&D expertise. Small and medium-sized businesses with fewer than 500 employees are eligible for this program.

Poultry and Egg On-Farm Investment Program

The Poultry and Egg On-Farm Investment Program is a new program aimed at helping poultry and eggs producers adapt to market changes resulting from international trade agreements. It will provide CA$630 million of non-repayable contributions over 10 years to chicken, turkey, egg, and broiler hatching egg producers. Application for the program is anticipated to launch in Spring 2021.

Price Pooling Program

The Price Pooling Program is designed to protect marketing agencies in the agricultural sector against unanticipated declines in the market price of their products. It is a price guarantee offered by the Minister of Agriculture and Agri-Food to mitigate against sudden losses to marketing agencies due to market conditions, and provide the security necessary for marketing agencies to make the initial payment to the producers for the delivered products. In the event where the actual wholesale price is less than the guaranteed price, the shortfall will be paid for by the Government of Canada. The program is open to any marketing agencies that meet the definition under section 2(1) of the Agricultural Marketing Programs Act.

Scientific Research and Experimental Development (SR&ED) Program

The SR&ED program provides tax credits and refunds for expenditures on eligible R&D activities in Canada. This program is administered by the Canada Revenue Agency, and provides more than CA$3 billion tax incentives annually to businesses. These tax incentives come in the form of income tax deductions, investment tax credits, or refunds. Example of work that qualifies for the SR&ED tax incentives include experimental research conducted to achieve technological advancement to create or improve new materials, devices, products or processes.

Tariff-free zone for industrial manufacturers

Canada offers a tariff-free zone for industrial manufacturers. Companies can import advanced machinery and equipment into Canada free of import duties. This initiative seeks to reduce costs and increase profitability of investors' global operations. Its aim is to reduce customs costs, simplify tariff structure and eliminate administrative burdens for businesses. It applies across the country, and makes Canada more attractive for potential investors.

Technology Transfer and Licensing - Agriculture

The Technology Transfer and Licensing - Agriculture program under Agriculture and Agri-Food Canada provides an opportunity for businesses to license commercially viable technologies and intellectual properties owned by the Office of Intellectual Property and Commercialization. Businesses are required to submit a plan for developing and marketing the technology alongside the application, and the selection process is competitive and time-sensitive. These technologies may be made available on an exclusive or non-exclusive basis.

The Protein Industries Supercluster

The Protein Industries Supercluster is one of five innovation 'superclusters' in Canada under the federal Innovation Supercluster Initiative. It aims to drive commercially successful innovations through collaborations between businesses, and post-secondary and research institutions in the food-processing sector. Protein Industries Canada is a not-for-profit organization created to facilitate collaboration, and work with companies to access new partnerships. Based in Western Canada, the Protein Industries Supercluster is expected by Protein Industries Canada to add more than 5,000 jobs and contribute $4.5 billion to Canada's GDP over 10 years.

The Strategic Innovation Fund

The Strategic Innovation Fund aims to promote innovation by providing funding for large-scale, transformative and collaborative projects. The fund is divided into two streams: Business Innovation and Growth, and Collaborations and Networks. The first stream seeks to encourage R&D that accelerates technology transfer and commercialization of innovative products, services and processes. The second supports large-scale, national collaborations between the private sector, researchers and non-profit organizations. The fund is open to for-profit and not-for profit organizations in all sectors of the economy.

Agribusiness is a high-priority growth sector in Alberta and there are a variety of options available to businesses to obtain financial support. Dentons will continue to monitor the status and development of these programs and will provide updates as needed. Please reach out to our agribusiness team to help you navigate the legal landscape and grow your business.

This client alert was co-authored by Bennett Wong and Winta Asefaw, with the assistance of Kate Wiltse and George Hua.

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