Why is dairy getting over $300 million to deal with solids non-fat?

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The federal budget announced earlier this week had a handful of agriculture-related commitments, including $333 million over 10 years for the establishment of the Dairy Innovation and Investment Fund.

The fund, set to be administered by Agriculture and Agri-Food Canada, is for research and development of new products that use solids non-fat (SNF), market development for these products, and to increase processing capacity for SNF-based products.

Solids non-fat encompasses everything in milk other than water and butterfat, including protein, lactose, and minerals, and is often in excess of what can be used domestically within the dairy value chain.

But why this fund and why now?

As Tyler McCann, managing director of the Canadian Agri-Food Policy Institute, noted on RealAg Radio on Wednesday, Canada was prompted to deal with SNF domestically after the signing of the new NAFTA, the United States-Mexico-Canada Agreement (USMCA).

Prior to the agreement, Canada had been exporting SNF to Mexico, however the U.S. took issue with the by-products of Canada’s supply management system being exported. Canada agreed to cap exports of SNF as part of the overall North American agreement.

The $300-plus million in funding to address this SNF surplus issue was originally mentioned in a federal announcement of support for processors in supply-managed dairy and poultry sectors in November 2022.

Dairy Farmers of Canada says it welcomes the confirmation of funding in the budget. “Canada has a surplus of SNF and does not currently have enough processing capacity to maximize the full value of milk. DFC is awaiting the details of the fund with great anticipation.”

McCann says those outside the dairy industry are disappointed that the budget sets out a fund like this that’s solely focused on dairy. “It could have been broader. The [dairy sector] isn’t the only one that could use research and innovation,” he says.

Listen on for the full discussion with McCann, Kelvin Heppner, and Shaun Haney on RealAg Radio, here:

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