The federal government has rolled out its new Dairy Innovation and Investment Fund, which includes a federal commitment of up to $333 million in public funding over the next decade to help dairy processors across Canada increase processing capacity for a growing surplus of solids non-fat (also known as SNF.)
The program, which was previously announced in November 2022 and again in the federal budget in March 2023, is the final piece of compensation for producers and processors in supply managed sectors for concessions the Canadian government made in trade deals over the past decade, including the Canada-EU trade agreement, the CPTPP, and the renewed Canada-U.S.-Mexico trade agreement.
Agriculture Minister Lawrence MacAulay and Parliamentary Secretary for Agriculture Francis Drouin were in Saint-Hyacinthe, Quebec on Friday to formally launch the processor program.
“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,” said the minister. “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.”
We will always defend our supply management system, and we promised to help our dairy producers and processors who have been impacted by international trade agreements. Today, we’re keeping that promise. pic.twitter.com/MWO74R8zG1
— Lawrence MacAulay (@L_MacAulay) September 29, 2023
Solids non-fat is what’s left after milk is processed and fat is used for products such as butter and cream. Growing demand for butterfat has resulted in additional SNF supplies. Prior to signing the new North American trade agreement, the Canadian dairy industry had an outlet for this surplus, selling some SNF into Mexico, however the U.S. opposed having by-products from Canada’s supply management system being exported, and Canada agreed to cap exports of SNF.
To be eligible for funding, new projects must result in a net increase of SNF capacity of at least 50 million litres of skim milk per year. Upgrades to existing facilities must result in a net increase of SNF processing capacity of at least 25 per cent and 30 million litres of skim milk per year.
The fund, which will be administered by the Canadian Dairy Commission, will cover construction costs up to 25 per cent, with other eligible costs covered at up to 33 per cent.
“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,” noted Phil J. Vanderpol, chair of the Dairy Processors Association of Canada.
Dairy Farmers of Canada is also welcoming the program. “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,” said DFC president, David Wiens, in a statement.
According to Agriculture and Agri-Food Canada, there were 507 dairy processing plants in Canada as of 2022.