Canada launches $333m fund to compensate dairies for lost market share

The Dairy Innovation and Investment Fund was first announced in November 2022 and again in Budget 2023 this March. The funding – which will be allocated across Canada by region - will be delivered by the Canadian Dairy Commission on behalf of Agriculture and Agri-Food Canada.

Dairy producers and processors will have access to support for medium to large-scale projects that will help the sector better manage the country’s surplus of solids non-fat (SNF, comprising every ingredient contained in milk other than butterfat and water, e.g. protein and lactose). 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 largest chunk of the money, around $127m, is to go to Ontario, followed by Quebec ($109m), the West including British Columbia, Alberta, Manitoba and Saskatchewan ($74m) and the Atlantic ($18m), comprising New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador. Unused funding may be re-allocated from one region to another, according to Agri-Food Canada. The maximum contribution is $75m per project or the funds available in the region of the project, whichever is lower.

Eligible projects must cover the following:

• 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% 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).

Eligible costs of capital assets and contracted services will also be supported, such as removal and disposal of existing equipment; purchasing, shipping, installing and commissioning of new equipment; installation of new or expansion of existing milk reception and storage areas; retrofits and renovations of existing facilities; construction of a new facility; training; and translation of materials related to training. Costs related to the purchase of land or research and development are not eligible.

Application process

Producers can apply in a two-stage process comprising a project summary form – used to screen the applicant’s and project’s eligibility – and a full project application if the initial proposal is successful. Applicants have until November 3, 2023 to submit a project summary form. The program will consider costs eligible for reimbursement as of November 17, 2022, if the project summary form is received on or before this deadline.

For more information and to apply, visit the fund’s web portal​.

David Wiens, Dairy Farmers of Canada president, said: “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.”

Phil J. Vanderpol, chair of Dairy Processors Association of Canada, added: “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.”