Canada | Publication | May 20, 2020 - 1 PM ET
The governments of Canada, British Columbia and Saskatchewan have all recently announced new initiatives to support agribusinesses. Agribusinesses will need to understand the qualification criteria of these programs and any limitations on the funds to ensure they do not risk violating the purpose and intent of the specific program. Doing so will help companies avoid having to repay the funds or facing other penalties. The federal and provincial initiatives are summarized below.
Recently, Norton Rose Fulbright Canada (NRFC) provided an update on Prime Minister Trudeau’s May 5th announcement about new measures to assist agribusinesses, including $252 million in federal funding and an increase of $200 million in borrowing capacity to support agribusinesses.
Since then, the federal government has announced additional support for which agribusinesses qualify. This support includes:
Each province will distribute and set criteria for the $3 billion wage top-up funding, so readers should monitor provincial government websites for further details.
In addition to the federal programs announced above, Immigration, Refugees and Citizenship Canada (IRCC) has announced it is accepting applications to the new Agri-Food Pilot (the pilot).
On May 14, the Government of Canada announced the launch of a $100 million Agriculture and Food Business Solutions Fund through Farm Credit Canada to provide agribusinesses with financial stability and flexibility to help them rebuild their business models during challenging times, such as COVID-19.
The fund will support various agribusiness enterprises, including those involved in primary production, agri-tech, manufacturing, packaging and distribution. It will offer innovative solutions, such as convertible debt investments and other flexible financing solutions – up to a maximum of $10 million per application.
Companies will need to demonstrate an unexpected business disruption, such as losing key suppliers, use of a facility, or critical staff members. Agribusinesses may not use the funds to repay shareholder loans or purchase shareholder equity positions.
As noted above, IRCC has launched a new three-year pilot primarily for experienced, non-seasonal workers residing in Canada to obtain permanent residency. The pilot is designed to test an industry-specific approach to help employers fill ongoing labour needs for full-time, year-round employees. Specifically, the pilot will focus on employing workers in the meat processing, mushroom and greenhouse production, and livestock industries. IRCC is accepting from May 15, 2020, to May 14, 2023, up to 2,750 applications annually throughout the pilot. However, the pilot does not apply in Quebec due to the Canada-Quebec Accord.
Recently, NRFC provided an update on new programs in Alberta, British Columbia, Ontario and Quebec designed to assist agribusinesses dealing with disruptions due to COVID-19. Since then, British Columbia and Saskatchewan have launched new initiatives to help agribusinesses manage market disruptions due to COVID-19, as summarized below.
British Columbia’s new program will allow agribusinesses working in activities related to fish, seafood and aquaculture to access consulting and planning services similar to the types offered under the Canadian Agricultural Partnership, a federal-provincial-territorial agreement that is not otherwise available to these sectors.
Agribusinesses qualify for the British Columbia funding if they have experienced a revenue drop of at least 30% due to COVID-19. The program will provide up to $5,000 in business planning services and coaching for individuals, and up to $20,000 for groups. These services will help agribusinesses develop immediate and long-term recovery plans for their businesses. Eligible agribusinesses can also apply to a specialized business planning stream of the program for further assistance.
For more information about eligibility click here.
Saskatchewan’s $10 million initiative will help livestock producers manage the effects on their business due to COVID 19. Half of the funds will cover the costs of the province’s obligations under the national AgriRecovery set-aside program. The other half will be used to partially offset increased premium costs associated with the Western Livestock Price Insurance Program (WLPIP).
The province’s contribution to the AgriRecovery set-aside program unlocks a total $12.5 million in funding for livestock producers, to be delivered by the Saskatchewan Crop Insurance Corporation. This money will assist agribusinesses with the cost of temporarily holding cattle back from market during processing plant disruptions associated with COVID 19. Shipments of steer to processing facilities has decreased from 4,500 weekly to under 400 weekly year-over-year. Read NRFC’s recent update, which includes more details about the AgriRecovery program here.
The WLPIP is a risk management tool for livestock agribusinesses. As premiums for the program have increased significantly due to COVID-19, the province will provide 40% of the increased premium costs back-dated to February 25, 2020. The premium adjustments will remain in effect until at least September 1, 2020, when the province will review and reassess. Additionally, the WLPIP deadline to obtain calf price insurance will be extended from May 28, 2020, to June 18, 2020.
Agribusinesses will need to carefully monitor the details of these initiatives, as more details are released. It will be important for management to ascertain how the availability of these funds will interact with already-available programs for agribusinesses at the federal and provincial levels and to take appropriate action to obtain the full benefit of these programs.
It is reasonable to expect the same trust-based principles that apply to other federal government funding and subsidy programs will apply and that these programs will rely on the good faith of agribusinesses in reporting their eligibility and completing their applications, and there may be penalties for violating such principles.
For information about other available government relief programs, refer to our guide.
The authors would like to thank Preston Brasch, articling student, for his assistance in preparing this legal update.
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