Supply Management Processing Investment Fund – Applicant guide

Applicant guide

Purpose of this guide

This guide will:

  1. help you determine if you may be eligible for funding from Agriculture and Agri-Food Canada (AAFC) under the Supply Management Processing Investment Fund
  2. provide instructions to help you complete the project application form

Table of contents

1.0 About the Supply Management Processing Investment Fund

The Supply Management Processing Investment Fund supports the dairy, poultry and egg processing sectors to mitigate the impacts of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Canada-United States-Mexico Agreement (CUSMA). It aims to assist existing processors in the supply-managed sectors to increase their competitiveness and resilience in the face of evolving markets.

The overall budget from April 1, 2022, to March 31, 2028, is $397.5 million.

Program objective

The program supports investments in processing facilities that improve productivity and/or efficiency through the acquisition of new automated equipment and technology.

Program priority

Priority consideration will be given to:

  • small and medium enterprises (SMEs)
  • first-time applicants
  • processors manufacturing products on the import control list
  • projects that improve productivity

Note: To better meet program objectives, additional prioritization may be applied. For example, for poultry further processors, priority may be given to applicants engaged in deboning and cutting activities rather than value-added processing activities.

1.1 Eligible applicants

Eligible applicants are for-profit organizations, including corporations and cooperatives, and are processors of supply-managed commodities:Footnote 1

  • Dairy processors
  • Poultry Primary processors (chicken and turkey)
  • Poultry Further processors (chicken and turkey)
  • Hatcheries (broiler, egg-type or turkey)
  • Egg graders
  • Egg processors
Eligibility criteria

Applicants must be:

  • operating in Canada
  • processors buying domestic raw commoditiesFootnote 1
  • predominantly processing supply-managed commodities at the project locationFootnote 1
  • holding an active federal or provincial processing licence
  • able to provide financial statements demonstrating ongoing revenues from processing, including a minimum of 24 months prior to the submission of an application
  • federally or provincially registered legal entities capable of entering into legally binding agreements

1.2 Funding and cost-sharing

Available funding

Contributions under the program are non-repayable.

Over the life of the program, the maximum AAFC contribution to an organization will normally not exceed:

  • $10 million for dairy processors
  • $5 million to all other eligible applicants listed in section 1.1

Note: The program will accept a maximum of one application per organization, with the exception of dairy processors, who may submit more than one application, up to the maximum contribution indicated above.

Cost sharing

Eligible project costs will normally be shared between AAFC and your organization as follows:

Size of organization AAFC Applicant
SMEs (0 to 499 employees) 50% 50%
Large (500 employees or more) 25% 75%
Note: The program may provide an additional 10% on the cost-share ratio where the majority of the business (more than 50%) is owned or led by one or more under-represented groups.

Your portion of the cost-share must be cash contributions. In-kind contributions are ineligible.

What is a cash contribution

A cash contribution is an expense requiring a cash payment, by either your organization or by a participant/contributor (such as a partner or other government), during the term of the contribution agreement. Specifically, a cash contribution is an expenditure for an eligible project cost incurred and paid for by your organization, or another project participant.

The program will only reimburse cash contributions for eligible project costs that are incurred and paid for by your organization. A cash contribution made by another project participant should be reported as part of your sources of funding, and must be for an eligible project cost.

What is an in-kind contribution

In-kind means the fair market value attributed for goods and the fair value attributed for services that require no outlay of cash during the term of the Contribution Agreement by you or a contributor.

Stacking provisions

The stacking limit refers to the maximum level of Canadian government funding that an applicant can receive towards the total eligible costs of a project.

The total government funding (federal, provincial/territorial, and municipal governments) will not exceed 75% of eligible project costs.

Basis of payments

Payments to recipients will be made based on the reimbursement of eligible expenditures that have been incurred and paid by the applicant as set out in the contribution agreement.

Eligible costs

The following costs are eligible if they are reasonable and directly related to the project:

  • Costs for the purchase and installation of new equipment
  • Costs related to the contracting of external expertise for services related to the equipment installation
  • Costs for the modification of the processing facility necessary for the installation of the equipment
  • Construction costs, for example, expansion or modernization (dairy facilities only)

Costs related to the purchase of land and buildings, and research and development are not eligible under the Supply Management Processing Investment Fund. For more information on cost limitations, refer to Annex C: Project costs.

The proposed project costs will be evaluated by AAFC, and modifications could be negotiated, when deemed necessary, to ensure that the level of funding is the minimum necessary to achieve the expected results of the project.

Retroactivity

The program will consider costs eligible for reimbursement from the date a complete application is received by AAFC. A confirmation of the date will be provided by AAFC. Any costs incurred prior to the signing of a contribution agreement would be incurred solely at the applicant's risk without obligation of payment by AAFC.

1.3 Eligible activities

The program will support investments in processing plants that are aimed at improving the competitiveness of the company.

The program supports projects that increase automation and/or improve productivity in processing facilities, such as, but not limited to:

  • automation of an existing production process
  • improvement to an existing automated or robotic process
  • purchase of a new production line
  • implementation or improvement of an integrated management software

In addition to the above, projects may also include activities that will provide additional benefits such as, but not limited to:

  • improving environmental sustainability, such as:
    • Equipment to reduce water and energy consumption
    • Equipment required to treat waste water resulting from an increase in production
  • responding to consumer demand concerning food safety and animal welfare, such as:
    • Packaging equipment that increases shelf life
    • Processing equipment to reduce/control pathogen load

1.4 Application deadlines

Applicants may apply at any point during the life of the program, until available funds have been fully allocated. Once all funds have been allocated, a notice will be posted on this website.

The program ends on March 31, 2028, and all projects must be completed prior to that date.

Following the program's service standards, the program aims to provide a decision on funding within 100 business days of receiving a complete application package. The time for review and approval should be taken into consideration when submitting your application. Preferably, the application should be submitted approximately 3 to 6 months before initiating project activities. Projects should normally be completed over a maximum period of 3 years.

2.0 Expected results

Approved projects are expected to result in one or more of the following benefits:

  • Increase automation in processing facilities
  • Reduce production costs
  • Increase productivity
  • Increase annual revenues

3.0 Assessment criteria

Once the eligibility of the applicant and project have been established, proposed projects will be assessed on their overall relevance with respect to the objectives of the program. Applicants have to demonstrate that:

  • there are issues and challenges that are affecting their productivity and competitiveness and how the proposed project will address them
  • the project will generate a gain in productivity and/or efficiency
  • the organization is financially viable and expected to generate and/or increase revenues
  • there is a realistic financing plan in place
  • it has the technical, managerial and operational capacity to carry out the project

4.0 Reporting on your project

Should you be approved for funding, you will be required to report on progress, performance, and finances. These reports include:

Progress reports

You will be required to provide progress reports describing the progress made towards deliverables and activities completed, as described in your contribution agreement.

Performance reports

Once your project is completed, you will be required to provide performance reports on an annual basis for a minimum of 2 consecutive years. The reports will track progress against mutually agreed upon performance measures outlined in the contribution agreement.

Financial Reports

Financial reporting will be required with each request for reimbursement of expenditures, in addition to year-end accounting and other financial reports.

Other reports may be required at AAFC's discretion.

5.0 Considerations

5.1 M-30 Act (Quebec organizations only)

The province of Quebec's M-30 legislation may apply to Quebec based applicants only. It is the Act Respecting the Ministère du Conseil exécutif (R.S.Q., c. M-30).

More information on the Act is available online or by contacting the Ministère de l'Agriculture, des Pêcheries et de l'Alimentation (MAPAQ) at dpci@mapaq.gouv.qc.ca.

M-30 applies to various types of Quebec organizations, for example, organizations located in Quebec and receiving more than half of their financing from the Government of Quebec may be subject to the Act.

All Quebec based organizations will have to address this matter and demonstrate their compliance with the Act during the project assessment process, and prior to entering into a Contribution Agreement.

5.2 Intellectual property

Any intellectual property created or developed by or for the recipient resulting from the activities undertaken and described in the Work Plan will be owned by the recipient or by a third party, as may be negotiated by the recipient.

6.0 After you apply

After you submit your application, an acknowledgement notice will be sent to you.

Note: You should not consider your application as submitted to the program until you receive the acknowledgement of receipt.

The program's goal is to:

  • respond to general inquiries made to our phone number or email address before the end of the next business day
  • acknowledge receipt of your application within 1 business day
  • assess your application and send you an approval or a rejection notification letter within 100 business days of receiving a complete application package

Please note that an invitation to submit an application to the program does not constitute an offer of funding. Also, even if a project meets all eligibility criteria, the submission of an application creates no obligation on the part of Canada or AAFC officials to provide funding for the proposed project. Canada retains discretion to determine, based on other public policy and public interest considerations, whether an application that meets the criteria identified in this Guide will ultimately receive funding.

Should your application be approved, you will be invited to enter into a Contribution Agreement with AAFC.

7.0 Contact information

For more information on the Supply Management Processing Investment Fund, please contact the program by:

E-mail: aafc.smpif-fitpgo.aac@agr.gc.ca
Telephone: 1-877-246-4682

Annex A: How to complete the application

1. Complete and submit a Project Summary Form

The Project Summary Form helps to determine your project's eligibility and alignment with program criteria and priorities.

Email your completed Project Summary Form (PDF) to aafc.smpif-fitpgo.aac@agr.gc.ca.

Please contact the program if you need help to complete and submit the Project Summary Form.

Following the submission, you will be contacted by a program officer to discuss your project and you may be invited to submit a Project Application Form. Please note that an invitation to submit an application to the program does not constitute an offer of funding.

2. Complete a Project Application Package

If you are invited to submit a Project Application package, the program will send you the forms and instructions to submit a complete application.

Once you submit your application, you will be notified if your application is complete or if you are missing information. If your application is incomplete, you will have 30 business days to provide the missing information before your file is closed.

The following supporting documents are required as part of a complete application:

  • Application form, including:
    • Work Plan listing all activities and detailed description of the work to be undertaken
    • Financing Plan
    • Performance Objectives
  • Business Plan, including:
    • Diagram of the applicant's corporate structure
    • Organizational chart
  • Certificate of Incorporation or Articles of Incorporation
  • 2 complete Financial Statements (which will cover 3 years of revenues)
    • Including balance sheet, income statement, and statement of cash flow
  • Pro Forma Financial Statements for 3 years after project completion
  • Detailed Budget with forecasted total project costs by cost category and fiscal years
  • Copies of financing agreements related to the project financing plan
  • Quotes, estimates and/or contracts supporting the costs of the project
  • Processing licence

Annex B: Definitions

Commodities
Processors may use imported products but their primary source of supply-managed commodities should be from Canada.
Supply-managed commodities must comprise at least two-thirds (2/3) of total inputs being processed at the facility where the project is taking place.
Dairy
Dairy includes milk from an animal, including cows, ewes, goats, water buffalo. It does not include dairy-free products or dairy-free alternatives such as those made from soybeans, rice or nuts.
Dairy processors
Dairy processors transform Canadian milk into dairy products and/or dairy ingredients such as butter, cheese, milk powders, evaporated milk, sweetened & condensed milk, cream, ice cream, buttermilk, yogurt, etc.
Egg graders
Egg graders grade and package Canadian table eggs (Galllus domesticus species only).
Egg processors
Egg processors transform Canadian shell eggs into liquid eggs, powdered egg, frozen products and ready to eat items (Galllus domesticus species only).
Hatchery
Only broiler, egg-type or turkey hatcheries are eligible applicants.
Ineligible applicants
Ineligible applicants include individuals, sole proprietorships, governments (provincial, territorial, municipal), and not-for-profit organizations (that operate solely for social welfare, civic improvement, pleasure or recreation, any other purpose except profit).
Large enterprises
Businesses with 500 employees or more. A subsidiary, wholly-or majority-owned, by a large parent company will be included in the employee count and considered as a large enterprise.
Poultry primary processors
Poultry primary processors slaughter chicken and/or turkey.
Poultry further processors
Poultry further processors transform raw chicken and/or turkey into meat or meat products
Small and medium enterprises
Businesses with 1 to 499 employees.
Under-represented groups
Under-represented groups include women, youth (aged 35 or under), Indigenous groups, visible minorities, and persons with disabilities.

Annex C: Project costs

Eligible project costs – General principles

  • Eligible costs must be directly related to, and necessary for, successful completion of the approved project
  • Eligible costs must be incurred and paid by the recipient (organization signing the Contribution Agreement with AAFC)
  • Any other expenditure not specifically listed below as eligible or otherwise approved by the program may be considered as ineligible
Eligible capital assets

Tangible assets that are purchased, constructed, developed or otherwise acquired and:

  • are required for the execution of the project
  • have a useful life extending beyond one fiscal year and are intended to be used on a continuing basis
  • are not intended for resale during the life of the project

Eligible capital assets include costs related to the purchase of machinery, equipment and related systems (such as software).

Eligible contracted services

Professional or specialized services for which a contract is entered into, such as:

  • costs related to the installation of the machinery, equipment and related systems
  • costs related to the modification of the processing facility required for the installation of the equipment
  • costs related to construction, expansion, and/or modernization of dairy facilities

A contract should be in place with the contractor, including payment terms and deliverables. Recipients must use a fair and competitive or otherwise justifiable and generally accepted sound business process that results in competent and qualified contractors working on the project.

Eligible other direct costs

Other costs for project-related deliverables, such as:

  • costs related to shipping or transportation of equipment and/or technology

Ineligible project costs – General principles

  • All costs related to regular ongoing operational and managerial activities of the organization and any costs which cannot be directly tied to the project are considered ineligible.
  • Notwithstanding that the following costs may have been or may be reasonably and properly incurred and paid by the proponent during the execution of project activities, they are considered ineligible costs under the program:
Ineligible administrative costs

Administrative costs means costs related to:

  • project management costs: management and administrative staff wages, including those who negotiate service contracts, pay the invoices, manage the project budget, monitoring and/or prepare the claims and any financial or progress/performance reports for the project
  • administrative office supplies and expenses:
    • basic telephone fees (including fax lines) and cell phones
    • hydro
    • materials and office supplies (for example, pens, pencils, paper, envelopes, cleaning supplies, subscriptions)
    • monthly internet fees
    • postage and courier fees
    • office equipment (for example, computers, printers, photocopiers)
    • office space (rent) and related utilities, maintenance and property taxes
    • audit fees
    • bank fees
    • insurance
    • legal fees
    • other overhead type expenditures relating to the organization's office
Ineligible capital assets

Ineligible capital assets include:

  • equipment, machinery, material and all other costs not specifically required for the execution of the project
  • used or refurbished equipment
  • rentals and/or lease (including Capital and Operating leases) of facilities, equipment or machinery
  • any portion of cost, or any cost or assistance that, in the Minister's opinion, exceeds the fair market value for that cost item
  • land, goodwill, and existing equipment or buildings owned by a related party
  • costs related to the acquisition of land or buildings
  • costs for any vehicle purchase, modification or leasing
Ineligible contracted services

Professional or specialized services for which a contract is entered into, for activities such as:

  • construction costs (for all applicants listed in section 1.1 other than dairy processors)
  • costs related to the preparation of a funding application, business plan and feasibility studies
Ineligible salaries and benefits
  • salaries and benefits paid to or on behalf of organization's staff to execute activities outlined in the project Work Plan
Ineligible travel

Travel costs directly related to the project, such as:

  • per diems (meals, incidentals and taxis)
  • accommodation
  • transportation, such as airfare
  • hospitality
Ineligible other costs
  • any cost, such as amortization, and working capital including provisions for contingencies and cash reserves, that would not result in a direct, out-of-pocket expense for the applicant
  • research and development costs
  • material/consumables needed to undertake the project
  • marketing, promotion and public relations expenses
  • permits and licenses
  • refundable portion of the Goods and Services Tax, value added taxes, or other items for which a refund or rebate is received
  • entertainment, gifts, and charitable donations

Endnotes

Endnote 1

Please refer to Annex B: Definitions for more information on applicant eligibility.

Return to footnote 1 referrer

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