Written By Julia Schatz, Murray Coleman, Ted Shoub, Venetia Whiting and Julia Pasieka
In an earlier post, we highlighted the top issues that agribusinesses might wish to consider when navigating the challenges created by COVID-19. Canadian agribusinesses, alongside governments, have implemented long-term strategies to address the realities of living and working through a pandemic. Updates from our earlier post include details on programs or incentives announced to keep cash flowing, securing the agribusiness workforce, and strengthening the supply chain.
Keeping Cash Flowing
Provincial and federal governments continue to provide critical funding.
In Ontario, the Canadian Agricultural Partnership1 is supporting three initiatives to help the province's agri-food sector adapt to current challenges:
- The Place to Grow: Agri-Food Innovation Initiative provides $1,000,000 in new funding to help connect Ontario workers with in-demand jobs in the agri-food sector. The initiative will help primary agriculture, food processing companies, and retail stores recruit and train workers. Applications will be received and assessed on a continuous basis, while funding is available.
- The Agri-Food Open for E-Business Initiative provides $2,500,000 in funding to help grow the agri-food retail e-business. It intends to help agri-businesses develop online platforms to provide consumers with greater access to agri-food products. Eligible businesses or organizations can apply for either:
- a grant of up to $5,000 to establish an online business and marketing presence. Funding under this stream is intended for those needing immediate solutions; or
- cost-share funding of up to $75,000 to help businesses that already have an online presence develop e-business opportunities or collaborations on a larger scale.
- The Agri-food Workplace Protection Program, in coordination with the federal government, invests up to $2,250,000 to help farmers "enhance health and safety measures to prevent the spread of the virus." The funding will be used for initiatives including purchasing personal protective equipment, physical barriers, enhanced cleaning and disinfection and redesigning workstations. The program will also offer support to farmers who experience unexpected costs for housing and transportation in the event of a COVID-19 outbreak among on-farm employees.
In Manitoba, the Canadian Agricultural Partnership is providing $160,000 to Direct Farm Manitoba to purchase and develop a centralized online network of pickup and delivery options that will connect consumers with farmers' markets and other food producers and processors.
The Government of Alberta has announced several initiatives that support the agri-business in the province.
- In connection with the Canadian Agricultural Partnership, the Agriculture Training Support Program will provide:
- up to $5,000,000 in support to farmers, agri-businesses and food processors to offset the cost of training new employees. The government will contribute a maximum of $2,000 per new employee up to a maximum of $50,000 per employer. Grants will be provided on a first-come, first-served basis until all funding has been allocated; and
- approximately $1,000,000 in funding to be targeted for meat processors to provide support for new hires to undertake meat-cutting training.
- As a part of the federal AgriRecovery initiative (see below), the new fed cattle set-aside program will allow beef producers to be compensated for the costs of holding on to slaughter-ready cattle.
- Producers enrolled in the AgriStability program will be eligible for an increase in the interim payment from 50 percent to 75 percent for hog and potato producers. Find more information about AgriStability on the Agricultural Financial Services Corporation website.
On May 14, the federal government, on behalf of Farm Credit Canada (FCC), announced a $100,000,000 Agriculture and Food Business Solutions Fund to support proven, viable companies through unexpected business disruptions. Support will take the form of flexible financing options to help companies return to a stable financial position. To qualify, companies must demonstrate an impact from an unexpected business disruption (such as the loss of a key supplier, temporary loss of critical staff or leadership). The funds cannot be used to repay shareholder loans or purchase shareholder equity positions. Applications will be assessed individually, to a maximum of $10,000,000.
The federal government also announced a $252,000,000 aid package aimed at primary agriculture and food processing businesses. This includes:
- a $77,500,000 Emergency Processing Fund to help food processors adapt to health protocols, modernize processes and operations, and acquire personal protective equipment for their workers;
- $125,000,000 to be provided through an AgriRecovery initiative to assist producers who face additional costs, including helping cover the costs of maintaining livestock that cannot currently be processed due to closures of some food processing plants;
- $50,000,000 to establish a food surplus purchasing program wherein the government will buy large quantities of surplus products and redistribute them to local organizations which are serving vulnerable Canadians; and
- the possible expansion of the AgriInsurance program to include labour shortages as an eligible risk for the horticulture sector. This would insure against lost production due to an insufficient workforce, should producers be unable to find enough labour to harvest.
While the dollar amount falls well short of the $2.6 billion requested by the Canadian Federation of Agriculture in late April, the federal government has advised that the package represents an "initial investment", and additional federal supports for agri-business are expected. For example, the government has already expressed interest in expanding the Canadian Dairy Commission's borrowing limit to $200,000,000 to allow it to buy and store more surplus dairy products in the wake of increased milk dumping across the country.
Funding directed at supporting the fish and seafood processing sector is also available. The federal government has pledged $469,000,000 to support the fishing sector in the form of an industry-specific benefit and a grant:
- the Fish Harvester Benefit is a $267,600,000 benefit to cover up to 75 percent of losses for any fish harvesters who expect an income drop of 25 percent this season. The program will provide a maximum individual amount of $847 per week for up to 12 weeks; and
- the Fish Harvester Grant is a $201,800,000 non-repayable grant that offers up to $10,000 of non-payable support to self-employed harvesters. The size of the individual grants will depend on the harvesters' past revenue.
Earlier, the federal government announced the Canadian Seafood Stabilization Fund, which will provide $62,500,000 of new assistance to the fish and seafood processing sector. The Fund will help businesses access funding, support new health and safety measures, and adapt technologies and products to improve productivity and adapt to changing requirements and market demands. Details on how and when processors can apply for funding will be available soon.
The federal government has also committed to providing up to $3 billion in support to top-up the wages of minimum wage essential workers. While it will be up to individual provinces to determine who qualifies, it will likely include frontline staff such as grocery store workers. The Government of Canada will work with the provincial governments to determine eligibility and amounts of funding. Further information on the federal government's initiatives can be found on the prime minister's website.
Bennett Jones has also published updates on COVID-19 pandemic-related financial support for Canadian businesses generally, on April 9, April 16, April 24, April 30, and most recently, on May 6.
Securing the Workforce
Agribusinesses are concerned about ensuring sufficient labour support due to health-related absenteeism and difficulties surrounding temporary foreign workers (TFWs). In response, on May 12, the government announced a new, temporary policy that came into effect immediately and will "drastically reduce" the time it takes for a TFW to start a new job. A TFW who is already in Canada and has secured a new job offer (typically backed by a labour market test) can get approval to start their new job while their work permit application is still being fully processed. This policy will cut the process, which usually takes 10 weeks or more, down to 10 days or less.
The federal government has also announced $50,000,000 in funding to farmers and fish processors who are bringing in TFWs during the COVID-19 crisis. The program provides $1,500 per worker, which can be used to cover wages during the 14-day period in which TFWs are required to quarantine before they can commence working. More details on the program can be found on the Government of Canada's website.
The Province of Québec has raised the minimum wage for labourers engaged in picking raspberries to $3.89 per kg, and for those picking strawberries to $1.04 per kg.
The private sector has also come up with some creative ways to avoid a labour shortage. The Canadian Honey Council, in coordination with the federal government, chartered its own plane to fly 80 skilled workers from Nicaragua in advance of pollination season.
Despite these incentives, as of April 28, 2020, New Brunswick has restricted TFWs from entering the province. This order does not affect TFWs that have already arrived.
Strengthening the Supply Chain
Agribusinesses continue to be concerned about supply chain interruptions, particularly in light of the closure or reduction in capacity of several processing facilities after experiencing outbreaks of COVID-19.
In response to the potential for international supply interruptions, Canada, the United States, and 22 other WTO members signed on to a joint statement to "reinforce international cooperation on trade in agricultural and agri-food products." Together, the members represent 63 percent of global exports, and 55 percent of global imports, of agriculture and agri-food products. Members committed to, among other things:
- exercise restraint in establishing domestic food stocks of traditionally-exported agricultural products;
- not impose agriculture export restrictions or implementing unjustified trade barriers on agriculture and agri-food products and key agricultural production inputs; and
- introduce COVID-19 related emergency measures involving agriculture and agri-food products only when those measures are "targeted, proportionate, transparent, temporary and consistent with WTO rules."
Agri-Food Economic System has identified that Canada is in a unique position to address global supply chain concerns. Canada—a net exporter in nearly all agri-food products—has the opportunity and capacity to increase its already significant export capacity that can elevate Canada's position in international food supply.
The federal government has announced $20,000,000 in funding for the Canadian Food Inspection Agency (CFIA) to support critical food inspections that will help ensure "continued access to safe, high-quality food" for Canadians. The funding will also support the CFIA in working more closely with industry to minimize supply-chain disruptions. The CFIA is also exploring ways to introduce more flexibility in its regulation, including by relaxing packaging and labelling requirements not related to food safety to allow packaged food intended for use in restaurants and hotels to be redirected for sale in grocery stores and other retail outlets.
The Bennett Jones Agribusiness, Food and Beverage group is closely monitoring any changes and updates in relation to the agribusiness sector, and is here to respond to any questions you may have. In addition, please visit our COVID-19 Resource Centre for other COVID-19 related materials.
1. The Canadian Agricultural Partnership is a partnership of Canada's federal, provincial and territorial governments that began in April 2018, representing a five-year, $3-billion dollar commitment to support Canada's agri-food and agri-products sectors.