On May 5, 2020 the federal government announced a $252 million aid package aimed at helping farmers, food processors and other industry proponents in the agriculture sector address challenges posed by COVID-19. Targets supports offered by the program include the following:
- Emergency Processing Fund: The federal government has created a $77.5 million Emergency Processing Fund which food producers can use to buy personal protective equipment for workers, adapt to health protocols, retrofit their facilities and support other social distancing measures.
- AgriRecovery Initiatives: Beef and pork producers will have access to a new national initiative called AgriRecovery, which will provide funding of up to $125 million to help with additional costs associated with the management of livestock that is backed-up on farms due to the temporary closure of food processing plants.
- Surplus Food Purchase Program: The federal government will be launching a fund with an initial investment of $50 million that will buy surplus food and redistribute it to organizations that are serving vulnerable Canadians, such as local food banks.
- Increasing Canadian Dairy Commission’s Borrowing Limit: The federal government intends to increase the Canadian Dairy Commission’s borrowing limit by $200 million in order to address costs associated with the temporary storage of cheese and butter.
- Changes to AgriStability: The federal government will be working with provinces and territories to increase interim payments from 50 per cent to 75 per cent through AgriStability, a program that supports agricultural producers who face significant declines in revenue (note that British Columbia, Quebec, Saskatchewan, Prince Edward Island, and Alberta have all already agreed to the 75 per cent AgriStability interim payment).
- Changes to AgriInsurance: The federal government will examine expanding the AgriInsurance program to include labour shortages as an eligible risk for the horticulture sector - meaning producers who suffer lost production due to the inability to find sufficient labour to assist with harvest could be eligible for recovery of such losses under the AgriInsurance program.
Of note, this aid package falls well short of the $2.6 billion emergency funding requested by the Canadian Federation of Agriculture. Indeed, in response to the aid package industry groups, such as the Grain Council of Canada, the Ontario Federation of Agriculture and the Canadian Cattlemen’s Association, have expressed concerns that the support may be insufficient to assist farmers and ranchers dealing with the fallout of COVID-19. The aid also does not allocate funds to producers of fruits and vegetables, whose growing season is now getting underway.
In addition, an increase to the Canadian Dairy Commission’s borrowing limit by $200 million will require the passage of new legislation, so the federal government will need opposition support to accomplish the desired legislative change. Although it seems unlikely that Members of Parliament would vote against such change, it is conceivable that this could be delayed in the legislative process if committee hearings cause its implementation to be slowed.
Prime Minister Justin Trudeau has indicated that this aid is an initial step and if more funding is required the federal government will provide it. We will continue to monitor the government’s response to the issues the agri-sector is facing as a result of COVID-19 and will provide further updates and insights in due course.