AAFC Dairy Innovation and Investment Fund
The Dairy Innovation and Investment Fund (DIIF) aims to help dairy processors in making investments to increase competitiveness over the long term and adapt to the new market realities.
The Fund provides non-repayable contributions to Canadian dairy processors to invest in innovative solutions to better manage the structural surplus of solids non-fat in Canada.
Offered by Canadian Dairy Commission
Amount
Non-repayable contributions of up to 33% of eligible project costs (up to 25% for construction costs), to a maximum of $75 million per project or the funds available in the region of the project, whichever is lower
Quick eligibility check
Who can apply
Eligible applicants are for-profit organizations, including corporations, cooperatives and partnerships, and are Canadian dairy product manufacturers who process milk. Only projects involving milk from cows are eligible.
Applicants Footnote 1
- must hold a valid federal or provincial licence to carry out activities with respect to dairy processing. New legal entities involving partnerships between existing Canadian processors are also eligible.
- are federally or provincially registered legal entities capable of entering into legally binding agreements.
1.2 Eligible projects
Only investments in building facilities and equipment that result in a NET increase in solids non-fat processing capacity for the purpose of the program objective will be considered.
To be eligible:
- The project must, in the case of building of new facilities: result in a NET increase in solids non-fat processing capacity of at least 50 million litres of skim milk per year, organization-wide Footnote 2 in Canada. By way of example, if a new facility replaces an existing facility, it must create a NET additional processing capacity of at least 50 million litres of skim milk per year.
- The project must, 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: 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 Footnote 2 in Canada. The project must create additional capacity that does not replace a reduced capacity in another facility owned by the applicant. Applicants can combine different type of projects in the same plant to reach the minimum volume requirement.
- The applicant must receive assurance from the marketing board of the pool where the project is located that the milk for this project is either available or has the potential to be made available, either within the facility’s current supply or through other means.
- Demonstrate there is a market for all milk components.
By way of exception, a foreign company that wishes to start operating in Canada as a dairy processor and whose proposed projects have significant impacts and meet the program objectives may be considered an eligible applicant. Contact the Canadian Dairy Commission for more details.
Not eligible:
The following types of projects are not eligible
projects aimed at processing milk components that are not considered part of the structural surplus, such as butterfat, whey, permeate or buttermilk
projects related strictly to the processing of milk from species other than cows such as ewes, goats or water buffalos
projects related strictly to dairy-free products or dairy-free alternatives such as those made from soybeans, rice or nuts
projects aimed at replacing existing equipment without an increase in capacity
About the funding
The overall budget from April 1, 2023, to March 31, 2033, is up to $333 million, which includes $5 million for program administration, and up to $33 million in unclaimed Dairy Direct Payment Program funds.
Funding for projects under this program is distributed among regions as follows (approximation):
Regions: West (British-Columbia, Alberta, Saskatchewan, Manitoba); Approximate funding* (millions): $74
Regions: Ontario; Approximate funding* (millions): $127
Show all funding details
Regions: Québec; Approximate funding* (millions): $109
Regions: Atlantic (New-Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador); Approximate funding* (millions): $18
*Unused funds may be reallocated from one region to another.
Contributions under the program are non-repayable. The maximum contribution under the DIIF is $75 million per project or the funds available in the region of the project, whichever is lower. Applicants may use the table below to estimate the maximum DIIF contribution that they may receive if their project is accepted.
Table 1
ESTIMATING THE MAXIMUM CONTRIBUTION FOR YOUR PROJECT Footnote 3
ESTIMATING THE MAXIMUM CONTRIBUTION FOR YOUR PROJECT Footnote 3: Project types
Example 1
New processing facility
Example 2
Expansion of an existing facility
Example 3
Replacement of equipment and increase capacity
(no construction)
ESTIMATING THE MAXIMUM CONTRIBUTION FOR YOUR PROJECT Footnote 3: Building construction Footnote 4
ESTIMATING THE MAXIMUM CONTRIBUTION FOR YOUR PROJECT Footnote 3: (# of litres x $0.10/litre)
N/A
Equipment, installation and other eligible costs (# of litres of new capacity x $0.30/litre)
Equipment, installation and other eligible costs to replace existing equipment (# of litres of current capacity x 50% x $0.30/litre) | N/A | N/A
Maximum contribution (the lowest of this amount or $75M or the funds available in the province where the project is located)
Table 2
Examples of maximum DIIF contributions
Example 1
Examples of maximum DIIF contributions: A new facility with an additional net capacity of 50 million litres of skim milk per year for the entire organization
Examples of maximum DIIF contributions: Building construction: 50 million litres x $0.10/litre = $5 million
Examples of maximum DIIF contributions: Equipment, installation and other eligible costs: 50 million litres x $0.30/litre = $15 million
Examples of maximum DIIF contributions: Maximum contribution: $20 million
Example 2
Examples of maximum DIIF contributions: A new facility with an additional net capacity of 300 million litres of skim milk for the entire organization. Due to its size, this project will reach the $75 million maximum contribution ($17 million in the case of the Atlantic provinces and $74 million in the West).
Examples of maximum DIIF contributions: Building construction: 300 million litres x $0.10/litre = $30 million
Examples of maximum DIIF contributions: Equipment, installation and other eligible costs: 300 million litres x $0.30/litre = $90 million
Examples of maximum DIIF contributions: Maximum contribution: $75 million (or the regional funding, whichever is lower)
Example 3
Examples of maximum DIIF contributions: A facility with 150 million litres capacity that increases its processing capacity by a minimum of 25% and 30 million litres of skim milk for a total of 187.5 million litres (addition of 37.5 million litres) and requires the expansion of an existing building.
Examples of maximum DIIF contributions: Building construction: 37.5 million litres x $0.10/litre = $3.75 million
Examples of maximum DIIF contributions: Equipment, installation and other eligible costs: 37.5 million litres x $0.30/litre = $11.25 million
Examples of maximum DIIF contributions: Maximum contribution: $15 million
Example 4
Examples of maximum DIIF contributions: A facility with 150 million litres capacity that is replacing its current equipment AND increasing capacity by a minimum of 25% and 30 million litres of skim milk for a total of 187.5 million litres of skim milk without the need for a new building.
Examples of maximum DIIF contributions: Building construction: $0
Examples of maximum DIIF contributions: Equipment, installation and other eligible costs for increased capacity: 37.5 million litres x $0.30/litre = $11.25 million
Examples of maximum DIIF contributions: Equipment, installation and other eligible costs to replace existing capacity: 50% x 150 million litres x $0.30/litre = $22.5 million
Examples of maximum DIIF contributions: Maximum contribution = $11.25 million + $22.5 million = $33.75 million or the regional funding, whichever is lower.
Cost sharing
The DIIF contribution may not exceed 33% of eligible project costs. The contribution for construction costs will be up to 25% whereas the contribution for other eligible costs will be up to 33%. These levels of contribution are taken into account in tables 1 and 2 above.
- The applicant’s portion of the cost-share must be cash contributions.
- In-kind contributions are ineligible.
Stacking limit
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 85% of eligible project costs.
Basis of payments
Payments to recipients will be made based on the reimbursement of eligible costs that have been incurred and paid by the applicant as set out in the contribution agreement. The recipient will need to show proof of payment of those costs.
Payments to recipients in the form of advances towards eligible costs may be possible and shall be limited to immediate cash requirements and subject to provisions as set out in the contribution agreement.
Eligible Activities
- Removal and disposal of existing equipment.
- Purchase, shipment, installation, and commission of new equipment, software and production lines.
- Installation of new or expansion of existing milk reception and milk storage area as required to meet the objectives of the project.
- Retrofits or renovations of existing facilities related to the installation and operation of eligible equipment.
- Construction of a new facility.
- Training necessary to operate eligible equipment.
- Translation of materials related to training on the new equipment.
Eligible costs (Refer to Appendix A: Project costs, for definitions)
The following costs are eligible if they are reasonable and directly related to the project, the objectives of the program and eligible activities:
- Capital assets.
- Contracted services.
The program will consider costs eligible for reimbursement as of November 17, 2022, if the project summary form is received on or before November 3, 2023. For possible future rounds of applications, costs will be considered eligible for reimbursement as of the date the CDC receives a complete application. A confirmation of the date the application has been deemed complete will be provided by the CDC.
Any costs incurred prior to the signing of a contribution agreement would be incurred at the applicant's risk without obligation of reimbursement by the CDC.
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 the CDC). 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. These include, but are not limited to, the construction of new buildings and the purchase of skimming equipment, evaporators, dryers and silos.
- have a useful life extending beyond one fiscal year and are intended to be used on a continuous 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).
a. May also include expenditures relating to the alteration or modernization of an asset that appreciably prolongs the period of usefulness of the item or improves its functionality.
b. Eligible costs include the purchase price plus other acquisition costs, such as installation, freight, transportation, insurance and duties.
Eligible contracted services
Professional or specialized services for which a contract is entered into, such as:
- construction costs of a new building.
- costs for the removal and disposal of old equipment.
- costs related to the installation and commissioning of machinery, equipment and related systems.
- costs related to the retrofits or renovations to the processing facility required for the installation of the eligible equipment. A contract should be in place with a qualified contractor, including payment terms and deliverables.
- cost of translation of materials related to learning how to use new equipment.
- 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.
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