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Government Grants Spur the Growth of Canadian Food Processors

October 24, 2016

By Jeff Shepherd, Mentor Works Ltd. 

Food processing/manufacturing is one of the largest business sectors of the Canadian economy and that’s not going to change anytime soon. The Conference Board of Canada estimates that Canadian food manufacturers will reach a record $4.3 billion in pre-tax profits in 2016, with exports increasing at a rate of approximately 2.6% in each of the next 5 years.

However, this opportunity to grow and succeed on a global scale needs to be met with increased investment by food processors. In order to satisfy growing demand for products, manufacturers must seek strategic investments to diversify their offerings and achieve greater efficiency.

Federal and provincial governments understand the value food manufacturers provide to the economy, and offer support to the sector through targeted grants and loans. These government funding opportunities can be used to offset a portion of costs related to investments and may be leveraged for a wide range of strategic projects.

How to Use Government Grants for New Investments

Government funding programs, and government grants in particular, are an intelligent way for companies to reduce the cost of upcoming investments. While government loans provide low/no interest rates and can be used to extend cash flow, government grants are a source of non-repayable funding and directly improves the return on investment (ROI) of projects.

Grants are (usually) available only to mature, growth-oriented companies who have been incorporated for 3 years or more and maintain 10 or more employees. While each program is slightly different in its eligibility criteria, most programs require businesses to be financially stable and have a record of profitability for funding requests to be approved.

Government grants are retroactive in nature, and will only fund pre-approved projects/expenses. This process provides an opportunity to forward-thinking companies, as funding can be coordinated during the strategic planning process. Businesses often apply for grants ahead of their project starting to allow time for approval before any costs are incurred.

Government Grants and Funding Opportunities for Food Processors

There are four key areas of investment businesses may receive grants for, including:

  1. Workforce Development: Hiring and training employees for a more skilled workforce;
  2. Business Expansion: Large-scale business investments including the construction of new facilities or developing new international markets;
  3. Capital Adoption: Purchasing or modifying technology for productivity enhancement or energy efficiency; and
  4. Research and Development: Innovative technology development or commercialization projects associated with new products or processes.

Government Grants for Workforce Development

Despite the food processing sector’s growing need for automation, manufacturers still require skilled employees to keep production flowing smoothly. Being able to recruit top talent, then training them to deliver value to the company is essential for all food processors to remain competitive.

Government funding programs such as the Canada-Ontario Job Grant (COJG) may reimburse companies for up to 66% of eligible third-party training costs, such as trainer or course fees and associated training materials. For small businesses with less than 50 employees, this contribution can increase as high as 83%. This program is an excellent way to offset training costs and improve the skills of your workforce at an accelerated pace.

Likewise, hiring grants may help manufacturers access employees that have recently graduated from a post-secondary institution. Each spring, a new round of funding is released to offer employers up to 50% of a new hire’s wages to a maximum of $14,000-$20,000. These grants can help employers build a skilled, youthful workforce at reduced cost.

One southern Ontario food manufacturer used both of these incentives with tremendous success. The company used COJG to implement a food safety/traceability training course where a total of 19 employees received new high-value skills. The business also used one of many hiring grants available to employ a Production Administrator. In the first year of the employee being on staff, the business saved $16,000 in wages.

Government Grants for Business Expansion

Canadian food processors can also benefit from government grants aimed at increasing production capacity and developing new markets. These funds are heavily focused on increasing revenue (especially internationally) and increasing the number of jobs a business can maintain.

One of the most popular government grants among Ontario manufacturers is the Southwestern Ontario Development Fund (SWODF). Food and beverage processors who are implementing large-scale business expansion projects may use the fund to recover up to 10-15% of project costs to a maximum $1.5 million in government grants.

Grand River Foods, a food processor from Cambridge, Ontario successfully received grants through SWODF to expand its production facility’s size and purchase new equipment to increase its product offering. Because of the SWODF-funded project, Grand River Foods expects it will be able to create 50 new jobs and maintain over 300 during the project’s lifecycle.

Government Grants for Capital Adoption

Technology is transforming the food and beverage processing sector by making it more efficient and better able to cater to customer preferences. Adding new product lines, increasing capacity, and offering products in different sizes are all projects that can help manufacturers grow and succeed in an extremely competitive market.

A new Ontario government grant available exclusively to manufacturers is the CME SMART Green Fund. The program was created to help manufacturers increase productivity while simultaneously reducing greenhouse gas emissions (GHGs). Agri-food processors may use this program to reduce project costs by up to 50% to a maximum $200,000 per facility. Companies may use the fund for up to 5 facilities for a maximum $500,000 grant.

Government Grants for Research and Development

Food and beverage manufacturers should also be aware of grants to research and develop new innovative products or processes. Research activities, either internal or through a post-secondary research institution, can assist businesses overcome technical challenges impeding their growth.

A popular and effective funding program available to businesses across Canada is the Industrial Research Assistance Program (IRAP). IRAP grants may provide up to 50-80% of R&D project expenses to a maximum $50,000 or more, depending on the size of the research project.

Jeff Shepherd obtained his Honours Bachelor of Business Administration from the University of Guelph-Humber. He has combined his passion for marketing and economic development in his role of Marketing Analyst at Mentor Works. To read more of Jeff’s government funding content, view Mentor Works’ blog.

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Mentor Works Ltd.
Mentor Works Ltd. helps companies get government funding. We work directly with Canadian businesses to help build and execute on their custom developed Proactive Funding Plan™. This approach helps you grow your business and increase your cash flow by creating a proactive plan for government funding.

By building a Proactive Funding Plan™ that’s based on your business’ to strategic priorities, we will maximize your cash flow planning to help fund your business expansion efforts, new technology/equipment, hiring, training, and research & development activities. Mentor Works’ turnkey approach includes matching funding with each client’s unique priorities, while streamlining the application process and keeping our clients up-to-date on all funding news and announcements so they never miss out on a funding opportunity.

Mentor Works offers also offers free educational resources for businesses, including Downloadable Funding Resources, Funding Webinars & Workshops, a Daily Funding Blog, a Weekly Funding Newsletter, and a List of Top Funding Programs.

Connect with Mentor Works today at 1-888-599-3111 or their Contact Form to learn more about your funding options.