Business and Operations
Getting a grant for your bakery
By Bonny Koabel CGA CPA
Canadian government offers food industry grants
By Bonny Koabel CGA CPA
When most people hear that the government gives money away as grants, their reaction is that it must not be true.
Why does the Canadian Government give away money?
When most people hear that the government gives money away as grants, their reaction is that it must not be true. Why would the Government want to give businesses money and receive nothing in exchange? The reality is that the Canadian Government does receive something in exchange for the money they give away: For every $1 the Government gives out in funding the government receives approximately $3 back in tax revenue. Grants are a win-win situation. Businesses receive funds they need to start, operate and expand their companies and the Government receives tax revenue from increases in company payrolls, HST collected Corporate Taxes and Employer Health Taxes.
What’s the Government’s motivation in giving $3 billion to the food industry?
The food sector has become Canada’s largest manufacturing employer and the Government would like to see this sector continue to grow and prosper. Food and restaurant businesses have 6,900 businesses that provide over 257,000 direct jobs to Canadians. The food industry employs more Canadians than both the auto and aerospace industries combined. The food sector produced $112.4 billion of goods in 2016, which is comprised of 18 per cent of all manufacturing shipments in Canada and 2 per cent of the national GDP.
Bakeries, restaurants and caterers supply approximately 70 per cent of all processed food and beverage products in Canada and is also the largest buyer of the food Canadian farmers grow. The food sector exports processed food and beverage products to 192 countries around the world. These exports reached $33.5 billion in 2016, which was an increase of 7 per cent over 2015. Food related-industries exported 29.8 per cent of all goods produced, 87 per cent of these exports went to three major markets in 2016 – United States (74 per cent), China (7 per cent) and Japan (6 per cent.)
The Federal Government would like to see Food sector exports grow to $75 billion by 2025. In order to reach this goal, the Federal Government will need to assist the capital intense food sector with funding.
CAP is a 5-year, $3-billion investment by federal, provincial and territorial governments to strengthen and grow Canada’s food sector. Funding began in 2018 and will run to 2023. CAP is split between the Federal and Provincial Government on a 60:40 basis and is geared towards the needs of each province and territory. Once the Province or Territory announces their funding plan it will appear online. Listed in this article are the website links to the Provinces and Territories funding plans and amounts:
- Alberta: $406 million in funding – www.cap.alberta.ca/CAP/
- British Columbia: $115 million in funding – www.iafbc.ca/funding-opportunities/innovation/
- Manitoba: $176 million in funding – www.gov.mb.ca/agriculture/canadian-agricultural-partnership/ag-action-manitoba-program/
- New Brunswick: $37 million in funding – www2.gnb.ca/content/gnb/en/departments/10/agriculture/content/agriculture_programs.html
- Newfoundland and Labrador: $37 million in funding – www.faa.gov.nl.ca/programs/cap/index.html
- Northwest Territories: $5.6 million in funding – www.gov.nt.ca/newsroom/news/canadian-agricultural-partnership-evolve-nwt-agriculture
- Nova Scotia: $37 million – www.novascotia.ca/agri/programs-and-services/financial-funding/
- Ontario: $1.5 billion in funding – www.ontarioprogramguides.net/category/other-business/
- Prince Edward Island: $37 million in funding – www.princeedwardisland.ca/en/information/agriculture-and-fisheries/canadian-agricultural-partnership-2018-2023
- Quebec: $293 million in funding – www.mapaq.gouv.qc.ca/fr/Grands-dossiers/pca/Pages/PartenariatCanAg.aspx
- Saskatchewan: $388 million in funding – www.saskatchewan.ca/business/agriculture-natural-resources-and-industry/agribusiness-farmers-and-ranchers/canadian-agricultural-partnership-cap
- Yukon: $7.4 million in funding – www.canada.ca/en/agriculture-agri-food/news/2018/05/new-funding-partnership-with-canada-will-benefit-yukon-farmers-and-support-local-food-production.html
Only Nunavut is left to announce their funding.
What types of expenses does the CAP cover?
The Canadian Government has realized that running a food manufacturing facility is very expensive. Food manufacturing facilities require equipment and machinery, food quality systems and certification, refrigeration, freezers, pest control etc., all of which cost a lot of money. Since the food sector is the largest manufacturing employee in Canada it is in the Government’s best interest to help with some funding. The CAP Funding program is meant to assist manufacturing facilities with these costs. Here are the funding areas for bakeries in Ontario. Funding varies across Canada, but these are the categories and contributions in Ontario.
- Enterprise Resource Planning and Supply Chain Management Systems – 35% of costs up to $100,000
- Ingredient Efficiency and Waste Reduction – 35% of costs up to $75,000
- Technology and Equipment to Improve Labour Productivity – 25% of costs up to $250,000
- Develop New Products or Processes– 35% of costs up to $75,000
- Market Products in Canada – 35% of costs up to $50,000
- Market Products Internationally – 35% of costs up to $75,000
- Food Safety and Traceability System Improvements – 50% of costs up to $75,000
- Food Safety Equipment – 35% up of costs up to $10,000
- Traceability Equipment – 35% of costs up to $10,000
How do I apply for CAP funding?
To apply for CAP funding go to the link above for the Province your company resides in. The CAP webpage will tell you the application filing deadlines. Each Provincial CAP webpage will announce the funding deadlines for early 2019. The CAP applications are quite detailed. It is recommended that you contact your Provincial CAP office or attend a training session to get more information on the CAP Funding Program.
There are consulting companies that specialize in CAP funding application submissions and it is recommended that you speak to one to assist you with the process. Each company is allowed to submit two CAP applications for each funding deadlines. For example, your bakery could apply for a new oven and a new ERP system for the same deadline. Companies are also allowed to file applications for new and every filing deadline, there is no upper limit to how much funding a company can receive.
After you submit your CAP application to the Government you will receive a response in up to 2 months letting you know if you were successful with receiving funding. If you are not successful, remember you may be able to resubmit the application for the next filing deadline.
Funding Recipients around the country
Here are some examples of funding received around the country under the former CAP funding program called Growing Forward 2 that ended in 2017:
Create A Treat received $100,000 for the purchase and installation of an automated stamping system, oven tunnel and cooling spiral.
Del’s Pastry received $29,995.00 to purchase and install equipment, complete process training and facility modifications to develop a new proprietary process for cinnamon bun production to help access new markets.
La Rocca Creative Cakes had received up to $100,000.00 to purchase and install an Enterprise Resource Planning system to help increase labour productivity.
Bonny Koabel CPA, CGA is the President of AKR Consulting Canada located in Mississauga, ON, a firm specializing in Government Grants, Subsidies, Tax Credits, Refunds and Rebates since 2003. Bonny has specialized in assisting businesses with obtaining Government funding for the past 15 years. Her expertise is working with companies and developing strategies to utilize Government funding. Bonny can be reached at email@example.com or 905-678-6368.