It is envisioned that by 2025, Canada will be a leader in Agricultural technology, recognized globally as a reliable and competitive supplier of safe, sustainable, high-quality agri-food products.

In order to successfully realize this vision, significant obstacles must be overcome in relation to increasing demand for clean and sustainable farming practices as well as increasing food supply for anticipated population growth of up to 9 billion by 2050. To find solutions to these obstacles, modern agricultural operations are leveraging cutting edge technologies such as precision agriculture, remote monitoring of crops and livestock, machine learning techniques, agricultural robots, and IoT-based smart farming systems with cloud-based data analytics.

Canadian companies developing agritech solutions can turn to a variety of non-dilutive funding options such as grants, tax credits, and SR&ED financing to support their projects at various stages of growth, from R&D to commercialization and export.

Research and Development

  • SR&ED tax credits

The Scientific Research and Experimental Development (SR&ED) program is one of the most lucrative sources of non-dilutive funding, providing an average of over $3 billion to Canadian companies each year.

Qualified Canadian Controlled Private Corporations (CCPCs) can receive up to 35% back of eligible expenditures incurred in the development of new or improved products or processes. Foreign-owned or public corporations can qualify for a 15% tax credit on eligible expenditures.

Most Canadian provinces offer additional tax credits on qualified SR&ED expenditures. Depending on the province, SR&ED claimants can earn additional provincial SR&ED tax credits. Read more about provincial tax credits to find out your province’s rate of return.

  • SR&ED Financing

The SR&ED tax credit program is critical for the viability of Canadian companies. However, it often takes over one year to receive the funding, which can be critical, particularly for early stage companies. SR&ED financing helps to alleviate existing cash flow issues in the form of accrual debt financing. Thereby, companies can obtain advanced funding to gain access to the SR&ED cash refund up to six months before filing. This enables early stage companies to bridge the funding gap and extend the runaway until the next funding round.

  • CAP

The Canadian Agricultural Partnership (CAP) is a five-year, $3 billion, federal-provincial-territorial agreement launched on April 1, 2018, that will replace Growing Forward 2 (GF2). CAP provides cost-sharing funding for processors and other agri-related businesses.

Provincial programs under the partnership are tailored to meet regional needs through various streams. Federal programs under this partnership include AgriScience and AgriInnovate, which are focused on enhancing competitiveness through R&D and adoption of innovative products/practices, with an emphasis on sustainable and clean growth in the agricultural sector.

  • RII

Other government funding sources may be specific to provinces, such as the FedDev Rural Innovation Initiative (RII). SMEs operating in rural Southern Ontario within priority sectors could receive a non-repayable grant to cover up to 50% of eligible project costs for a maximum of $100,000 through the FedDev RII Regional stream. Priority sectors include advanced manufacturing, clean technology, digital industries, food processing, and Agtech. The current application intake started on May 21, 2019, with project activities to be completed by December 31, 2020.

Commercialization

The Industrial Research Assistance Program (IRAP) supports companies that are investing in new technology projects that lead to new products, processes, or services in Canada, with an emphasis on commercialization. IRAP will cover labor and subcontractor costs. 

Applicants are allowed to apply to both IRAP and SR&ED as expenditures are not double-claimed.

Export

CanExport is a government funding program that provides funding to Canadian small and medium-sized enterprises (SMEs) to support new export market development.

Previously, the CanExport program excluded the agriculture and food processing sectors, since companies in these industries were already eligible for export funding through the AgriMarketing program. However, as of August 22, 2019, the program will also be expanded to include supporting companies from Canada’s agriculture, agri-food and agri-products industry, including fish and seafood. CanExport’s funding limit for SMEs will also increase to $75,000 to cover up to 75% of eligible expenses.

Eligible subsectors

Agri-tech subsectors that are eligible for the above non-dilutive funding include, but are not limited to:

  • Precision agriculture            
  • Agricultural machinery and robotics              
  • Agricultural biotechnology
  • AI-based Agritech and predictive analytics      
  • IoT-based smart farming, remote sensing, and advanced monitoring
  • Foodtech and supply chain management including food safety and traceability
  • WasteTech
  • Sustainable/alternative protein development and culturing
  • Irrigation and water management systems
  • Aquaculture

Agri-tech is poised to revolutionize food production and export practices by providing new opportunities and innovative solutions to imminent challenges such as climate change and food security. With increasing prioritization of the agri-food industry, an abundance of natural resources and access to various funding options, Canada is set to become a frontrunner in paving the way for an agricultural revolution.

NorthBridge Consultants has been assisting companies in accessing government funding for over 25 years. As one of the largest independent government funding consulting firms in Canada, our objective is to maximize the government funding potential for your company. Contact us today to find out how much funding your company could receive.

Co-authored by Rebecca Galicha, Technical Writer and Ela Malkovsky, Technical Writer/ Editor-in-Chief at NorthBridge Consultants.