The federal government is offering up to $333 million over 10 years to encourage dairy processors to expand their facilities to produce skim milk powder.
The money comes from the compensation fund to offset concessions made in trade deals with Europe, the United States and Mexico and the Trans-Pacific partnership.
It’s not clear what will be done with the additional skim milk powder because it can’t be exported under World Trade Organization regulations which ban the export of subsidized products.
Prior to signing the new North American trade agreement, the Canadian dairy industry had an outlet for this surplus, selling some solids, not fat (SNF) into Mexico, however the U.S. opposed having by-products from Canada’s supply management system being exported, and Canada agreed to cap exports of SNF.
To be eligible for funding, new projects must result in a net increase of SNF capacity of at least 50 million litres of skim milk per year. Upgrades to existing facilities must result in a net increase of SNF processing capacity of at least 25 per cent and 30 million litres of skim milk per year.
