New Entrant Quota Assistant Programs to Help New Producers Dream Big

If you’ve ever dreamt of getting into the dairy or poultry sector, now may be your chance. The Dairy Farmers of Ontario (DFO) and Chicken Farmers of Ontario (CFO) each have a new entrant quota assistance program (NEQAP) to help aspiring producers make their way into the industry by reducing some of the necessary up-front investment. Taking away some cash constraints at the outset could make an otherwise impossible dream become an attainable goal.

The Dairy Farmers of Ontario (DFO) New Entrant Quota

DFO made changes to the New Entrant Quota Assistance Program (NEQAP) last year, which allows applicants to start with 50 kg of quota, a substantial increase from the previous 32 kg. In the past, the quota was matched by DFO kg-for-kg, to a maximum of 16 kg of loaned quota. Now, DFO will still loan on a kg-for-kg basis, but to a maximum of 20 kg. The producer is then able to purchase an additional 10 kg of quota on the monthly exchange, bringing the total quota holdings to 50 kg.

The loaned quota is free to use. A producer taking the maximum of 20 kg from DFO will see 1.2 kg of quota beginning returned per year to DFO, starting in Year 11, thereby making all loaned quota fully repaid in 26 years. Note that the loaned quota is not saleable, it can’t be included in the sale of an ongoing operation, and is not eligible for any general allotments (owned quota is).

This year in Ontario there are eight NEQAP positions available, two of which are reserved for organic producers. The organic applicant intake deadline passed on May 31, 2021, while the conventional stream deadline is September 30, 2021. DFO provides a very detailed list of items required in the application package. This includes a description of the operation, such as management capabilities, an agreement to finance, and financial projections for a 10-year period. It must also be accompanied by a signed letter from a Chartered Professional Accountant, indicating that the operation is capable of generating a profit.

Chicken Farmers of Ontario (CFO) New Entrant Quota

The CFO’s New Entrant Chicken Farmer Program is another well-established program that allows new producers to enter the industry starting with the 14,000 unit minimum (as required of all chicken producers in Ontario). Each year, there are five positions available, with the deadline to apply closing on October 31, 2021.

The CFO’s program is set up to have the producer purchase quota incrementally as follows: 4,000 units at outset, 3,000 units at Years five and 10, and 4,000 units in Year 15. Similar to the DFO’s program, only owned quota is saleable. However, all quota held by the producer is eligible for general allotments, and producers may also participate in the CFO’s Market Development program, allowing them to ship some additional birds during the year under the program.

A 15-year financial projection is included with the application along with information on the production site, necessary permits, and information on management. With this program in particular, applicants should pay very close attention to cash flow and the large blocks of quota purchases at specified times, when compared to the DFO’s program that has quota purchases happening later and spread over longer period of time.

What you need to know

Regardless of the program, it is important to consider the reasons behind your desire to enter the industry, along with an appropriate budget to manage the construction and start-up phase, a network of resources and the right advisors to help you along the way.

We are frequently asked what it takes to be successful in getting one of the new entrant positions. The answer is always the same – be thorough. It’s important to read each of the application requirements and answer or provide details on each of them completely, concisely and accurately as possible.

If you would like to learn more on how MNP can help, contact Adam Vervoort, Senior Manager, Agriculture Services, at 519-272-0000 or [email protected]