One of the hardest parts of finding alternatives to plastic packaging is financing. Innovations that replace plastic are often more costly in the short term, or may need expensive adjustments to fit exact product requirements. But there are options available to food and beverage operators looking for funding.
We asked for input from professionals helping food and beverage operators access funding.
Participants
Q: Many food and beverage operators say lack of financing and time to research alternatives are the key reasons they haven’t removed plastic from their operations. Where should they start in their search to access funds and research their options?
Alex Barlow: This is definitely a tough challenge, with upcoming regulations on Single-Use Plastics many businesses will be scrambling to address plastics, especially in food service. I think we can expect to see some new federal funding be released to help develop new solutions in this space, or to help operators trial new solutions as these new regulations roll out. In terms of resources, the first one I would point out is the Canadian Plastics Pact, which has a number of resources and tools for food and beverage operators to consult and consider integrating to address this issue. There are a lot of simple solutions that can take place at the design level to help improve recyclability and recovery of plastics, and lots of non-plastic solutions out on the market already (paper straws, bioplastic take-out materials, and more). Secondly, not to toot our own horn, but I would encourage operators to sign up for CFIN’s digital member platform, where we have a lot of upcoming content and discussions about plastics. It’s a good spot to potentially find a supplier, hear from other operators, and members can also connect with their local Regional Innovation Director to hopefully facilitate some meaningful connections. We’ve also developed a call under our Food Innovation Challenge, opening September 1, 2022 for collaborative research, development, and demonstration projects titled Plastics Solutions for Foods: Reduction, Replacement, and Recyclability. We’re looking for projects that either improve the recovery/recyclability of plastics, reduce their use, or replace them with bioplastics or bio-based solutions that meet industrial composting certifications. Funding is 50 per cent up to $2 million per project in grant funding from CFIN. There are lots of new and scaling firms in Canada offering solutions, so I encourage operators to get connected with CFIN, their local innovation hubs, Natural Products Canada, Ignite Atlantic, etc. to tap into these up-and-coming firms and evaluate their solution.
Nathan Chick: The government funding landscape is complex and changes often. That’s why many Canadian businesses use the Government Funding Directory to easily filter through the top Canadian programs available today. This free directory allows filtering by region and business activity. If your business is trying to search for programs by industry, please visit the Government Funding Programs by Industry Directory for more specific opportunities. For businesses that are looking to get started with government funding, it is always important to establish what your business is trying to achieve, as well as what resources and capital will be required to achieve your desired outcome. Once you have determined your desired outcome, we encourage businesses to learn how to create a smart funding plan by using our free Build a Government Funding Plan slide deck. It’s crucial that you contact a government funding professional prior to beginning the application process to receive industry expertise on the current funding landscape and key application support to ensure the best chance of success. If your business is a startup, there are certain criteria that you must meet to apply for many government funding programs. To see if you qualify, please use our free Startup Funding Checklist. We also recommend that readers visit our article on How to Stack Canadian Government Grants, Tax Credits, and Loans to learn how some programs can be used collectively to maximize funding potential.
Alex Lau: At Farm Credit Canada we can provide support. We have a team specialized in supporting food and beverage companies across Canada. We have customers who are already making changes and moving to alternatives to plastic, using other recyclable, recycled, and compostable packaging materials. We also have connections we can support you with. We work closely with other associations. We can share our knowledge and connect you to those who have walked in your shoes or have the expertise that can help you.
Q: Are alternatives to plastic as expensive as operators believe?
Alex Barlow: That is a good question. In terms of strategies to make plastics more recyclable, I believe there are some cost-effective design strategies that can be implemented, and the Canada Plastics Pact has released its Golden Design Rules for Plastics Packaging which is an excellent place to start. When it comes to bioplastics, my experience is that producers of these products have yet to reach that critical scale point where they achieve economies to their pricing. This is one of the reasons CFIN is funding our plastics themed call, to support the demonstration of these technologies, reduce the financial pain of pilots of demonstrations, and support scalability of sustainable national solutions that meet consumer, operator, and retailer expectations of safety, aesthetics, and performance. This issue is messy; there are inconsistent recycling and composting practices across the country, and a lack of consumer knowledge about recycling and industrial composting generally. There is a lot of work to do, but as prohibition and a cost model comes into place, and funding is available to help make the transition, hopefully there will be enough carrots and sticks to motivate change on all levels.
Kyle Burak: For most, alternative packaging remains more expensive, but this is expected to change over time and consumers appear willing to pay an additional cost for sustainably packaged items. Businesses need to also take into account related costs. Does it require a change to production? Will it change transportation costs? For example, plastic is durable, light and often compact, but some alternatives could offer savings. Another thing to consider is whether product shelf life will change. If so, what are the potential impacts of additional shrink? There is more to consider than the cost of the new packaging itself and some may require changes to pricing.
Nathan Chick: Finding new and innovative ways to improve a product, such as with alternative packaging, can pose challenges that may increase costs, resources, and more. However, there are often ways to reduce these costs for businesses that strategically implement government funding strategies.
Alex Lau: I recently worked with a vegetable production company which packed in plastic clamshells. Because of a drive towards sustainability and environmentalism, they decided to make a change to use less hard plastics. They are now packaging in soft plastic bags that use four times less plastic and a cardboard shell on the outside for durability. There was cost to that. They needed new equipment for the new packaging system. Ultimately, they have reduced their environmental impact (less plastic used), they did pay for equipment, but the cost of alternative packaging materials was comparable. In addition, they can market their products and business in a way that aligns with consumer preferences.
Q: Can operators access funding for retooling equipment to new packaging specifications?
Bonnie Bain: For retooling equipment or specialized equipment needs, FCC can provide standard term financing for equipment (terms depend on the type of equipment and its useful life). We can offer an interest-only period during the installation and commissioning stage. We can offer fixed interest terms and flexibility to repay the loan at any time without penalty. And for those companies who have long-term annual needs for financing cap ex, we have a solution for that too.
Alex Barlow: There are certainly several funds targeting the manufacturing sector, either for food and beverage manufacturers, or for those who make plastics and packaging alternatives. I would encourage operators to look at their local Regional Development Agencies and contact their provincial government economic development folks to chat about their project. Some of the groups who tend to be left behind by these funds are the foodservice and retail players, but I do feel these groups are further along in the availability of plastics replacements. We’ve seen some good progress made in single use plastics and circular economy practices in food take out.
Nathan Chick: There are government funding programs available to assist in innovation for food and equipment costs, such as: FedDev Ontario Business Scale-up and Productivity (BSP) Program; Eastern Ontario Development Fund (EODF) / Southwestern Ontario Development Fund (SWODF); Bioenterprise FoodShift Program; and Scientific Research and Experimental Development (SR&ED). Lastly, the Canadian government has recently announced a new agreement to replace the current Canadian Agricultural Partnership (CAP) program, which will be called the Sustainable Canadian Agricultural Partnership (SCAP). SCAP will start its five-year initiative in April 2023 with $500 million in new funding designed specifically for addressing sustainability in agriculture and food. Therefore, there are likely to be many more future government funding opportunities available to address sustainable packaging challenges in the new year. To learn more about SCAP, review our recent SCAP blog today.
Alex Lau: 100 per cent! FCC is a financial institution 100 per cent committed to supporting Canadian food and beverage. We can absolutely support these types of requests. We are here to support Canadian food processors, agriculture producers and agribusinesses. In addition, we are here to help the industry meet the federal government’s goal to reduce plastic waste and transition to a national circular plastics economy.
Graham Legge: We have flexibility in what we offer. Whether that means tradition capex, or solutions that are tied to R&D or sustainability.
Q: Anything else you need operators to know about accessing funds?
Bonnie Bain: Stay in touch with your local food and beverage associations, industry publications and events to stay on top of the latest developments. Talk to your customers to see what they want. Use social media to learn how important it is for your customers to eliminate plastic.
Alex Barlow: The best strategy is to have one – think about what your pain points are, look at the existing resources, get connected with your peers in industry to understand best practices, even engage a consultant if you feel that will help you take charge in this area. Industry associations and groups such as CFIN can help you understand your options, and potentially connect you with partners. This pre-funding work is critical to success; government grants and their applications need to be approached with a clear plan and identified solutions. Have your numbers ready – how much plastic do you use, and what would be the impact post-project?
Nathan Chick: There are two main approaches to government funding, a proactive approach, and a retroactive approach. Proactive government funding programs include grants, loans, and more to plan projects in the future by applying for programs that fit your business activity. Retroactive government funding programs often include tax incentives that allow businesses to claim tax credits on projects that they have already completed, as long as the business followed proper protocol. Most government funding programs, retroactive and proactive, will focus on four major funding activities with varying criteria that businesses must meet to be successful. The four funding activities are: Hiring & Training; Research & Development; Business Expansion; and Capital & Technology Adoption. Watch our educational video to learn more about the four funding activities today.
Alex Lau: Start asking questions now instead of waiting. It takes time to research, implement and put changes like this into action. Don’t wait. Start today. I encourage you to leverage FCC and your own financial institution in discussions for supporting this green initiative.
Food innovation and new technology can have a major impact on product life cycle design. Do you have a ground-breaking concept needing funding? CFIN’s Food Innovation Challenge, Plastics Solutions for Food: Reduction, Replacement, and Recyclability, is looking for proposals! Click here for more information.
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