Question Period Note: WINE SECTOR SUPPORT PROGRAM EXTENSION

Q1 - How is the government continuing to support the wine sector in its ongoing challenges? Q2 – How else does the department support the wine sector as a whole? Q3 – What other supports exist for Canadian wineries? Q4 – Will the government modify the Wine Sector Support Program to broaden its support for the wine sector writ large (e.g., grape growers)? Q5 – Will the government develop a national wine strategy?

R.1 - The Government of Canada extended the Wine Sector Support Program, providing up to an additional $177 million in support for the next three years (2024-25 to 2026-27) to help the sector improve its competitiveness and adapt to challenges. R.2 - The Sustainable Canadian Agricultural Partnership offers a range of federal-only programming (i.e., AgriScience, AgriAssurance and AgriMarketing) to organizations delivering national projects that support Canada’s agricultural sector, including wine. For example, the AgriAssurance Program approved up to $836,220 over five years in funding to the Canadian Grapevine Certification Network, to provide Canadian grape growers and wineries with the material necessary to replant or plant certified virus-free grapevines in their vineyards to ensure the long-term viability of the Canadian grape and wine sectors. R.3 - Agriculture and Agri-Food Canada also has a robust online resource tool, AgPal, that includes a comprehensive list of programs, including cost-shared programs, that may provide financial support to producers in Canada’s wine sector. The tool would also provide information on the suite of business risk management programs. R.4 - At this time, Agriculture and Agri-Food Canada is not seeking to expand the Wine Sector Support Program, as any such modification would take significant time, and have unintended implications for the market, Canada’s trade policy, and existing supply chains. R.5 - The Government of Canada is actively considering the best way to ensure that our domestic sector is well positioned to grow in a way that supports resiliency and aligns with international trade objectives.

In 2021, the Canadian wine industry generated approximately $2.1 billion in annual sales. There are approximately 800 wineries in Canada, and the sector is concentrated in British Columbia, Ontario, Quebec, and Nova Scotia.

On January 12, 2018, Australia formally requested consultations with Canada under the World Trade Organization (WTO) dispute settlement mechanism on a range of Canadian federal and provincial (British Columbia, Ontario, Quebec and Nova Scotia) wine measures.

At the federal level, the dispute implicated the federal excise duty exemption for 100 per cent Canadian wine, introduced in the 2006 Federal Budget to stimulate growth and improve the competitiveness of the Canadian wine industry. The exemption applied to wine (including cider, wine coolers, fruit wines and sake) produced in Canada and composed wholly of agricultural or plant products grown in Canada.

At the provincial level, the dispute covered a number of measures involving markups, taxes and charges applied by provincial liquor boards. Canadian wine producers called for a negotiated resolution to the dispute.

On April 21, 2021, Canada and Australia reached a mutually agreed solution regarding Australia’s claims about the disputed Quebec measures on the sale of wine. On April 22, 2021, Australia officially withdrew itsclaim, and both parties requested the Panel to refrain from making any findings or recommendations with respect to these measures. The wine industry requested the initiation of settlement discussionsand supported the mutually agreed solution.

On June 30, 2022, the Government of Canada repealed the federal excise duty exemption on wine, as set out in subsection 135(2) of the Excise Act, 2001.

Canadian wine industry representatives voiced concerns regarding the detrimental impacts that both the elimination of the excise tax exemption and the COVID-19 global pandemic would have on Canadian wineries, requesting that the Government of Canada provide support programming.

Budget 2021 proposed to provide $101 million over two years, starting in 2022-23, to Agriculture and Agri-Food Canada, to implement a program to help the wine sector adapt to ongoing and emerging challenges, in line with Canada’s trade obligations. Stakeholders indicated that the $101 million was $34 million short of the Budget 2022 estimate of impacts of the repeal of the excise tax ($135 million), and that a two-year program would not provide the certainty needed to support investments. On June 16, 2022, the Government of Canada approved an additional $65 million in grant funding for the Program.

The initial two years (2022-23 and 2023-24) of the Wine Sector Support Program (WSSP) provided up to $158 million in grant funding to Canadian wine licensees.

On March 1, 2024, the Government of Canada announced an extension to the Program, investing up to an additional $177 million over the following three years (2024-25 to 2026-27).

In 2024-25, the WSSP approved 478 applications, representing approximately 71 million litres of production, totaling approximately $55 million in payments, which began to be released in September 2024.

In recent months, there has been a number of discussions with industry around the potential to modify the WSSP in order to expand its scope and objective beyond providing temporary support. This would help the wineries adapt to the elimination of the excise tax exemption. While the discussions have been informative, the proposals are outside the scope and objective of the program, and would require AAFC to re-design the program, and seek the Treasury Board’s approval on major amendments to the WSSP’s terms and conditions. In addition, the proposals raise a number of policy concerns, in particular around the potential implications on the market, existing supply chains, and trade policy.

Lastly, some participants in the wine sector have expressed a desire to see the government develop a national wine strategy. In this respect, departments are actively considering the best way to ensure our domestic sector is well positioned to grow in a way that supports resiliency and aligns with international trade objectives.

The Government of Canada recognizes the wine sector’s important economic contributions, including providing business opportunities and jobs for grape growers and wine makers across Canada. 

To ensure continued support for the sector, on March 1, 2024, the Government of Canada announced an extension to the Wine Sector Support Program, investing up to an additional $177 million over the next three years.

This extension allows the Program to continue to assist federally-licensed Canadian wineries adapt to ongoing and emerging challenges impacting their financial resilience and competitiveness by providing grants based on their wine production.