Question Period Note: PRODUCT ELIGIBILITY FOR ON-FARM CLIMATE ACTION FUND (OFCAF)

Q1 – What factors are considered when selecting eligible beneficial management practices (BMPs) in the On-Farm Climate Action Fund (OFCAF)? Q2 – Has the OFCAF program been responsive to the sector when considering new BMPs for inclusion? Q3 – Does AAFC have a process in place for considering new BMP addition to the OFCAF?

R.1 - AAFC applies key principles to scientific assessments to ensure selected practices offer the greatest potential to reduce GHG emissions or sequester carbon to reach the 2030 greenhouse gas reduction goals. AAFC also considers the potential for co-benefits to soil health, water and/or air quality and biodiversity; that there is no negative impact on yields, etc.; as well as the potential for impact across a variety of regions and landscapes. R.2 - The program has been open to sector requests for inclusion of additional BMPs since it began. AAFC has reviewed multiple suggestions and conducted scientific assessments where published, peer-reviewed material was available. For example, in Summer 2022, through sector engagement and a scientific analysis, Polymer Coated Urea was added to the list of eligible beneficial nitrogen management practices.

Sector outreach was also conducted in late 2022 to solicit feedback on the current list of eligible practices and suggestions for new practices to be considered. R.3 - AAFC has developed a transparent BMP review process for the OFCAF program. The evaluation criteria for new BMPs will remain grounded in science-based evidence and allow for input and feedback from the stakeholder community. Applications for new BMP additions will be reviewed twice a year. The sector will receive direct feedback from AAFC on the eligibility of submitted BMPs, furthering transparency and communication with the sector.

Agricultural stakeholders were presented with this BMP review process in July 2023, with generally positive feedback provided, and it was officially launched in late December 2023.

The science around different beneficial management practices continues to evolve. As we learn more, we will continue to review and update the practices that are eligible under the OFCAF program.

First announced in Budget 2021, the originally $200 million On-Farm Climate Action Fund (OFCAF) is an approach to help farmers tackle climate change. The Fund is part of the Government of Canada's Agricultural Climate Solutions initiative, which falls under the more than $5 billion Natural Climate Solutions Fund, a program managed by Natural Resources Canada, Environment and Climate Change Canada, and Agriculture and Agri-Food Canada.

In March 2022, former Prime Minister Trudeau and the former Minister of Environment and Climate Change announced the 2030 Emissions Reduction Plan, outlining a strategy to meet and exceed the Government’s initial 2030 net GHG emissions reduction target of 30 percent below 2005 levels by 2030, and achieve net-zero GHG emissions by 2050.

Through the 2030 Emissions Reduction Plan and Budget 2022, a $470 million investment in OFCAF was announced to top-up funding for some current successful applicants, to consider broadening support for additional key climate mitigation practices, and extending the program past its current end date, while still supporting the adoption of practices that contribute to the fertilizer emissions target and the Global Methane Pledge.

The On-Farm Climate Action Fund is part of a broader Government of Canada strategy of climate action in the agricultural sector including measures under the Government of Canada’s Strengthened Climate Plan, through the 2030 Emissions Reduction Plan, and through the Fund’s links with the Natural Climate Solutions Fund. There exist a number of initiatives with incentives for adoption of on-farm practices that maximize GHG reductions and environmental co-benefits to help address environment and climate issues in the agricultural sector.

The OFCAF Program was initially launched on August 12, 2021, and supports farmers in adopting BMPs that store carbon and reduce greenhouse gases, specifically in the areas of nitrogen management, cover cropping, and rotational grazing practices. These practices also provide other environmental benefits such as improved biodiversity and soil health.

Through Budget 2023, the Government of Canada announced an additional $34.1 million for Eastern Canadian producers who were subject to fertilizer market price increases in 2022. Farmers can access the funding through the OFCAF program to support the adoption of nitrogen management BMPs to optimize fertilizer use and reduce the need for fertilizers.

Existing initial recipient organizations and selected eligible organizations in Saskatchewan and Newfoundland submitted project plans for the second phase of OFCAF which will run from April 2025 until March 2028. Funding decisions were communicated to those organizations in December 2024, and an announcement (News Release) was made on January 28, 2025.

On January 28, 2025, the Government of Canada announced the expansion of the On-Farm Climate Action Fund (OFCAF), which will provide an additional $300 million to 13 initial recipients in continuation of their efforts to help farmers become more climate resilient over the next 3 years, until 2028. Existing initial recipient organizations and selected eligible organizations in Saskatchewan and Newfoundland have been asked to submit project plans for the second phase of OFCAF which will run from April 2025 until March 2028.

• The Government announced more than $889.1 million for the Agricultural Climate Solutions with its Living Labs and On-Farm Climate Action Fund streams that together, will increase carbon sequestration and reduce greenhouse gas emissions and offer other positive environmental benefits.

• In collaborating with the sector across Canada, Agricultural Climate Solutions supports farmers in adopting beneficial management practices that improve resiliency to climate change.

• Specifically, the On-Farm Climate Action Fund supports producers in the immediate implementation of beneficial management practices in nitrogen management, cover cropping, and rotational grazing.

• Eligible practices under the Fund were selected through published peer-reviewed Canadian studies that demonstrated the greatest potential to reduce GHG emissions or sequester carbon to reach the 2030 greenhouse gas reduction goals.