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					                      Agri-food
Québec : A Dynamic and Profitable
            Business Environment




               www.investquebec.com
                                                                    Agri-food


TABLE OF CONTENTS

Home __________________________________________________________________ 3

Sector Profile____________________________________________________________ 4
Exports                                                                      5
Food Processing                                                              6
Raw Materials                                                                8
Other Advantages                                                            10

Industry-leading Companies _______________________________________________ 11
Manufacturing of Dairy Products                                             12
Manufacturing of Sugar and Confectionery Products                           13
Bakeries                                                                    14
Fruit and Vegetable Preserving                                              15
Manufacturing of Beverages                                                  16
Manufacturing of Meat Products                                              17
Manufacturing of Other Foods                                                18
Recent Foreign Investments                                                  19

Labour ________________________________________________________________ 21

Research & Development _________________________________________________ 22
Associations                                                                23

Operating Costs _________________________________________________________ 24
Taxes                                                                       25

Financial Solutions and Taxation___________________________________________ 26
Measures to Stimulate R&D                                                   29

Choose Investissement Québec ____________________________________________ 31




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HOME

With its rich rural tradition and forward-looking entrepreneurship, the agri-food industry is
a major contributor to Québec's economy. Employing nearly 12% of the province's
workforce, agri-food exports are booming, surpassing Canadian and worldwide growth rates
for the past 10 years.

The industry owes its vitality primarily to the abundance and quality of raw materials that
Québec has to offer.
   • Pork: Québec is the largest pork producer in Canada.
   • Soybeans: Quality food-grade specialized beans are grown in Québec.
   • Berries: Québec is the world's third largest cranberry producer and a major Canadian
      producer of wild blueberries and strawberries.
   • Vegetables: The province is recognized across Canada for the quantity and variety of
      vegetables it grows.
   • Maple syrup: Québec is home to over 70% of world production.
   • Refined sugar: Québec's quality and prices are unsurpassed in North America.
   • Drinking water: The province has some of the world's largest fresh water reserves.

Québec also offers food processors other advantages, including:
   • A clean, abundant and affordable source of energy (hydroelectricity);
   • Qualified labour trained at specialized agri-food schools;
   • World-renowned agri-food research centres;
   • An attractive tax regime for R&D and the purchase of manufacturing and processing
     equipment;
   • Numerous financial assistance programs.

Given everything Québec has to offer, it's no surprise that multinationals like Barry
Callebaut, Bonduelle, Cargill, Danone, Kraft and Parmalat have all chosen to set up
operations right here.

 "Investissement Québec helped us develop a nearly $8-million project to purchase cutting-edge
 packaging equipment with a non-refundable contribution. They also put us in touch with all the
people we needed to get the project off the ground."—Christian Bossé, Operations Manager, Dare
                                         Foods, 2009.

           Your company is growth-minded. Expand your horizons in Québec.


                                                                    Last update: November 2011




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SECTOR PROFILE

A Major Industry for the Québec Economy
With its rich rural tradition and forward-looking entrepreneurship, the agri-food industry is
a major contributor to Québec's economy. Agri-food employs over 475,000 people, or 12%
of the province's workforce.

Breakdown of Agri-Food Jobs in Québec, 2010
(in thousands)




Source: Ministère de l’Agriculture, des Pêcheries et de l’Alimentation du Québec (MAPAQ), July
2011

Breakdown of Agri-Food GDP in Québec, 2010
(in billions of 2002 dollars)




Source: Ministère de l’Agriculture, des Pêcheries et de l’Alimentation du Québec (MAPAQ), July
2011




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Sector Profile
Exports

Over the last ten years, the growth in Québec exports has exceeded that of Canada and the
world. Since 1990, Québec exports have nearly quadrupled whereas Canadian and
international trade have approximately tripled.

In 2010, Québec agri-food exports reached $5B. The US remains the primary destination,
accounting for 56% of the province's exports, followed by the European Union (13%), Japan
(9%), Russia (2%) and China (2%).

Québec's leading agri-food exports are as follows:

Breakdown of Agri-food Exports, 2010
(as a % of total agri-food exports)




Source: Ministère de l’Agriculture, des Pêcheries et de l’Alimentation du Québec (MAPAQ)




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Sector Profile
Food Processing

Employing near 65,000 people, the food processing sector is Québec's leading
manufacturing industry in terms of employment. With operations across the province, the
industry is a powerful driving force supporting the development and sustainability of
Québec's regions.

                              Québec's Food Processing Industry
                                      A Snapshot (2010)
Jobs                                                                             64,770
Number of facilities                                                              2,400
Shipments (B$)                                                                    22.9


Source: Ministère de l'Agriculture, des Pêcheries et de l'Alimentation du Québec (MAPAQ), July
2011

Dairy products and meats are Québec's largest food processing sectors, representing over
40% of the industry's total shipments.




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Breakdown of Food Processing Industry Shipments by Sector -
2010 (in percentage)




Source: Ministère de l’Agriculture, des Pêcheries et de l’Alimentation du Québec (MAPAQ)




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Sector Profile
Raw Materials

Québec's agri-food industry owes its vitality primarily to the abundance and quality of raw
materials that the province has to offer.

Diversified Meat Production
Québec is the largest hog producer in Canada and exports its products to some one hundred
countries. The high quality of the pork produced here is world-renowned. Québec is also
the largest producer of veal and lamb and the second-largest producer of poultry in
Canada. For close to two decades, cattle production in Québec has also been booming,
although the province still remains a modest player, accounting for approximately 5% of
national production.

High-quality Soybeans Sought After by Asian Consumers
A large proportion of Québec's soybean production is made up of high-quality specialized
beans intended for human consumption. Over two thirds of Québec's food-grade soybeans
are exported, chiefly to Asia where they are used to produce foods like soy milk, tofu, soy
sauce and miso.

Berries Recognized for Their Health Benefits
Québec is a major producer of berries, ranking third in the world for cranberry production.
It also accounts for nearly 40% of Canadian strawberry and wild blueberry production.
These berries are known for their antioxidant powers.

A Cornucopia of Vegetables
Nearly 40% of Canada's field vegetables come from Québec. The province grows a wide
variety of vegetables, including carrots, cabbages, corn, lettuce, onions, beans, peas,
peppers and tomatoes.

The World Leader in Maple Syrup
Québec produces over 70% of the world's maple syrup. Maple products are exported to
48 countries, mainly the United States but also Japan and European markets.

A Plentiful Supply of High-quality Drinking Water
Québec is known for its immense water resources. Although the province has only one
tenth of 1% of the world's population, it boasts nearly 3% of the planet's fresh water
reserves. Québec uses only 0.5% of its fresh water, compared to 18.9% in the US.




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Extremely Competitive Sugar Prices
The large quantities, excellent quality and affordable price of Canadian sugar are
competitive advantages for food processing companies targeting the North American
market. In recent years, the price of Canadian sugar has averaged 35% less than sugar
produced in the United States.




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Sector Profile
Other Advantages


Clean, Abundant and Affordable Energy
Québec is the largest hydroelectric producer in North America: 97% of the energy it
produces is hydroelectricity. Hydro is renewable, non-polluting energy that emits as little
greenhouse gas (GHG) per kilowatt-hour as wind power. Government corporation Hydro-
Québec, which exploits Québec's vast water power resources, offers rates that are among
the lowest and most stable in the world. Its transmission system meets the quality and
reliability criteria of the Northeast Power Coordinating Council (NPCC), which are among
the most demanding standards in North America.

Legislation that Facilitates Access to World Markets
Canadian legislation enforced by the Canadian Food Inspection Agency sets out some of the
world's most stringent agri-food standards. Canada is known for its commitment to food
safety and its environmental leadership, boosting consumer confidence in Canadian
products and helping those products make inroads into world markets.

Access to a Vast Consumer Market
Québec is ideally located. As a participant in the North American Free Trade Agreement
(NAFTA) with the United States right next door, the province has access to a market of
over 440 million consumers, including 130 million within 1,000 kilometres of Montréal, the
province's biggest city. Close by are large cities such as New York, Boston, Philadelphia,
Toronto, Detroit and Chicago.




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INDUSTRY-LEADING COMPANIES

Many world-renowned agri-food processing companies have operations in Québec. They
operate in many sectors:

   •   Manufacturing of dairy products
   •   Manufacturing of sugar and confectionery products
   •   Bakeries
   •   Fruit and vegetable preserving
   •   Manufacturing of beverages
   •   Manufacturing of meat products
   •   Manufacturing of other foods
   •   Recent foreign investments




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Industry-leading Companies
Manufacturing of Dairy Products

Agropur, Canada's largest dairy cooperative, processes more than 2.7 billion litres of milk
annually. Its 27 plants in Canada, the US and Argentina employ some 5,000 people. Agropur
produces the full range of dairy products: bulk cheese, fine cheeses, whey protein
concentrate, fluid milk and cream, yogurt and frozen desserts.

Danone Canada has been a leader in Canada's fresh dairy products sector since 1967. The
company produces yogourt at its Boucherville, Québec, plant. Danone Canada generates
sales of over $500 million and employs 550 people.

Kraft Canada is the leading marketer of food products and services in Canada. The
company sells more than 100 brands in products from cheeses to beverages to pasta,
cookies and more. It operates 12 plants and bakeries, along with several distribution
centres. Almost 99% of Canadians are Kraft product consumers. In Québec, Kraft employs
over 1,500 people in its dairy and bakery product operations.

Parmalat Canada produces milk and dairy products, fruit juices, cultured products, cheese
products and table spreads. It operates five plants in Québec, where it employs almost
1,000 people. Outside Québec, the company owns 13 other facilities in three provinces.

Saputo is the largest dairy processor in Canada, the third biggest dairy processor in
Argentina and one of the top three cheese producers in the United States. The company
manufactures and markets a complete line of cheeses, fluid milk and other dairy products
in addition to milk by-products like lactose and whey protein. Saputo also operates a
bakery division that manufactures, distributes and markets a wide range of snack cakes and
tarts. Saputo has 46 plants, including 26 in Canada, and employs 9,800 people.

In December 2010, French company Yoplait, the second-largest manufacturer of fresh dairy
products in the world, acquired Liberté, the leading Canadian producer of natural and
organic yogourt. Liberté's head office and both of its production units are located in
Québec.




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Industry-leading Companies
Manufacturing of Sugar and Confectionery Products

Switzerland-based Barry Callebaut is one of the world's oldest and largest cocoa and
chocolate products manufacturers. Its plant in Saint-Hyacinthe, the multinational's second
biggest, produces chocolate for industrial customers and confectioners. Its products are
used in ice cream, baked goods and as icing in confectioners' products.

Lantic, a sugar refiner based in Eastern Canada, operates a cane sugar refinery in
Montréal, Québec. In Western Canada, Lantic is the leading refiner, processor, distributor
and marketer of sugar products. The company has two sugar processing plants: a cane
sugar refinery in Vancouver, British Columbia, and a sugar beet processing facility in Taber,
Alberta.

Nutriart produces ingredients for the agri-food industry, including chocolate, chocolate
inclusions, caramels, fondant and fruit fillings. The company also manufactures chocolate-
based finished goods. In February 2010, Nutriart acquired Laura Secord, the largest and
best-known chocolate maker in Canada.




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Industry-leading Companies
Bakeries

A Canadian company with a 115-year history, Dare Foods employs 1,300 people at its seven
plants in Canada and the US. Its cookies, crackers, candies and fine breads are sold in
North America, Sweden, the Far East and more than 25 other countries around the world.
In Québec, Dare operates two plants, with a total workforce of over 400 people.

Ronzoni Foods is a pasta manufacturer that employs nearly 300 people at its Montréal
plant. Ronzoni is a division of Spain's Ebro Puleva group.

Founded over a century ago, Biscuits Leclerc manufactures a wide range of products,
including cookies, snack bars, crackers, breakfast cereal and chocolate. Its products are
exported to some 20 countries on four continents. Biscuits Leclerc employs over 500 people
and operates six plants: three in Québec, one in Ontario and two in the United States.

Bridor is a leading manufacturer of frozen bakery and pastry goods, including artisan
breads, croissants and pastries. It supplies major distributors, food chains, restaurants and
hotels. In December 2008, Bridor purchased Au Pain Doré. Together, the two companies
employ over 600 people in Québec.

Multi-Marques is the largest baker in Québec and the second largest in Canada. It is
primarily involved in the production and distribution of baked goods and pastries. In
Québec, Multi-Marques operates seven plants and has a workforce of over 1,700 people. In
addition to its own brands, it is also a supplier for private labels and food wholesalers. The
company is owned by Canada Bread, Maple Leaf's bakery division.

Weston is one of the largest food processing and distribution groups in North America. It is
active primarily in bakery product manufacturing and food retailing (Loblaws and Provigo).
In Québec, its bakery division has two plants, where it makes fresh and frozen baked
goods, regular breads, artisan breads and bagels.




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Industry-leading Companies
Fruit and Vegetable Preserving

Baxters Canada manufactures private label soups for a number of Canadian food retailers.
The company is wholly owned by Baxters Food Group, a UK-based manufacturer of several
prestigious brands.

Bonduelle North America is Canada's leading processor of canned and frozen vegetables.
The company also markets soups, sauces, baked beans, dried legumes and other products,
for both the retail market and the restaurant industry. Bonduelle owns seven plants in
Canada: four in Québec and three in Ontario.

Delta Dailyfood is a maker of fresh and frozen meals for commercial establishments and
institutions. Owned by French company Fleury Michon, the company employs over
400 employees.

Lassonde Industries is a Canadian leader in the development, manufacture and marketing
of a wide range of fruit and vegetable juices and drinks, sauces, soups and fondue
bouillons. The company also produces and markets certain specialty food products such as
canned corn-on-the-cob, meat marinades, barbecue sauces, pasta sauces, tapenades and
bruschetta toppings. The company employs approximately near 2,000 people.

Smucker Foods of Canada, a division of American giant The J.M. Smucker Company, makes
jams, jellies, toppings and fruit ketchups at its Sainte-Marie, Québec plant. The company
also has a small plant in Sherbrooke that specializes in the production of condensed milk.




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Industry-leading Companies
Manufacturing of Beverages

Labatt Breweries (InBev S.A.) is one of Canada's oldest brewers and produces 60 different
beer brands. It employs 3,000 people at its Canadian breweries. Labatt is part of the InBev
international group, the world's leading brewer in terms of production volume. In Québec,
the company operates a brewery in LaSalle, along with 45 distribution centres across the
province.

Coca-Cola has seven production plants in Canada and employs approximately 5,500 people
in all. In Québec, the company operates a plant in Trois-Rivières and another plant and a
distribution centre in Montréal. In addition to manufacturing soft drinks, it distributes
bottled water, juices and iced tea.

Molson Coors Brewing Company is one of the world's largest brewers, with operations in
Canada, the United States, Brazil and the United Kingdom. Molson is the oldest brewer in
North America and has a portfolio of 40 brands. Molson Canada has more than 3,000
employees and six breweries, including one in Montréal.

Pepsi opened its very first bottling plant outside the US in Québec, in 1934. Today, Pepsi's
Montréal plant employs 600 people and bottles soft drinks and energy drinks.




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Industry-leading Companies
Manufacturing of Meat Products

Maple Leaf Foods is one of the country's largest food processing companies. The brand first
appeared more than 100 year ago. The company's operations focus on meat products (deli
meats, wieners, fresh and frozen pork, chicken and turkey), bakery products (breads as
well as fresh pasta and sauces) and animal by-product processing (biodiesel).

DuBreton is North America's largest producer and processor of organic pork. The company
has over 1,000 employees and facilities in Canada, the US and Asia. It is a division of
Aliments Breton Foods Canada.

US giant Cargill operates a meat processing plant in Chambly, Québec, where it employs
some 700 workers. The plant specializes in the cutting and packaging of fresh ground meat
and sausages (beef, pork and veal) ready for the meat cases of food retailers.

Olymel is one of Canada's leading pork and poultry product processors. The company
has over 10,000 employees. Its products, including bacon, deli meats, ham, sausage and
cooked products, are sold under the Olymel, Lafleur and Flamingo labels. They are
distributed in Canada and exported to the US, Japan and Australia as well as about 60
other countries.




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Industry-leading Companies
Manufacturing of Other Foods

Based in Québec City, Aliments Krispy Kernels produces dried fruit, nuts, peanuts and
chips. Nearly 300 people work at the company's two Québec plants.

ConAgra Foods, an American manufacturer of packaged and frozen foods, employs
approximately 150 people and operates two plants in Québec, where it produces pizzas,
pogos and sauces.

Owned by PepsiCo, Frito Lay is the largest manufacturer of chip snacks in the world. Frito
Lay sells its potato chips and other snacks in more than 40 countries on five continents. In
Canada, the company operates five plants, including one in Lévis, near Québec City.




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Industry-leading Companies
Recent Foreign Investments

Québec is a location that is sought after by foreign agri-food companies, as these recent
investments indicate.

Karlsberg (German)
In March 2011, German multinational Karlsberg announced an investment of more than
$4 million to set up a new plant in Saint-Hyacinthe. The facility will produce alcoholic
beverages previously brewed in France.

Yoplait (France)
In December 2010, Yoplait acquired Liberté, the leading Canadian producer of natural and
organic yogourt. With the purchase of Liberté, Yoplait is developing a strong position in a
fast-growing new market segment.

Barry Callebaut (Switzerland)
In November 2010, Barry Callebaut, the world's leading manufacturer of high-quality cocoa
and chocolate products, announced a $20.6-million investment to increase production
capacity at its plant in Saint-Hyacinthe, Québec.

Danone (France)
In September 2010, Danone Canada announced that it was investing $50 million in its
Boucherville, Québec facility to produce its DanActive probiotic beverage for the whole of
Canada.

Chocmod Canada
In June 2010, French company Chocmod started building a chocolate truffle factory in
Saint-Jean-sur-Richlieu (Québec) in order to get closer to its North American market, which
currently buys 37% of the company's production. The project will require a $7M investment.

Fromageries Bel
In May 2010, France-based Fromageries Bel and its Québec partner Agropur have
announced they will jointly invest several million dollars to expand the Agropur plant in
Saint-Hyacinthe (Québec) in order to accommodate the Canadian production of the Boursin
cheese. In 2007, Fromageries Bel completed a $10M investment in a new plant in Lévis,
Québec. The plant makes the "Laughing Cow" brand of cheese under a subcontracting
agreement with Québec company Fromagerie Bergeron.

Pepsi
In June 2009, Pepsi announced a $40M investment to modernize its Montréal facilities. In
recent months, the American multinational also moved bottling operations for its "AMP
Energy" drink to Montréal from the previous location in the US.



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Fleury Michon
In 2008, French company Fleury Michon invested close to $42M in the expansion of the
Delta Dailyfood plant, which it had acquired in 2006. Delta Dailyfood specializes in the
preparation of fresh and frozen meals for airlines and grocery store chains.

TRT-ETGO
In January 2008, TRT-ETGO, a subsidiary of the Malaysian government agency FELDA,
announced a decision to invest $153M in the Bécancour industrial park to build the largest
soybean, canola seed and palm seed crushing plant in Eastern Canada and the US. The
production of vegetable oil for the food industry and protein meal for animal feed began in
April 2010.

Bonduelle North America
The world leader in fresh and processed vegetables, France-based Bonduelle set up a
facility in Québec in 2007 to serve the North American market. With seven plants in
Canada, Bonduelle North America is the country's number one processor of canned and
frozen vegetables. The company has just finished modernizing its plant in Bedford,
Québec.

Parmalat Canada
In 2007 and 2008, Parmalat Canada completed the expansion of its Victoriaville and
Montréal plants. The two projects represented a total investment of over $20M.




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LABOUR

Many Québec colleges and universities offer programs directly related to the agri-food
industry. Here are a few examples:

Colleges
The Institut de technologie agroalimentaire (ITA) offers several farm and food processing-
related programs. Training at the ITA is focused mainly on companies' labour needs, making
its graduates much sought after in the agri-food industry. The ITA boasts:
    • over 300 people dedicated to advancing science in several areas of expertise;
    • seven specialized technical programs and over 1,000 students per year;
    • a total of 9,000 hours of training activities per year, attended by some 4,000 people;
    • state-of-the-art facilities including farm schools, dairy and food processing plants,
       teaching gardens, composting centres, greenhouse complexes, etc.

The Cégep régional de Lanaudière offers a number of programs relating to the agri-food
sector:
   • food processing and food quality technology;
   • agricultural enterprise management and operation;
   • horticultural production and environment technology.

The College has an agri-food complex with four pilot plants covering the meat, grains,
dairy and plant product sectors, several advanced laboratories and a greenhouse facility.
The College is also a partner of a school farm.

Universities
Université Laval's Faculty of Agricultural Sciences and Food in Québec City offers seven
bachelor's programs (agronomy, agri-food economics and management, agroenvironmental
engineering, food engineering, consumer sciences, food technology, nutrition). Graduates
who wish to continue their studies can choose from nearly 20 master's and PhD programs.

With its Institute and 25 research centres, chairs, and groups, the Faculty is on the cutting
edge of its fields. Its research projects and activities touch every aspect of the bio-food
chain, from production and industrial processing to marketing and final consumption.

McGill University's Faculty of Agricultural and Environmental Sciences in Montréal is at
the forefront of advances in applied bioscience, food, nutritional and environmental
sciences research and teaching. The Faculty offers unique multidisciplinary programs that
bring together health, environment, food and nutrition, bioproducts, biotechnology and the
agriculture sectors.




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RESEARCH & DEVELOPMENT

Thanks to advantageous tax measures introduced by the Québec and Canadian
governments, the province is recognized the world over as one of the best places to carry
out R&D. It is also home to several renowned research centres specializing in fields related
to food processing.

Food Research and Development Centre (FRDC)
Located in Saint-Hyacinthe, the FRDC is Canada's largest research centre dedicated to food
processing. Its leading-edge scientists specialize in food preservation, processing, quality
and safety. The FRDC also assists food processing companies with their R&D activities. The
FRDC employs nearly 150 people.

Institute of Nutraceuticals and Functional Foods (INAF)
INAF was founded in 1999 at Université Laval. The institute has three main objectives:
   • to improve food intended for human consumption by furthering fundamental and
      applied knowledge of functional food and molecules;
   • to advance the training of highly qualified personnel;
   • to transfer knowledge and technologies to industry, health professionals and the
      general public.

The Institute groups together over 350 people, including nearly 70 professor-researchers,
research professionals and graduate students.

Cintech agroalimentaire
Cintech agroalimentaire, located in Saint-Hyacinthe, specializes in food processing
research. It focuses primarily on agri-food R&D processes, problem-solving and product
development.

Other Research Centres
   •   Université Laval's Centre de recherche en économie agroalimentaire (CRÉA)
   •   Marine Biotechnology Research Centre (MBRC)
   •   The INRS-Institut Armand-Frappier research centre's Canadian Irradiation Centre
   •   NSERC/Saputo/Exel-Pac Industrial Research Chair on materials and films for smart,
       safe and sustainable packaging.




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Research & Development
Associations


Agri-food Export Club
The Québec Agri-Food Export Club is a network of Canadian professionals serving agri-food
exporters. Its objective is to increase exports of its members' products and services.

Conseil de la transformation agroalimentaire et des produits de
consommation (CTAC)
CTAC represents some 400 companies in the food products industry. The Council's mission is
to represent, promote and defend the interests of its members in the agri-food processing
and consumption products industry and to showcase the competitiveness of its members in
local, national and external markets.

Conseil des industries bioalimentaires de l'Île de Montréal (CIBIM)
CIBIM promotes agri-food entrepreneurship and supports agri-food development projects on
the Island of Montréal.

Comité sectoriel de main-d'oeuvre en transformation alimentaire
(CSMOTA)
The sector-based food processing labour committee is a forum for developing, promoting
and supporting strategies to attract, retain and ensure the ongoing training of the
workforce in order to meet industry needs.




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OPERATING COSTS

Competitive Labour Costs
According to a 2010 study by KPMG on international business location, labour costs in
Québec are among the lowest in the industrialized countries.

Here is an example of the difference in costs and the breakdown of the average salary for
certain cities in northeastern North America.

                                Comparison of Average Salary
                                  Québec and United States
                                   (US$, Agri-food Industry)
                                                                     Sub-total:
                   Average salary     Statutory       Optional     Social benefits
                                                                                     Total pay
                      (KPMG)           benefits       benefits      (Statutory &
                                                                      optional)
Montréal, QC           46,336          6,000           11,782          17,782        64,118
Québec, QC             43,418          5,700           11,027          16,727        60,145
Sherbrooke, QC         42,836          5,627           10,882          16,509        59,345
Chicago, IL            46,255          6,082           18,127          24,209        70,464
Toronto, ON            48,245          4,718           12,400          17,118        65,364
Hartford, CT           46,282          6,300           18,145          24,445        70,727
New Yok, NY            49,227          5,136           19,300          24,436        73,664
Trenton, NJ            46,836          6,727           18,355          25,082        71,918


Source: KPMG's Guide to International Business Location-2010 Edition.




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Operating Costs
Taxes


Some of the Lowest Taxes in North America
The cost of income and other taxes for companies with a place of business in Québec is
among the lowest in North America. As a result, Québec's attractive tax structure favours
investment.

Comparison of Tax* Costs
Food processing industry (Chicago = 100)




*Income taxes, capital tax, sales tax and property tax.
Source: KPMG's Guide to international business location - 2010 Edition.




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FINANCIAL SOLUTIONS AND TAXATION

Financial Solutions for You
Investissement Québec can assist you with your expansion plans, providing consulting
services as well as financing assistance. In addition to being an economic development
agency, we are also a financial institution. In addition to offering financial solutions
introduced by partners, we have developed a number of financial and fiscal solutions of our
own to meet your needs.

   •   Financing of refundable tax credits
   •   UNIQ Financing
   •   Feasibility Study of an Investment Project
   •   Economic Projects Support Program (PSPE)
   •   Agricultural Flexibility Fund
   •   Investment Tax Credit for the Acquisition of Manufacturing and Processing
       Equipment
   •   Accelerated Depreciation for Manufacturing and IT Equipment
   •   Emploi-Québec Employment Assistance
   •   Workforce Training Tax Credit

Financing of refundable tax credits
Businesses can obtain a loan guarantee or a loan so they can enhance their liquidity.




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UNIQ Financing
We can provide you with a loan, a loan guarantee or quasi-equity financing to help you
continue to grow in Québec. UNIQ Financing comprises two components, depending on the
nature of your project:

Working Capital »
Capital Assets »


Feasibility Study of an Investment Project
Financial assistance is available for companies that wish to carry out an investment project
in Québec. The program is administered by Québec's Ministère du Développement
économique, de l'Innovation et de l'Exportation and can cover up to 40% of the cost of
consulting services for feasibility studies, to a maximum of CDN$100,000. Eligible sectors
are manufacturing, recycling, business services, industrial research and development and
scientific services.

Economic Projects Support Program (PSPE)
The goal of the Economic Projects Support Program (PSPE) is to support business
investment projects and product development projects carried out by Québec businesses to
enhance productivity and create jobs. The program is designed to support smaller projects
than those supported by the PASI. Financial assistance provided under the PSPE is generally
in the form of a refundable or non-refundable contribution.

Agricultural Flexibility Fund
The AgriProcessing Initiative (API) will deliver $50M over five years in repayable
contributions to food processing facilities. API provides contributions for the purchasing
and installing of equipment in Canadian facilities to enable the adoption of new
manufacturing technologies and processes. A company could receive a repayable
contribution of 50% of eligible project costs to a maximum of $2M per project . The
contributions are non-interest bearing.

Investment Tax Credit for the Acquisition of Manufacturing and
Processing Equipment
A business that acquires new manufacturing and processing equipment before January 1,
2016 may receive this tax credit, which can range between 5% and 40%, depending on the
region and the size of the business.

Accelerated Depreciation for Manufacturing and IT Equipment
To stimulate business investment, accelerated straight-line depreciation at a rate of 50%
may be applied to manufacturing and processing equipment purchased before




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December 31, 2011. For IT equipment, the rate is 100% for material purchased before
February 2011.

Emploi-Québec Employment Assistance
Financial assistance is provided by Emploi-Québec, together with the regions of Québec, to
reduce training and recruiting costs and help secure the employees needed for project
start-ups.

Workforce Training Tax Credit
Employers involved in an activity related to the manufacturing sector may receive a tax
credit covering 30% of their training expenditures incurred before January 1, 2012 to train
employees who primarily perform or supervise tasks involved in an eligible activity.




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Financial Solutions and Taxation
Measures to Stimulate R&D

Certain Québec tax measures enable companies to realize considerable savings on R&D
costs. The real cost of a CDN$100 R&D expenditure may be as low as CDN$38.

                             Net Cost of R&D Expenditures
                  Large Corporation or Foreign-controlled Corporation1

The result will be the same, regardless of the industry.
Example 1: A corporation incurs expenditures of $100,000 on R&D; i.e., $90,000 for the
salary of a researcher, $5,000 for subcontracting in Québec and $5,000 for materials.
Example 2: A corporation incurs expenditures of $100,000 on R&D; i.e., $90,000 for the
salary of a researcher, $5,000 for materials and $5,000 for equipment.

    Expenses                                              Example 1 ($)    Example 2 ($)
A   Salaries                                                    90,000           90,000
B   Subcontracting services                                      5,000            —
    Materials                                                    5,000            5,000
    Equipment                                                     —               5,000
C   Total R&D expenditures                                    100,000          100,000
    Québec tax credit
    (A + B/2) X 17.5%)                                            16,187           15,750
    Federal tax credit
    Total expenditures (C)                                       100,000          100,000
    Overhead (A X 65%2)                                           58,500           58,500
    Less Québec credit                                          (16,187)         (15,750)
D   Expenditures eligible for credit                             142,313          142,750
E   (D X 20%)                                                     28,463           28,550
F   Total tax credits                                            44,650           44,300
    Net cost for the corporation before income taxes
                                                                 55,350           55,700
    (C-F)
    Tax savings (when profits are earned)
    Federal ((C - F) X 16.5%)                                     9,133            9,190
    Québec ((C - E) X 11.9%)                                      8,513            8,502
G   Total tax savings                                            17,646           17,692
    Net cost for the corporation (C-F-G)                         37,704           38,008



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1 Profitable corporation.
2 Proxy method used to calculate overhead. Under this method, overhead actually incurred is
replaced by 65% of R&D salaries.
Source: Investissement Québec and Raymond Chabot Grant Thornton, April 2011




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CHOOSE INVESTISSEMENT QUÉBEC

Are you looking for the right place to grow your agri-food company?

Call Investissement Québec.

We combine the advantages of a financial institution and an economic development
agency, so we have what it takes to meet your needs.

Our team of experts can help you :
  • Gain insight into the challenges and opportunities offered by Québec's agri-food
      industry;
  • Build productive, strategic alliances with local and international partners;
  • Find a location that suits your needs;
  • Benefit from attractive tax incentives;
  • Find the right financing solutions including loans, loan guarantees and working
      capital.




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