Industry Proposed Changes to the Regulation that Sets the Fees Payable to the Grain Financial Protection Board under the Grain Financial Protection Program
O. Reg. 321/11 (Fees Payable to Boards)
Regulation - Minister
Bill or Act:
Farm Products Payments Act
Summary of Decision:
O. Reg. 205/13 was filed on June 28, 2013 with the Registrar of Regulations.
This regulation amended O. Reg. 321/11 under the Farm Products Payments Act The amendment to O. Reg. 321/11:
- increased the fees payable to the Board by soybean producers from two cents per tonne to ten cents per tonne; and
- decreased the fees payable to the Board by wheat producers from ten cents per tonne to five cents per tonne.
The amendments will be effective on July 1, 2013.
April 3, 2013
Summary of Proposal:
The Ontario Ministry of Agriculture and Food (OMAF) is proposing amendments to O. Reg. 321/11 (Fees Payable to Boards) which is made pursuant to the Farm Products Payments Act (FPPA). The proposed changes would:
- Increase the fee payable to the Board by soybean producers from two cents per tonne to ten cents per tonne; and
- Decrease the fee payable to the Board by wheat producers from ten cents per tonne to five cents per tonne.
The Board, which is classified as a Trust Agency, is responsible for the administration of the producer funds that are used to compensate producers in case of a default in payment by a licensed dealer or if a licensed grain elevator operator does not provide the owner with its grain. Grain Farmers of Ontario, which represents soybean and wheat producers, is supportive of the amendments. The fee changes are being driven by the recommendations of an actuarial study completed in August 2011. The Board is required to operate the funds on an actuarially sound basis.
The purpose of the Grain Financial Protection Program (the Program) is to reduce the risk of producer loss in the event that a licensed buyer defaults on payment as well as protect owners of grain who store their grain in licensed grain elevators. The Program was established in 1984. The Program consists of two parts. They are:
1. The annual licensing of grain dealers and elevator operators under the Grains Act. In order to receive a licence, dealers must prove financial responsibility and/or post security.
2. Administration of four producer compensation funds (soybean, wheat, grain corn and canola) for producers. The mandatory producer "check-off" fees ensure that the producer compensation funds established under the the Program have money to pay any valid claim(s) against the funds. As at March 31, 2012, the combined fund balances stood at $13.32 million. The Board is also responsible for adjudicating the validity of any claim(s) as well as determining how much a producer is eligible to receive. Should a claim be deemed valid, the Board will pay the claim to the producer. The Board is also responsible for trying to recover any payments it makes to a producer from the defaulting dealer. The Board includes representation from the grain industry. Members of the Board are appointed by the Minister.
The proposed changes to the Program represent no additional cost to the government. The changes are being recommended because of an actuarial study completed in August 2011. No changes are being recommended to the fees payable to the Board by grain corn and canola producers.
Farm Finance Branch
1 Stone Road, West, 2nd Floor,
Guelph, Ontario N1G 4Y2
July 1, 2013