Industry Proposed Changes to the Regulation that Sets the Fees Payable to the Livestock Financial Protection Board under the Ontario Beef Cattle Financial Protection Program
O. Reg. 321/11 (Fees Payable to Boards)
Bill or Act:
Farm Products Payments Act
Summary of Proposal:
OMAFRA 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 fees payable to the Livestock Financial Protection Board from five cents per head to ten cents per head.
Under O. Reg. 321/11, a fee of five cents per head of livestock sold is payable to the Board as follows:
1. In the case of a direct sale by a producer to a licensed dealer, the fee is payable by the producer.
2. In the case of a private treaty sale, the fee is payable by the licensed dealer who sells the livestock.
3. In the case of a sale by consignment, the fee is payable by each of the consignor and the consignee, each paying a separate fee.
The Board, which is classified as a Trust Agency, is responsible for the administration of the Fund that is used to compensate sellers in case of a default in payment. The Beef Farmers of Ontario, the Ontario Livestock Auction Markets Association and the Ontario Livestock Dealers Association represent key stakeholder groups that would be impacted, and are supportive of the increase. The fee increase was requested because of industry concerns with regard to the impact of record high cattle prices and increasing administrative costs on the Fund.
An actuarial review of the Fund was completed in September 2015. Based on the assumptions used, the actuary projects a gradual depletion of the Fund over the next 5 years, unless the fees are increased.
The fee was 20 cents per head at inception and reduced to 10 cents per head on June 1, 1984. The fee has been set at 5 cents per head since April 4, 1989.
The purpose of the Ontario Beef Cattle Financial Protection Program (the Program) is to reduce the risk of producer loss in the event that a licensed buyer defaults on payment. The Program was established in 1984. The Program consists of two parts. They are:
1. The annual licensing of dealers under the Livestock and Livestock Products Act. In order to receive a licence, dealers must prove financial responsibility and/or post security.
2. Administration of a compensation Fund. The mandatory "check-off" fees ensure that the compensation Fund established under the Program has money to pay any valid claim(s) against the Fund. The current Fund balance is $7.36 million. The Board is also responsible for adjudicating the validity of any claim(s) as well as determining how much a claimant is eligible to receive. Should a claim be deemed valid, the Board will pay the claim to the claimant. The Board is also responsible for trying to recover any payments it makes to a claimant from the defaulting buyer. The Board includes representation from the livestock industry. Members of the Board are appointed by the Minister.
The proposed changes to the Program represent no additional cost to the government.
October 23, 2015
Comments Due Date:
December 7, 2015
1 Stone Road, West, 2nd Floor,
Guelph, Ontario N1G 4Y2