Amending Regulation 54 of the Beef Cattle Marketing Act to increase licence fees collected by the Beef Farmers of Ontario.
R.R.O. 1990, Reg. 54: LICENCE FEES
Regulation - LGIC
Bill or Act:
Beef Cattle Marketing Act
Summary of Decision:
O. Reg. 290/19 RL was filed on August 22, 2019 with the Registrar of Regulations.
This regulation amended Regulation 54 under the Beef Cattle Marketing Act. The amendment to Regulation 54 will increase the fee payable by a person who sells cattle in Ontario and that is paid to and retained by the BFO from $3.00 per head to $4.50 per head.
The amendment will be effective on November 1, 2019.
Analysis of Regulatory Impact:
The proposed fee increase will strengthen BFO's efforts in marketing and promoting Ontario-produced beef. Market research conducted by the BFO concluded there is significant unmet demand for Ontario-branded beef products. The increased activities associated with marketing and promotion are intended to increase demand for Ontario beef, which will in turn raise the price of finished cattle. Evidence has shown raising finished prices will also raise calf prices, which will help the overall industry generate more revenue.
The increased focus on marketing is required due to challenges being faced by the industry: the Ontario beef industry faces increased competition from imports, the Ontario cattle herd has fallen by 7% over the last 10 years, and per capita consumption of beef continues to fall as consumers switch to substitutes such as chicken.
The BFO and approximately 19,000 beef farmers would be directly impacted by the proposed amendment. When implemented, farmers who sell beef cattle within Ontario and internationally at any stage of production will see their fees increased by $1.50 per head per transaction. The proposed change will result in an average of approximately $70 in compliance costs per farm. Revenue generated from the sale of cattle and calves in Ontario totaled approximately $1.3 Billion in 2017. The estimated $1.4 million increase in licence fees would be equivalent to less than 0.1% of total beef cattle industry revenue.
There will be no increase in taxes or fees collected by OMAFRA or the Ontario government as a result of this change. No system or process changes will need to be made. There will be very minimal administrative expense (e.g. communications on fee increase, form changes, etc.) associated with implementing this change for affected stakeholders. The increased fee will be collected using existing mechanisms. There are no financial implications to the province as a result of this amendment.
May 24, 2019
Summary of Proposal:
At the Beef Farmers of Ontario (BFO) Annual General Meeting on February 20, 2019, delegates voted on a resolution to increase the provincial portion of the beef cattle licence fee by $1.50. The resolution was passed with 87% in favour. The vote was preceded by extensive consultation with members at regional meetings.
Subsequently, at the request of the BFO, OMAFRA is proposing an amendment to Regulation 54 (Licence Fees) of the Beef Cattle Marketing Act to increase the licence fee paid under that regulation. The BFO is designated under the Beef Cattle Marketing Act as the association under that Act. It represents over 19,000 beef farmers in Ontario.
The licence fee is collected and used by the BFO to fund activities such as marketing, promotion and research. The amendment will increase the Ontario licence fee from $3 to $4.50. The provincial fee was last changed in 2014.
If approved, the fee increase would generate an estimated $1.4 million in additional revenue for the BFO annually. The fee increase will be used by the BFO for the promotion and marketing of beef cattle domestically and internationally, and to fund ongoing producer and consumer engagement activities. The BFO intends to use the additional revenue to achieve greater market share for new and existing Ontario beef brands. This will be accomplished by using $1.25 of the fee increase to develop new brands and expand current brands for both domestic and international markets. Branded products should be able to command higher prices for Ontario producers, which will increase industry revenue.
These marketing activities will be managed by a joint venture between the BFO and the Ontario Cattle Feeders' Association (OCFA). The joint venture will be overseen by a committee comprised of three members each from BFO and OCFA. The remaining $0.25 will go to BFO for continued support of producer and consumer engagement activities. The increased licence fee revenue will be spent on the following: Domestic Market Development ($175,000), Global Market Development ($175,000), Regional Brand Programs ($30,000), Promotional Materials ($50,000), Trade Missions ($70,000), Travel ($70,000), Overhead ($575,000).
Exemptions from the fee exist for cattle sold in a public auction sale that is organized for the purpose of selling only cattle for the production of milk, where the cattle being sold are veal cattle or where the seller does not reside in Ontario. Packing plant operators, auction market operators, livestock dealers and other persons who receive cattle from a seller are required to deduct the fees from the proceeds payable to the seller and remit fees to the BFO.
In addition to the provincial licence fee, a national levy of $1 per head is also collected by the Canadian Beef Cattle Check-Off Agency. The national levy is not changing as a result of this regulation change.
The combined provincial fee and federal levy is currently $4 and will increase to $5.50 per head. Compared to other provinces, Ontario currently has the lowest combined fee and levy. The increase in the provincial portion will bring it in line with other provinces.
A separate fee on interprovincial sales governed by a Federal Order under the Farm Product Agencies Act will not change as a result of amending Regulation 54.
Economic Development Policy Branch
1 Stone Road West, Guelph, Ontario, N1G 4Y2
November 1, 2019