Proposed changes to Ontario's Financial Protection Programs
O. Reg. 560/93
O. Reg. 467/19
Regulation - Minister
Bill or Act:
Farm Products Payments Act, 1990
Summary of Decision:
The ministry received eight submissions on the proposal for short- and longer-term changes to the Financial Protection Programs for the beef cattle and grains sector. Comments were generally supportive and focused primarily on the longer-term changes that would expand protection for other sectors, enhance program integrity, reduce burden and improve program responsiveness.
Short-term changes are being implemented or have already been put in place, including:
o Amendments to O. Reg. 560/93 to provide the Livestock Board with greater flexibility around quorum and update Board composition. This came into force on January 1, 2020.
o A new Minister's regulation (O. Reg. 467/19) to support the long-term viability of the programs and future program enhancements by better aligning program delivery expenses with the financial protection funds. This will be phased in between January and April 2020.
o Non regulatory actions to improve the client experience (e.g. update grain elevator inspections to eliminate duplication, implement electronic forms, and develop educational information) are expected to be in place by spring 2020.
Longer-term changes being explored for future implementation would result in: an efficient and effective legislative framework that better reflects current practices and approach to financial risk management; greater flexibility to create financial protection programs for other sectors; clearer rules and requirements to obtain and renew a licence; enhanced inspection and enforcement tools and powers to encourage compliance in a measured way that is proportional to risk; and improvements to fund management/claims adjudication that add clarity and reduce costs.
Stakeholder input will continue to be an important part of the process to finalize longer-term program changes. As such, the ministry will continue to engage industry in the policy development process over the course of 2020.
September 30, 2019
Summary of Proposal:
The Beef Cattle Financial Protection Program and the Grain Financial Protection Program are key tools to help Ontario's 19,000 beef cattle producers and 28,000 grain producers manage their business risks. Despite dramatic changes in the agri-food industry and financial risk mitigation approaches since the programs' establishment in the 1980s, the programs have remained largely unchanged.
Ontario's 2019 budget committed the government to review the programs to ensure grains and beef cattle producers have access to stable risk management tools that provide them with the confidence to grow their businesses.
In spring 2019, the ministry met with the Financial Protection Boards and industry to identify opportunities for program enhancements. There was consensus that the programs work well, and no major changes were needed to the structure of those programs for the two sectors. Stakeholders did identify ideas to enhance the programs' integrity, reduce burden and improve responsiveness. Themes included:
1.Annual dealer licensing is needed to ensure integrity, but processes for reviewing dealers' financial responsibility and incorporating past compliance into licensing renewal could be improved.
2.Inspection and enforcement help ensure compliance and a level playing field for all. Suggested changes included updating inspection processes to reflect current practices and focusing efforts on dealers operating without a licence.
3.Measures were suggested to improve the program's long-term viability, such as clarifying that only sellers who have paid check-offs are eligible for compensation, enhancing education on program requirements for buyers and sellers, and allowing the Boards to utilize dealer security to offset all costs of adjudicating claims (not just recovering claim payments).
4.There was strong support for Agricorp's program delivery and for the two boards in carrying out their mandate. Stakeholders were interested in exploring alternatives to the Boards being provincial agencies due to the reporting requirements and costs of meeting them.
The government is proposing a phased approach to implement the feedback received. There are actions that can be implemented over the next few months to improve the client experience and ensure the programs remain sustainable:
-Updating the list of directives inspectors use to guide inspections of grain elevator operations to eliminate duplication and ensure they reflect current business practices.
-Developing information for producers and dealers to ensure they understand the program and their obligations.
-Exploring opportunities to make it easier to complete and submit forms electronically.
-Introducing a new regulation to support the long-term sustainability of the financial protection programs by allowing Boards to pay the costs of administering the Grains Act, the Livestock and Livestock Products Act and the Farm Products Payments Act from the funds they administer.
-Updating the Livestock Financial Protection Board regulation to provide the board with greater flexibility around quorum.
The ministry proposes to make other changes and some may require further legislative or regulatory changes. Industry feedback is needed to prioritize and discuss how best to implement. Refer to the attached discussion paper for more details on the proposed approach, including what was heard in the engagement sessions and the areas that the ministry would like to explore further with industry.
Farm Finance Branch
1 Stone Road West, N1G 4Y2
January 1, 2020