Regulation - Minister
Proposed regulations under the new Protecting Farmers from Non-Payment Act to support Ontario's Financial Protection Programs.
Regulation Number(s):
N/A
Instrument Type:
Regulation - Minister
Bill or Act:
Protecting Farmers from Non-Payment Act
Summary of Proposal:
On June 8, 2023, Bill 91 Less Red Tape, Stronger Economy Act, 2023 received Royal Assent. The Act included the new Protecting Farmers from Non-Payment Act (Regulating Agricultural Product Dealers and Storage Operators), 2023.
The Protecting Farmers from Non-Payment Act was introduced to consolidates and updates the three Acts governing the Financial Protection Programs (Farm Products Payments Act, Grains Act and Livestock and Livestock Products Act) under one Act. The new Act will continues to mitigate the financial risk of non-payment with relevant and modern programs that are flexible and responsive to sector needs, update board governance, improve and clarify the rules and requirements to obtain and renew licenses and expand the suite of progressive compliance tools to encourage compliance, make it easier to expand the programs to other sectors, and update the appeals provisions.
The Protecting Farmers from Non-Payment Act will comes into effect upon proclamation. Before the Act can come into effect, new regulations are needed to operationalize the Act. The proposed new regulations will also incorporate regulatory issues identified as part of the previous consultation on the legislative changes; and align regulations with existing practice or polices in place.
The new regulations will be sector specific and are not intended to be significantly different from the existing regulations. Specifically, the new Minister's regulations for Grain and Livestock will continue to set out the following functions while also making necessary updates to enforcement and governance policies and processes:
1. the requirements for dealer and elevator operator licensing;
2. fees payables to the two Financial Protection Boards;
3. how payments are paid from the Funds; and
4. Financial Protection Boards payment of expenses.
Please see the links to the Grain and Livestock proposed regulation discussion papers for details about the proposed regulatory changes. Feedback provided will help the ministry determine what changes to implement.
The Protecting Farmers from Non-Payment Act was introduced to consolidates and updates the three Acts governing the Financial Protection Programs (Farm Products Payments Act, Grains Act and Livestock and Livestock Products Act) under one Act. The new Act will continues to mitigate the financial risk of non-payment with relevant and modern programs that are flexible and responsive to sector needs, update board governance, improve and clarify the rules and requirements to obtain and renew licenses and expand the suite of progressive compliance tools to encourage compliance, make it easier to expand the programs to other sectors, and update the appeals provisions.
The Protecting Farmers from Non-Payment Act will comes into effect upon proclamation. Before the Act can come into effect, new regulations are needed to operationalize the Act. The proposed new regulations will also incorporate regulatory issues identified as part of the previous consultation on the legislative changes; and align regulations with existing practice or polices in place.
The new regulations will be sector specific and are not intended to be significantly different from the existing regulations. Specifically, the new Minister's regulations for Grain and Livestock will continue to set out the following functions while also making necessary updates to enforcement and governance policies and processes:
1. the requirements for dealer and elevator operator licensing;
2. fees payables to the two Financial Protection Boards;
3. how payments are paid from the Funds; and
4. Financial Protection Boards payment of expenses.
Please see the links to the Grain and Livestock proposed regulation discussion papers for details about the proposed regulatory changes. Feedback provided will help the ministry determine what changes to implement.
Analysis of Regulatory Impact:
Analysis is underway to determine possible compliance costs and anticipated benefits of the proposed changes to operationalize the new Act. Feedback from stakeholders will be used to finalize the analysis. Anticipated benefits and costs based on a preliminary analysis are below.
Anticipated Benefits:
The proposed amendments would:
(1) further strengthen producer protection by, amongst other things, operationalizing new progressive compliance tools, licence registry, provisions to make it easier to expand financial protection to other sectors; increasing the grain small dealer exception threshold; and requiring livestock agents to be approved by the Director;
(2) maintain the long-term sustainability/stability of the Funds by operationalizing legislative provisions to update Board powers and procedures and give the Board new powers; and ensuring that the Funds are actuarially sound able to pay producers in the event of a claim.
(3) support the creation of a level playing field for dealers and elevator operators (e.g. operationalizing new progressive compliance tools, licence registry, and updated appeals provisions); and
(4) improve clarity of regulatory provisions, by aligning the regulations with existing policies and industry practices, which will limit confusion and improve compliance (e.g. setting out the contents of agreements to purchase or sell agricultural products, making it clear that elevator operators do not have to provide proof of financial responsibility to be licensed; clarifying the treatment of out of province sellers).
Anticipated Costs:
Direct compliance costs for producers, dealers and operators (that are complying with the licensing requirements) are related to:
(1) Proposed increase to the check-off fees paid by sellers. An actuarial review of the funds completed in 2021/22 has resulted in a recommendation to increase the check-off fees paid by grain corn, canola and beef cattle producers to ensure that the funds are actuarially sound (i.e. continue to have enough money to pay claims and administrative expenses). Check-off fee changes are recommended by the Boards. Changes to the check-off fees will be finalized once consultation is complete and recommendation for regulatory changes finalized.
(2) Proposed licensing fee changes would increase the licence application and renewal fees paid by dealers and elevator operators and short fall permit fees paid by operators under the Grain Program.
(3) Administrative costs associated with the time and effort licensees would need to take to familiarize themselves with the legislative and regulatory amendments; and to create agreements (or amend existing agreements to align with regulatory requirements). These costs are expected to be minimal for dealers and elevator operators as the major components of the Programs remain substantially the same.
Agricorp will incur administrative costs to update application forms and website; update/develop standard operating procedures; train staff; and develop communication material.
Anticipated Benefits:
The proposed amendments would:
(1) further strengthen producer protection by, amongst other things, operationalizing new progressive compliance tools, licence registry, provisions to make it easier to expand financial protection to other sectors; increasing the grain small dealer exception threshold; and requiring livestock agents to be approved by the Director;
(2) maintain the long-term sustainability/stability of the Funds by operationalizing legislative provisions to update Board powers and procedures and give the Board new powers; and ensuring that the Funds are actuarially sound able to pay producers in the event of a claim.
(3) support the creation of a level playing field for dealers and elevator operators (e.g. operationalizing new progressive compliance tools, licence registry, and updated appeals provisions); and
(4) improve clarity of regulatory provisions, by aligning the regulations with existing policies and industry practices, which will limit confusion and improve compliance (e.g. setting out the contents of agreements to purchase or sell agricultural products, making it clear that elevator operators do not have to provide proof of financial responsibility to be licensed; clarifying the treatment of out of province sellers).
Anticipated Costs:
Direct compliance costs for producers, dealers and operators (that are complying with the licensing requirements) are related to:
(1) Proposed increase to the check-off fees paid by sellers. An actuarial review of the funds completed in 2021/22 has resulted in a recommendation to increase the check-off fees paid by grain corn, canola and beef cattle producers to ensure that the funds are actuarially sound (i.e. continue to have enough money to pay claims and administrative expenses). Check-off fee changes are recommended by the Boards. Changes to the check-off fees will be finalized once consultation is complete and recommendation for regulatory changes finalized.
(2) Proposed licensing fee changes would increase the licence application and renewal fees paid by dealers and elevator operators and short fall permit fees paid by operators under the Grain Program.
(3) Administrative costs associated with the time and effort licensees would need to take to familiarize themselves with the legislative and regulatory amendments; and to create agreements (or amend existing agreements to align with regulatory requirements). These costs are expected to be minimal for dealers and elevator operators as the major components of the Programs remain substantially the same.
Agricorp will incur administrative costs to update application forms and website; update/develop standard operating procedures; train staff; and develop communication material.
Further Information:
Protecting Farmers from Non-Payment Act
Discussion Paper - Grain Financial Protection Program
(Download Adobe Reader)
Discussion Paper - Livestock Financial Protection Program
(Download Adobe Reader)
Proposal Number:
24-OMAFRA002
Posting Date:
February 27, 2024
Comments Due Date:
April 29, 2024
Contact Address:
Branch: Farm Finance
Address: 1 Stone Road West; Guelph ON N1G 4Y2
Address: 1 Stone Road West; Guelph ON N1G 4Y2