Grain Financial Protection Board Business Plan for the Fiscal Years 2021-2024

Table of Contents

  1. Executive Summary
  2. Mandate
  3. Governance
  4. Strategic Direction
  5. Overview of Current and Future Programs and Activities
  6. Resources Needed to Meet Objectives of Mandate and Strategic Directions
  7. Environmental Scan
  8. Performance Measures and Targets
  9. Finanical budget
  10. Initiatives involving third parties
  11. Risk Assessment and Management
  12. Communication Plan
  13. Appendix 1: Current Board Appointees (as of February 25, 2021)
  14. Appendix 2: History of claims (as of February 25, 2021)
  15. Appendix 3: Ministers mandate letter for 2021-22

Executive Summary

The Grain Financial Protection Board (Board or GFPB) was established in 1985 and is classified as a Board-Governed Provincial Agency under the Agencies and Appointments Directive (AAD). The Board "administers funds or other assets for beneficiaries named under statute." The Board's mandate, strategies and activities have always been focused on prudent management of the Funds to ensure financial compensation is available to grain corn, soybean, wheat, and canola producers/owners when required. The Board's mandate of administrating the Funds, investigating, granting and refusing claims, and recovering money is directly linked to one of the ministry's goals of ensuring the sustainability of agriculture in Ontario.

Commitments for 2021-2024

The Board will continue to administer the Funds in a sound manner and this provides producers/owners with an effective risk management tool that allows them to remain competitive. The Board has outlined five strategic priorities for 2021-2024:

  • To ensure long-term sustainability of the Funds administered by the Board;
  • To ensure appropriate agreements are reviewed, understood and in place to fulfill its mandate;
  • To work with ministry staff to explore alternative governance models as a potential option for the Board to consider;
  • To continue to investigate and adjudicate claims in a fair and equitable manner; and
  • To grant, refuse and recover claim payments under the Farm Products Payments Act (FPPA) as appropriate.

Revenue and Expenditures and Expectations for 2021-2024

The audit of the 2019-20 fiscal year was completed in December 2020 with an unqualified opinion. The Funds (grain corn, soybean, wheat and canola) continue to meet the minimum target balances as outlined in the 2011 and 2016 actuarial reports. Total revenue for 2019-20 was $908,089 and total expenses were $238,376.

Revenue

The Board receives revenue for the Funds from two sources. The first is in the form of producer check-off fees that are received when a producer sells one of the four commodities: grain corn, soybean, canola or wheat. Each commodity has its own check-off fee which is expressed in $/tonne. The Minister adjusted check-off fees in 2013 to assist the Funds in meeting the targeted Fund balances. No further adjustments are currently anticipated for 2021-2024.

Assuming that the projected sales of the four commodities would be similar to previous years, the projected check-off fees revenue will be approximately $448,000 per annum based on an average from the last four-years.

The second source of revenue is from investment interest earned on the balance of the Funds held. Due to the decrease in Bank of Canada's key interest rates and the unpredicted low rates, the Board's investments in Guaranteed Investment Certificates (GICs) are providing a lower rate of return than expected. As such, investment revenues are projected to be1.5% for 2021-22, compared to 2.2% in 2020-21. When possible, the Board staggers the terms and maturity dates of GICs and uses this laddering strategy to reduce the influence of interest changes and to maximize returns.

Expenses

The Board has been able to effectively manage expenses over the past several years. For 2021-22, the budgeted expenses are estimated to remain the same compared to the previous year. The Board has budgeted an increase in expenses of one and half per cent per annum to capture the projected effect of inflation.

A new Minister's regulation (O. Reg. 467/19: Boards Payment of Expenses) under the Farm Products Payments Act (FPPA) was introduced effective January 1, 2020 that requires the Board and industry to pay for all administrative program delivery costs of the Grain Financial Protection Program (Program). Program delivery activities include annually determining financial responsibility of dealers, licensing, inspections and enforcement under the Grains Act. The board continues to pay the costs to: administering the financial protection funds (fund management), claim adjudication and payment of claims. The new regulation will help to ensure the programs' long-term sustainability and support any potential future enhancements to Ontario's financial protection programs. This change resulted in an increase in Board expenses as of January 1st (2019-20 fiscal year and onward) in the budget.

As well under the new regulation, effective April 1, 2020, the Board is also required to pay investigative and some legal costs under the FPPA. The Board's 2020-21 budget includes a cost for these services.

Based on the Board's projections for 2021-2024, we anticipate to generate enough revenue to cover the admin expenses (program delivery and board support service expenses). Revenue is dependent on the interest rates which are at a historic low. Claims are the unknown factor to the Board's operating expenses but we include a projected amount of $263,000 annually to be paid out of the Funds.

The Board will continue to review and monitor the soundness of all the Funds on an annual basis, and will make recommendations to the Minister regarding the appropriate changes such as the level of check-off fees, as required.

Approximately every 5 years the Board conducts an actuarial review, an initiative that involves a third party vendor, to determine how potential claim payments and/or expenditures may impact the Funds. The last review occurred in 2016-17 fiscal. For 2021-22, an estimated expense for an actuarial review has been included. Governance/ secretariat and finance expenses have also been increased in 2021-22 to reflect the additional workload of completing an actuarial review.

Key achievements from 2020-2021

  • Review and management of Fund performance completed;
  • Board members participated in discussions regarding the ministry's review of the financial protection programs;
  • Claim adjudication training;
  • Business planning and risk assessment completed;
  • Appointment and re-appointment of Board members achieved;
  • Orientation for new board members completed; and
  • Review of policies and guidelines was undertaken.

In 2020-21, one claim application was submitted from a producer seeking payment from the Funds. The Board denied this claim.

Ontario's 2019 budget committed the government to a review the financial protection programs to ensure that grains (and beef cattle) producers have access to stable risk management tools that provide the confidence to invest in and grow their businesses. The ministry is currently leading this program review and will engage the Board and grain industry/ stakeholders in these discussions. These discussions began in 2019 and were put on hold in 2020 due to COVID-19. They resumed in early 2021.

The Board worked collaboratively with the ministry to make recommendations for vacant member positions. The Board continues to focus on the effective management of the Funds. All policies and guidelines are reviewed annually to both ensure that the material continues to be relevant, and that the members remain informed.

Mandate

The Board is responsible to the Minister of Agriculture, Food and Rural Affairs (Minister) and is constituted under the authority of the FPPA and the regulations made thereunder:

  • O. Reg. 70/12 (Payments From Funds For Grain Producers)
  • O. Reg. 321/11 (Fees Payable to Boards)
  • O. Reg. 467/19 (Boards Payment of Expenses)

The Board's legislative mandate is set out in subsection 4 (1) of the FPPA as:

It is the function of a board and it has power,

  1. To administer its fund;
  2. To investigate all claims made to it under this Act and to determine the extent of their validity;
  3. To grant or refuse the payment of claims or any part thereof and determine the amounts and manner of payment;
  4. To recover any money to which it is entitled under this Act by suit in a court of competent jurisdiction or otherwise; and
  5. to carry out the functions, and exercise the powers, prescribed by regulation.

The vision of the Board is to protect the financial interests of Ontario producers who have sold grain corn, soybeans, wheat and canola, as well as owners who stored grain with elevator operators. The Board's vision supports the Ontario Ministry of Agriculture, Food and Rural Affairs' (OMAFRA or ministry) goal of strong agriculture, food and bio-product sectors and strong rural communities; in particular, the business risk management components of this goal are support by the Board's vision.

Governance

The Board members are accountable to the Minister, through the Chair, for setting goals, objectives and the strategic direction for the Board. The Board operates under the authority set out in the FPPA and in accordance with the Memorandum of Understanding (MOU) between the Minister and the Chair. The MOU defines the relationship between OMAFRA and the Board, including the roles and responsibilities of the Minister, the Deputy Minister, the Board Chair and the Board members. Effective July 24, 2019, the Chair and Minister affirmed the existing MOU (that was effective June 5, 2017). The MOU is effective until it is revoked or the parties sign a new MOU. The MOU sets out the operational and reporting relationship between the Board and the Minister, and also outlines the administrative, financial and auditing arrangements with OMAFRA.

The Board must comply with provincial government directives that guide agencies in the delivery of services to the public. The Agencies & Appointments Directive is a Management Board of Cabinet Directive and sets out the requirements for the Board as a provincial agency.

Board Structure

The Board is comprised of a minimum of five members as appointed by the Minister for terms of up to three years. Members are eligible for reappointment. The Minister also has the authority to designate a member of the Board as Chair and another as Vice-Chair.

To ensure stakeholder confidence in its decisions, the Board requests stakeholders to identify candidates for recommendation to the Minister for appointment. Currently membership of the Board includes nominees from the Grain Farmers of Ontario (GFO), the Ontario Agri Business Association (OABA), and the Ontario Canola Growers Association (OCGA). These industry groups select candidates based on the Board's key competency needs of: industry experience as a primary agricultural producer or grain dealer; financial experience in accounting or investments; board governance and risk management. These key competencies enable the Board to continue to meet its mandate and enhance performance as a Board.

The Board typically meets quarterly, or as required by business demands (e.g. to review and adjudicate claims).

By convention, the Board has considered a full complement to be eleven part-time members. There are currently 11 Board members including the Chair and Vice Chair. Appendix 1 includes a list of the Board members.

Mandate letter from Minister

As part of the Agencies and Appointments Directive (AAD) the Minister issues an agency mandate letter to the Chairs of all board-governed agencies on an annual basis to inform their business plan. The Board Chair received the 2021-22 mandate letter from the Minister which outlines high-level, achievable expectations for the 2021-22 fiscal year (see Appendix 3). The Board has aligned its strategic approach and priorities to support these as follows:

  • Ensure long-term sustainability and effective oversight, risk management and expenditure management of the Funds (e.g. use tactics such as an actuarial review).
  • Support transparency and accountability by meeting all AAD provisions and requirements and identifying appropriate skills, knowledge and experience needed to support agency governance and accountability (i.e. agency attestation).
  • Continue to support improved customer service by measuring and communicating the performance of the Funds to stakeholders.
  • Continue to investigate and adjudicate claims in a fair and equitable manner.
  • Continue to support the ministry's review of the financial protection programs to ensure they are aligned with the current agricultural risk management landscape and sector trends.

These will be measured and addressed in the Board's 2021-2024 business plan as follows:

  • Annually review the performance of the Funds against established targets and annually review the Boards investment policy.
  • Annually review claims adjudication guidelines as well as ensure the processing of claims is completed fairly and with minimal delays.
  • Work with OMAFRA to support the financial protection programs review and to identify opportunities to ensure that grain producers have access to stable risk management tools.
  • Meet all AAD provisions and requirements (i.e. agency attestation).
  • Work with OMAFRA to identify and ensure candidates with appropriate skills, knowledge and experience are appointed.

Strategic Direction

The Board's strategic direction is focused on the following broad priorities which are essential in keeping with the Board's mandate and responsibilities:

  • To ensure long-term sustainability of the Funds administered by the Board;
  • To continue to investigate and adjudicate claims in a fair and equitable manner;
  • To work with ministry staff to continue to explore alternative governance models as a potential option for the Board to consider;
  • To grant, refuse and recover claim payments under the FPPA, as appropriate; and
  • To ensure appropriate agreements are reviewed, understood and in place to fulfill the mandate.

To support the priorities outlined above, the Board has established five goals with corresponding objectives and activities that are used to assist with fulfilling their mandate.

The goals which the Board focuses on are:

Ensure long-term sustainability of the Funds – The Board has hired Agricorp for the day–to-day administrative functions of the Funds; however, the Board is ultimately responsible for the oversight and management of the Funds. The Board annually measures the performance of the Funds against established targets. The Board will request actuarial reviews on the Funds periodically or as required and will only invest the Funds in instruments that are approved in the MOU. The Board has an established Statement of Investment Policy that is reviewed annually.

Maintain an adjudication process that is simple, fair and accessible with minimal delays – The Board has approved claim adjudication guidelines and has established operational procedures to assist with the processing of claims. These will assist the Board to ensure that the adjudication process is understandable, fair and has minimal delays.

Ensure agreements and directives are understood and documentation required under the MOU is in place – The Board reviews the documentation required under the MOU to ensure that it is both understood and that the appropriate documentation is on file. Legal counsel assists the Board with the review of the documentation.

Ensure a high performing Board – The Board works with OMAFRA and stakeholder groups to seek recommendations and approvals for appointments to the Board. The Board also maintains an orientation manual and provides new members with orientation and training.

Consult with industry stakeholders – The Board participates in a minimum of one stakeholder meeting every two to three years or more frequently, as needed.

Goal Objectives Activities
Long-term sustainability of the Funds. To maintain actuarially sound Funds that are managed in the interest of producers and owners.
  • An actuarial review is completed periodically or as required.
  • Funds are invested in instruments that are approved in the MOU.
  • Review and approve quarterly statements.
  • Meet with the Agricorp's Controller or Finance Manager semi-annually or as needed to discuss the Funds' performance, future strategies and other issues.
  • The Board's accounts and financial transactions are audited annually by the Office of the Auditor General. A report of the audit is available to the Board and to the Minister, as per the FPPA.
  • Recover any money to which the Board is entitled under the FPPA by suit in a court of competent jurisdiction or otherwise.
Long-term sustainability of the Funds. To be self-sustaining, paying all legitimate Board expenses from the Funds.
  • Review, monitor and approve financial reports.
  • Ensure that payments from the Funds are compliant with the FPPA.
Maintain an adjudication process that is understandable, fair, and accessible, with minimal delays. To conduct adjudicatory Board meetings and hearings and to issue decisions in a timely and fair manner.
  • Maintain the claim adjudication guidelines.
  • The Board may have the claim investigated and complete the claim adjudication process.
  • The Board may provide the evidence upon which it based its decision to the parties (i.e. the investigative report including statements by witnesses and supporting documents).
  • The Board may provide an opportunity for all parties to be heard (i.e. an opportunity to make written or, as requested by the Board, verbal submissions to the Board before a decision is made).
Ensure action is taken to recover any money to which the Board is entitled under the FPPA. Board compliance with the FPPA.
  • When a claim is paid, the Board follows up with the Chief Inspector to determine if security is held and thereafter to ensure that it is deposited to the Funds.
  • The Board consults with legal services for guidance on how to proceed with any recovery action.
Ensure that appropriate agreements and directives are understood and that required documentation under the MOU is in place. Board compliance.
  • Board members understand the MOU and directives and their roles and responsibilities.
  • Necessary documents are prepared and training is planned and undertaken.
Ensure a high performing Board. To mitigate loss of Board member experience and knowledge as members' terms expire.
  • Work with OMAFRA and stakeholder groups to seek recommendations and approvals for appointments to the Board.
  • Maintain a Board orientation manual/ handbook.
  • Training is scheduled and undertaken as required. (e.g.: claim adjudication).

Consultation with industry stakeholders.

To be transparent on decisions of the Board.

  • Participate in stakeholder meetings when scheduled. The last program stakeholder meeting was held in July 2018

Overview of Current and Future Programs and Activities

The following describes the Program and the four Funds and the role of the Board in the Program:

Grain Financial Protection Program

The Grain Financial Protection Program was introduced in the mid-1980s, following a series of grain elevator bankruptcies. Under the Grains Act, Agricorp (a provincial Crown Corporation), through the designation of a Chief Inspector who has statutory authority on licensing, is responsible for delivering all aspects of grain dealer and elevator operator licensing and inspection components of the program. The following are the licensing components of the program:

  • Determining the financial responsibility of grain dealers and elevator operators;
  • Inspection of storage sites; and
  • Licensing of grain dealers and elevator operators.
Grain Financial Protection Board Funds
  • The Board administers four Funds: grain corn, soybean, canola and wheat.
  • Income comes from producer check-off fees and the investment income generated from those fees.
  • The purpose of the Funds is to provide producers/owners with financial compensation in the event that a dealer or elevator defaults on their obligation or if there is a storage shortfall.

Grain Financial Protection Board

The Board is a trust agency that operates under the legal authority as set out in the Farm Products Payments Act and Ontario Regulation 70/12. The Board manages the respective Funds for Grain Corn, Soybeans, Wheat and Canola Producers under the financial protection component of the program and adjudicates claims to those Funds.

  • The Board will investigate and determine the validity of applications for potential payment from the Funds.
  • They decide to pay or refuse to pay on a claim based on the evidence and provisions of the FPPA and regulations.
  • Payment to producers and owners is made after the Board has determined that their claim is valid and the Board has approved the claim for payment.
  • The Board's main activities are to manage the Funds effectively and prepare for claims when they occur.

The Board administers the Funds and, as such, in addition to adjudicating claims, its focus is on the growth of the Funds and on prudent management of expenditures.

The Board does not administer any other program and no new programs are being considered for the 2021-2024 time frame.

Resources Needed to Meet Objectives of Mandate and Strategic Directions

Human Resources and Staff Numbers

The Board does not have staff. All resources are provided through a Service Agreement or as agreed to in the MOU between the Board and the Minister.

The Board currently has a multi-year service agreement with Agricorp to provide Governance, Secretariat and Financial Services to the Board. Staff that provide support to the Board have no role in the licensing and inspection components of the program. These functions are separate to avoid any perception of a possible conflict of interest in adjudicating the claims that arise from a licensed dealer's/ elevator operator's default in payment, while protecting the integrity of the program.

Resources, services, and support provided to the Board

Board service agreement with Agricorp

Both Governance/Secretariat and Financial Support services are provided to the Board by Agricorp as agreed to in the Service Agreement between the two parties. A multi-year service agreement for Governance, Secretariat and Financial Service Agreement was signed in 2017-18 for a three-year term (expiring March 31, 2020), with options to extend for two separate one-year terms. The Board extended the existing agreement with Agricorp for one separate year term for 2020-21 fiscal and is extending for another one-year additional term (for 2021-22 fiscal). Once the agreement is extended the service agreement will then expire March 31, 2022 until a new agreement is in place.

Additional support services to the Board

The Board has additional support available for legal counsel and the investigation of claims. These services are provided by the ministry to the Board and effective April 1, 2020 these costs are paid for by the Board.

  • Investigative services are provided by the Agriculture Investigations Unit within OMAFRA's Food Safety & Traceability Programs Branch; and
  • Legal counsel/ services are provided by the Ministry of the Attorney General through the Ministry of Agriculture, Food & Rural Affairs Legal Services Branch.

At this time the Board is not considering other service providers for these services and will engage the ministry as part of these discussions if needed so that consideration can be given to the broader implications for the program and the ministry from a risk management perspective.

Environmental Scan

The Board is responsible through its mandate to manage the Funds and to adjudicate claims presented by producers and owners of canola, grain corn, soybeans, or wheat. Producers or owners may submit a claim to the Board to potentially cover a portion of their losses.

The factors that could impact the Board and/or the health of the Funds are outlined below.

External Drivers

Interest Rates

Interest rates play a significant role in the overall health of the Funds. The Board's actuarial review indicated that the Funds are highly dependent upon investment income to cover projected expenses and claims. The review revealed that the current investment holdings are of high quality. The Board will need to continue to ensure that the Funds are invested in high quality investments that are consistent with the Trustee Act provisions referenced in the MOU and the Board's investment policy, while also considering the current unprecedented low interest rates.

Elevator Operators and Dealers

In recent years there have been an increase in the number of smaller businesses offering grain elevator and/ or dealer services. Many of these are producers increasing their own on-farm storage capacity and using their surplus storage capacity to store grain for other producers. An awareness campaign by stakeholders has resulted in an increased knowledge of the requirement to deal with a licensed facility. Agricorp addresses unlicensed facilities and dealers as soon as they are apparent with sanctions under the Grains Act.

If a dealer or elevator is not licensed, a review of that organization's financial responsibility is completed. This may determine the risk that the organization will default on their obligations to a producer or owner. Agricorp occasionally receives complaints about unlicensed operators but the number has decreased from a few years ago when many producers increased on farm storage capacity and provided custom storage to neighbours while unlicensed. In the majority of the cases, the complaint has resulted in the operator completing an application and the issuance of a license for the grain elevator.

Out of Province Dealers

In the past few years, there have been a few dealers based in Quebec or the United States that require a license. Producers are free to sell and transport crops to other jurisdictions. But if operations are purchasing from Ontario producers, a license is required. There are several out of province dealers that are currently licensed.

Increased Demand for Government Accountability and Transparency

Increased scrutiny of both private and public sector organizations has resulted in increasing demands for accountability. Government, including agencies, need to perform their functions effectively and efficiently in a transparent and responsible manner. They must show that government directives are being complied with and outcomes are achieved through clear and regular reporting. The Management Board of Cabinet requires greater Board accountability, transparency, reporting and standardized risk identification and management. In response to the need for greater transparency, the Board completes and submits to the ministry a quarterly risk assessment report.

Legislative, Strategic and Policy Changes

The Board was established under the FPPA, which is administered by OMAFRA. Any change to the FPPA could have a direct and profound impact upon the Board and its activities. Through the MOU, the Minister and the Chair have agreed to work closely together when the Ontario Government is considering regulatory or legislative changes for the agency. The Chair and the Minister meet as required to discuss any legislative changes that may impact the Board.

As part of the April 2019 provincial budget announcement there was mention of a review of the financial protection programs and changes to the FPPA through Bill 100. The FPPA was amended January 1, 2020 that enables the Boards to pay for all licensing and enforcements costs for the programs, fund management and claims adjudication under the FPPA from the Funds.

Financial Responsibility Review Committee (FRRC)

An important part of grain dealer and operator licensing involves determining the financial responsibility of dealers and elevator operators. The FRRC is established to support the determination of the financial strength of applicants. The FRRC includes an Agricorp staff member and two Chartered Accountants that review files and provide licensing recommendations to the Chief Inspector. The program helps to ensure that only financially viable operations are licensed to purchase from producers.

As part of the Financial Protection Programs review, the ministry is leading a review of the FRRC's mandate to assess its continued role in supporting the Program and identify any potential changes in its mandate. Based on feedback from industry stakeholders and Agricorp, it was determined that FRRC continues to play an important role in supporting the Program. Further discussions will be held with industry stakeholders and Agricorp on some of the other recommendations coming out of the FRRC review.

Commodity Prices

Commodity prices have experienced great volatility that may increase cash flow challenges and increase the amount of risk to the dealer/elevator and, in turn, to the Funds. This volatility has made it harder to predict the future of commodity prices.

COVID-19 global pandemic

Grain farmers in Ontario have been impacted by the economic conditions of the COVID-19 global pandemic. This impact includes the demand for grain decreasing, contracts being deferred and disruptions in the agricultural value supply chains. For the Board, this could result in less revenue to the Funds from the contributions of check-off fees being lower over the next couple of years, investment income lower due to the interest rates falling to a historic low and a potential impact on claims with the potential impact on dealers/ operators and the financial positions. The Board will continue to monitor for impacts.

Internal Drivers

Funds

The 2016 actuarial review indicated that the Funds are highly dependent upon investment income. The review suggested that the Board should consider making changes to the target fund levels compared to the previous actuarial report, however the balance of the Funds are meeting the target fund level so no change was made. An actuarial review is planned for 2021-22 fiscal year and the Board will consider if any of the recommendations are needed to be implemented, and will continue to monitor all the Funds against the target levels to ensure they are growing or maintained at an appropriate level.

Board Expertise and Development

The Funds have a low frequency of claims. This makes it difficult for Board members to acquire "hands-on" claims adjudication experience. The Board annually reviews the Claim Adjudication Guidelines and claims training is held to assist Board members to adjudicate claims. Board members bring a variety of skills and experience and an annual review of these guidelines promotes a consistent approach to adjudicating claims.

Board Knowledge Management and Succession Planning

Deliberate planning and consideration are given to the expiry date of members' terms to minimize the loss of experience and knowledge during member transition periods. A continuous review of existing Board members' terms is conducted. Appointment tenures are staggered, in part to promote continuity.

Performance Measures and Targets

The following indicators define the outcomes the Board is committed to achieving. These indicators are the basis for measuring and evaluating impact.

Implementation plan: Performance measures and targets for each objective are identified below.  As part of its continuous improvement process, the Board has set goals to ensure that objectives are achieved. The Board also tracks progress against these measures and prepares an annual report.

Objective 1: To maintain a solvent compensation Fund managed in the interest of grain producers.

Performance measure Baseline Target 2019-20 Actual 2019-20 Target 2020-21 Target 2021-22 Target 2122-23
Annual financial audit achieves an unqualified audit opinion in accordance with Canadian generally accepted accounting principles Unqualified Unqualified Achieved Unqualified Unqualified Unqualified
Grain Corn target Fund balance Minimum Fund balance $4,600,000 maintained Minimum Fund balance $4,600,000 maintained Achieved: Balance $6,130,272 Minimum Fund balance $4,600,000 maintained Minimum Fund balance $4,600,000 maintained Minimum Fund balance $4,600,000 maintained
Wheat target Fund balance Minimum Fund balance $2,200,000 maintained Minimum Fund balance $2,200,000 maintained Achieve: Balance $4,167,662 Minimum Fund balance $2,200,000 maintained Minimum Fund balance $2,200,000 maintained Minimum Fund balance $2,200,000 maintained
Canola target Fund balance Minimum Fund balance $900,000 maintained Minimum Fund balance $900,000 maintained Achieved: Balance $1,069,511 Minimum Fund balance $900,000 maintained Minimum Fund balance $900,000 maintained Minimum Fund balance $900,000 maintained
Soybean target Fund balance Minimum Fund balance $4,400,000 maintained Minimum Fund balance $4,400,000 maintained Achieved: Balance $5,787,700 Minimum Fund balance $4,400,000 maintained Minimum Fund balance $4,400,000 maintained Minimum Fund balance $4,400,000 maintained
Receipt and review Fund financial statements from Agricorp Quarterly Quarterly Achieved Quarterly Quarterly Quarterly

Minimum Target Fund Balances are maintained as per actuarial review.

Objective 2: To conduct adjudicatory hearings and issue decisions in a fair and timely manner.

Performance measure Baseline Target 2019-20 Actual 2019-20 Target 2020-21 Target 2021-22 Target 2122-23
Claims processed with minimal delays Claimants notified within 2 days, dealer/ elevators within 4 days of receipt of claim application Claimants notified within 2 days, dealer/ elevators within 4 days of receipt of claim Achieved – there were no claims that required board discussion and decision in 2019-20. Claimants notified within 2 days, dealer/ elevators within 4 days of receipt of claim application Claimants notified within 2 days, dealer/ elevators within 4 days of receipt of claim application Claimants notified within 2 days, dealer/ elevators within 4 days of receipt of claim application
Claims are adjudicated fairly Claims are reviewed individually, and established adjudication guidelines are followed Claims are reviewed individually, and established adjudication guidelines are followed Achieved – there were no claims in 2019-20 that required adjudication and decision. Claims are reviewed individually and established adjudication guidelines are followed Claims are reviewed individually and established adjudication guidelines are followed Claims are reviewed individually and established adjudication guidelines are followed
Claimants received notification of Board decision Within 10 days of a Board decision Within 10 days of a Board decision Achieved – there were no claims in 2019-20 that required board decision. Within 10 days of a Board decision Within 10 days of a Board decision Within 10 days of a Board decision

Objective 3: To grant or refuse claims and to seek recovery of amounts paid.

Performance measure Baseline Target 2019-20 Actual 2019-20 Target 2020-21 Target 2021-22 Target 2122-23
Claims are reviewed to determine their validity Board refers to FPPA and uses legal counsel as required to determine validity of claims Board refers to FPPA and uses legal counsel as required to determine validity of claims Achieved – there were no claims reviewed/ discussed by Board in 2019-20. Board refers to FPPA and uses legal counsel as required to determine validity of claims Board refers to FPPA and uses legal counsel as required to determine validity of claims Board refers to FPPA and uses legal counsel as required to determine validity of claims
Recover any money to which the Board is entitled to under the FFPA Legal counsel is consulted when proceeding with any recovery action Legal counsel is consulted when proceeding with any recovery action Achieved – No recovery for the Funds in 2019-20 as there were no claims. Legal counsel is consulted when proceeding with any recovery action Legal counsel is consulted when proceeding with any recovery action Legal counsel is consulted when proceeding with any recovery action

Objective 4: To ensure that the Board is compliant with directives, policies and agreements.

Performance measure Baseline Target 2019-20 Actual 2019-20 Target 2020-21 Target 2021-22 Target 2122-23
Updated MOU in place Updated as per the Agencies and Appointments Directive section 1.9.1 Not applicable In July 2019, the Chair and the Minister re-affirmed the continued use of the existing June 2017 MOU. Updated as per the Agencies and Appointments Directive section 1.9.1 (if applicable) Updated as per the Agencies and Appointments Directive section 1.9.1 (if applicable) Updated as per the Agencies and Appointments Directive section 1.9.1 (if applicable)
Submit Annual Report Annually Within 90 days of the agency's receipt of the audited financial statement. Achieved; met AAD requirement. Report was submitted to Minister through the OMAFRA liaison on October 30, 2019 within 90-days of completing the financial audit Within 90 days of the agency's receipt of the audited financial statement meeting AAD requirements Within 90 days of the agency's receipt of the audited financial statement meeting AAD requirements. Within 90 days of the agency's receipt of the audited financial statement meeting AAD requirements.
Submit Business Plan Annually March 2020 Achieved. Submitted on Feb. 28, 2020. March 2021 for 2021-2024 March 2022 for 2022-2025 March 2023 for 2023-2026
Submit Quarterly Risk Assessment Report Quarterly Quarterly Achieved. Submitted to OMAFRA's ministry liaison to the Board Quarterly Quarterly Quarterly
Submit Agency Attestation(New requirement as of 2015/16) Annually Annually Achieved. Submitted to OMAFRA's ministry liaison to the Board on April 27, 2020. Annually Annually Annually

Financial budget

The estimated revenues and expenses for the next three years are provided in Table 1 (below). The Board is subject to an annual audit by the Office of the Auditor General of Ontario.

Projected Board Revenues

The Board manages four separate Funds for grain corn, soybeans, canola and wheat. Revenue is received from producer check-off fees and interest earned on the balance of the Funds held. Producers contribute to the Funds by paying check-offs on crop that is sold.

Check-off fees

The Minister adjusted the fees effective July 1, 2013. They are based on the volume of crop sold and are outlined for the four commodities below:

  • Corn: 1/10 of 1 cent/tonne
  • Wheat: 5 cents/tonne
  • Soybeans: 10 cents/tonne
  • Canola: 20 cents/tonne

The Minister has the authority to set these fees under the FPPA. The FPPA authorizes the Board to withdraw amounts from the Funds for specific purposes, such as to compensate producers for valid claims when a dealer has defaulted on a payment or to compensate owners when an elevator has defaulted on a storage responsibility.

Investment interest

Interest from the Board's investments is a key source of revenue on the balance of the Funds. The Funds are invested in instruments authorized under the MOU and as per the Board's investment policy.

Due to the decrease in Bank of Canada's key interest rates and the unpredicted low rates, the Board's investments in Guaranteed Investment Certificates (GICs) are providing a lower rate of return than expected over the next couple of years.

When possible, the Board staggers the terms and maturity dates of GICs and uses this laddering strategy to reduce the influence of interest changes and to maximize returns.

Projected Board Expenditures

Governance, Secretariat and Financial Support Services - The FPPA requires the Board to meet all its expenses from the Funds except for the remuneration of those of its employees who are public servants employed under Part III of the Public Service of Ontario Act, 2006. The Board has entered into a contract with Agricorp, which expires on March 31, 2021 but have extended this existing agreement with Agricorp for one additional one-year term for 2021-22 fiscal. The agreement is set to expire March 31, 2022.

Professional, Technical or Other Assistance to the Agency - An example of this type of cost would be an actuarial review. The next actuarial review is planned for 2021-22 fiscal.

Board Legal Services and Investigation - Effective April 1, 2020 the Boards pays the costs for legal services associated with the administration of the FPPA and investigative costs. Legal services also reviews any board agreements, governance documents and provides any other legal advice as requested. This is a new expense reflected in the Board's financials for 2020-21 onward.

Board member Per Diems, Travel and Meal Expenditures - A financial review determined that Board remuneration (per diem and incidental costs, including travel) is paid by OMAFRA and not from the Funds. This change came into effect in November of 2010.

Costs of Determining Financial Responsibility - Since November of 2010 and as indicated in the MOU, the Board is obliged to pay the person or persons who are responsible for determining whether grain dealer license applicants and grain dealer licensees are financially responsible. Agricorp is that person. Effective January 1, 2020 the Board is paying the full program delivery costs. This change will result in an increase in Board expenses as of January 1st (2019-20 fiscal year and onward) in the budget.

Claim Payments - All claim payments and associated costs are paid by the four Funds. The total cost depends on the number and complexity of the claims received by the Board and the amount of payments on approved claims. To date, claims have been infrequent.

Financial Responsibility Review Committee (FRRC) – FRRC is an external third party vendor (2 chartered accountants) hired by Agricorp that provide advice and recommendations to the Chief Inspector regarding the financial risk assessment of grain license applications. The FRRC members review approximately 265 files annually. Agricorp has signed a contract agreement with the two existing FRRC members for a period of one year, with an option for Agricorp to extend for two additional one year periods (therefore a final date of the term is October 2023). The Board is responsible to pay for all program administrative costs effective January 1, 2020, including FRRC costs. The Board has no role or authority in the licensing process as the licensing authority remains Agricorp's.

Proposed Capital Expenditures

The Board does not have any capital expenditures planned for 2021-2024.

Table 1. Financial table - expenditure and revenue

Revenue ($)

  Budget 2019-20 Actual 2019-20 Budget 2020-21 Actual6 2020-21 Budget 2021-22 Budget 2022-23 Budget 2023-24
Fees 436,823 430,116 460,000 452,000 448,000 448,000 448,000
Investment Interest 366,9681 477,973 414,000 379,000 271,000 241,000 210,000
Claim Recoveries  0 0 0 - 0 0 0
Total Revenue 803,791 908,089 874,000 831,000 719,000 689,000 658,000

Expense ($)

  Budget 2019-20 Actual 2019-20 Budget 2020-21 Actual6 2020-21 Budget 2021-22 Budget 2022-23 Budget 2023-24
Claims 263,0002 0 263,0002 0 263,0002 263,0002 263,0002
Governance/Secretariat Services 47,000 11,235 47,000 11,000 52,000 47,000 47,000
Financial Services 33,280 17,683 33,000 28,000 33,000 33,500 34,000
Professional Fees (i.e. actuarial) 0 0 0 0 60,0003 0 0
Board Legal and Investigative services n/a n/a 14,0004 1,000 14,0004 14,0004 14,0004
Determining Financial Responsibility/Licensing & Enforcement 185,0845 209,4585 610,0005 435,000 530,0005 539,0005 548,0005
Total Expense 528,364 238,376 967,000 475,000 952,000 896,500 906,000

Net Balance and Fund Balance

  Budget 2019-20 Actual 2019-20 Budget 2020-21 Actual6 2020-21 Budget 2021-22 Budget 2022-23 Budget 2023-24
Net Balance (Total Revenue - Expenses) 275,427 669,713 (93,000) 356,000 (233,000) (207,500) (248,000)
Fund Balance Beginning of Year 16,485,432 16,485,432 17,157,226 17,155,145 17,511,145 17,278,145 17,070,645
Fund Balance End of Year 16,760,859 17,155,145 17,064,226 17,511,145 17,278,145 17,070,645 16,822,645

Notes:

1 2019-20 forecasted interest rate of 1.70%; 2020-21 forecasted interest rate of 2.2%; for 2021-22 forecasted interest rate of 1.5% and for 2022-2024 forecasted interest rate of 1.4%.

2 Amount for claims are included for budgeting purposes only and are based on the information used in the 2011 and 2016 actuarial study.

3 Actuarial review – last actuarial review was last completed in 2016 (completed approx. every 5 years). Amount estimated based on cost of 2016 review. Next review is planned for 2021-22.

4 Effective April 1, 2020 the Board is responsible to pay legal services and investigative services for claims.

5 Expenses included in Determining Financial Responsibility/Licensing & Enforcement includes the program costs (determining financial responsibility and licensing), two FRRC member's and other administration (i.e.: bank charges). Effective January 1, 2020, the Boards pay the full program costs. For the 2020-21 budget, the expense cost does not net any dealer or license fees collected. For the 2021-2024 budget years the cost does net any dealer or license fees collected.

6 These numbers represent the actuals from the first three quarters of 2020-21 and a forecast for Q4.

Initiatives involving third parties

Approximately every 5 years the Board conducts an actuarial review, an initiative that involves a third party vendor, to determine how potential claim payments may impact the Funds.

As an agency of the government, the Board adheres to the OPS Procurement Directive when making any purchases for goods or services from a third party vendor.

The next actuarial review is planned for 2021/22. The last actuarial review was completed in 2016.

Information Technology

All Information Technology support is provided by AgriCorp through the maintenance of ready access and secure storage of documents developed and received on behalf of the Board. The mandate of the Board does not require Electronic Service Delivery.

Risk Assessment and Management

The AAD requires a risk-based approach to be used to focus ministry and central agency resources on higher risk agencies and to ensure compliance with directive requirements. The table below provides a description of the risks identified and the plans to mitigate these risks. Aside from the actions detailed below, risk management is also supported by a strong commitment by the Board and its service provider to meet or exceed the performance measures outlined in this plan.

Risk category Risk statement/name Risk level assessment/ inherent risk score Risk Action Plan/Mitigation activities
Operational Interest Rate Risk Low- minimal risk exposure
  • The Board ensures that the actuarial review remains current to assess the soundness of all the Funds.
  • The 2011 and 2016 actuarial review recommended a target balance for each of the four Funds.
Operational Elevator Operators and Dealers Low- minimal risk exposure
  • The Board ensures that the actuarial review remains current to assess the soundness of all the Funds.
  • The 2011 and 2016 actuarial review recommended a target balance for each of the four Funds.
Operational Fluctuation in commodity prices Low- minimal risk exposure
  • The Board ensures that the actuarial review remains current to assess the soundness of all the Funds.
  • The 2011 and 2016 actuarial review recommended a target balance for each of the four Funds.
Operational Lack of quorum for Board Low- minimal risk exposure
  • Board member transition is monitored and appointment recommendations are sought and forwarded to the ministry several months prior to vacancies. This is to reduce the impact to the Board as experienced members leave and new members are appointed.
Operational Members expertise and development Low- minimal risk exposure
  • Training for Board appointees is on-going specifically focused on claim adjudication and a Board orientation manual has been created.
  • The Board has a claim adjudication guideline to assist members with adjudicating claims. Legal counsel and investigative services are available to the Board to support the claims process.
Operational Members knowledge and succession planning Low- minimal risk exposure
  • Continuous review of board members tenure is conducted. When making recommendations to the Minister for potential board appointment, staggered terms is taken into consideration to promote continuity.
Operational Inability to pay claims Low- minimal risk exposure
  • The Board has an Investment Policy aligned with the MOU which outlines strategies for investing Funds.
  • The Board will be considering the results and recommendations from the 2021-22 actuarial review when available and will continue to monitor all the Funds annually and make the appropriate changes as needed.
Information Technology & Infrastructure Security Breach of Information Low- minimal risk exposure
  • All Board policies and procedures are maintained electronically. Security breach possibilities are reviewed annually to reduce risks.

Communication Plan

Annually, the Board will inform the stakeholders of the status of the Funds by providing them with a copy of the Board's audited financial statements and annual report when available.

Schedule C of the MOU between the Board and the ministry outlines the communication plan that the Board will follow.

Key messages for communication

  • Clearly outlines the process and regulations that are followed in making a decision.
  • Identifies section(s) of the applicable Act(s) and regulations used to arrive at a decision.

Key messages for broad based communications

  • All Funds are maintained on an actuarially sound basis.
  • The Board adjudicates claims made under the FPPA and determines the payment, if any, to be made from the Fund.
  • The FPPA protects the financial interests of producers who sell grain corn, soybeans, wheat and canola to licensed dealers. It also protects the financial interests of owners who store grain corn, soybeans, canola or wheat with licensed elevator operators.
  • Agricorp is responsible under contract with OMAFRA to administer the licensing and inspection components of the Grain Financial Protection Program including the determination of financial responsibility of licence applicants.

Vehicle used to communicate key messages

  • In the event of a claim, the Board will advise each claimant and the dealer/ operator via letter on the outcome of their claim.
  • The Minister will consult with the Chair, as appropriate, when significant new directions for the Board are contemplated. The Deputy Minister will meet with the Chair, as necessary, to discuss matters of mutual importance to the Board and OMAFRA.

Appendix 1: Current Board Appointees (as of February 25, 2021)

Position Member Name Tenure
Chair (Part Time) Buttenham, David 22-Mar-2011 – 17-Sept-2023
Vice-Chair (Part-Time) Van Ankum, Henry 19-Apr-2012 – 30-Aug-2022
Member (Part-Time) McBlain, Tyler 21-Aug-2019 – 20-Aug-2021
Member (Part-Time) Haerle, Markus 29-Jun-2015 – 1-Jan-2022
Member (Part-Time) Harrison, Jeff 22-May-2019 – 21-May-2022
Member (Part-Time) Doelman, Jennifer 26-Jun-2019 – 25-Jun-2022
Member (Part-Time) MacDonald, Jennifer 13-Mar-2017 – 12-Mar-2023
Member (Part-Time) Menich, Lindsay 27-Oct-2017 – 26-Oct-2023
Member (Part-Time) Schwandt, Nadine 27-Oct-2017 – 26-Oct-2023
Member (Part-Time) Hazzard, Paul 21-Aug-2020 – 20-Aug-2023
Member (Part-Time) Campbell, Ron 29-Jan-2018 – 28-Jan-2021
Reappointed 05-Feb-2021 – 04-Feb-2024

Appendix 2: History of claims (as of February 25, 2021)

Fiscal Year (Apr. 1 - Mar. 31) # of claims reviewed/ made decision on # of Claims Paid Total Claim Amount Paid from Funds Dollars Recovered to the Funds Amount Paid Out by the Funds
1985-1986 264 92 $1,059,602.00 $312,699.00 $746,903.00
1986-1987 7 6 $27,603.04 $26,280.00 $1,350.04
1987-1988 Nil Nil - - -
1988-1989 2 2 $15,806.69 $0.00 $15,806.69
1989-1990 13 13 $249,748.02 $0.00 $249,748.02
1990-1991 20 18 $279,367.75 $2,000.00 $277,367.75
1991-1992 Nil Nil - - -
1992-1993 11 11 $266,814.40 $40,000.00 $226,814.40
1993-1994 27 24 $270,500.59 $0.00 $270,500.59
1994-1995 5 1 $15,993.09 $8,000.00 $7,993.09
1995-1996 Nil Nil - - -
1996-1997 51 45 $434,282.39 $0.00 $434,282.39
1997-1998 Nil Nil - - -
1998-1999 Nil Nil - - -
1999-2000 21 21 $57,786.98 $0.00 $57,786.98
2000-2001 Nil Nil - - -
2001-2002 Nil Nil - - -
2002-2003 Nil Nil - - -
2003-2004 8 8 $147,204.67 $11,379.00 $135,825.67
2004-2005 Nil Nil - - -
2005-2006 Nil Nil - - -
2006-2007 Nil Nil - - -
2007-2008 Nil Nil - - -
2008-2009 19 18 $731,797.00 $267,000.00 $464,797.00
2009-2010 Nil Nil - - -
2010-2011 Nil Nil - - -
2011-2012 3 0 $0.00 $0.00 $0.00
2012-2013 Nil Nil - - -
2013-2014 Nil nil - - -
2014-2015 Nil Nil - - -
2015-2016 5 4 $7,617.23 $7,617.23 $0.00
2016-2017 Nil Nil - - -
2017-2018 15 2 $29,132.89 $29,132.89 $0.00
2018-2019 8 0 $0.00 $0.00 $0.00
2019-2020 Nil Nil - - -
2020-2021 1 0 $0.00 $0.00 $0.00
Total 480 265 $3,593,283.74 $704,108.12 $2,889,175.62

Appendix 3: Ministers mandate letter for 2021-22

David Buttenham
Chair, Grain Financial Protection Board
1 Stone Road West
Guelph, ON
N1H 8M4

Dear Mr. Buttenham:

As you begin planning for 2021-22 fiscal year, I am pleased to write to you in your capacity as Chair of the Grain Financial Protection Board to provide you with a letter setting out expectations and direction for the Grain Financial Protection Board in the year ahead. Pursuant to the requirements of the Agencies and Appointments Directive, this letter sets out my expectations for the Grain Financial Protection Board for the 2021-22 fiscal year.

I would like to start by thanking you and the members of the Board for everything you continue to do in ensuring the delivery of high-quality service to Ontarians. These times have been incredibly difficult for everyone in Ontario. We will continue to work with our agri-food sector during these unprecedented times to protect our food system, from farm to fork.

Ontario's board-governed agencies are vital partners in ensuring the delivery of high-quality services to Ontarians. The work that you and your fellow board members undertake to establish the goals, objectives, and strategic direction for the Grain Financial Protection Board ensures that you continue to protect producers of grain corn, soybeans, wheat and canola in the event of defaults on payment by licensed buyers. It is important that this direction is consistent with government priorities, your agency mandate, key policies and directives and my directions, where appropriate. I thank you for your willingness to serve.  As part of the government of Ontario, agencies are expected to act in the best interests of Ontarians by being efficient, effective, and providing value for money to taxpayers.

This includes:

  1. Competitiveness, Sustainability and Expenditure Management
    • operating within your agency's allocations
    • identifying and pursuing opportunities for innovative practices, and/or improved program sustainability
    • identifying and pursuing efficiencies and savings
    • complying with applicable direction related to supply chain centralization, Realty Interim Measures and Agency Office Location Criteria
  2. Transparency and Accountability
    • abiding by applicable government directives and policies and ensuring transparency and accountability in reporting
    • adhering to requirements of the Agencies and Appointment Directive, and responding to audit findings, where applicable
    • identifying appropriate skills, knowledge and experience needed to effectively support the board's role in agency governance and accountability
  3. Risk Management
    • developing and implementing an effective process for the identification, assessment and mitigation of risks, including planning for and responding to emergency situations such as COVID-19
  4. Data Collection
    • improving how the agency uses data in decision-making, information sharing and reporting, including by leveraging available or new data solutions to inform outcome-based reporting and improve service delivery.
    • supporting transparency and data sharing with the ministry, as appropriate.
  5. Digital Delivery and Customer Service
    • exploring and implementing digitization or digital modernization strategies for the provision of services online and continuing to meet and exceed customer service standards through transition
    • using a variety of approaches or tools to ensure service delivery in all situations, including COVID-19

In addition to these government-wide priorities, I expect the Grain Financial Protection Board to focus on:

  • Measuring and communicating to stakeholders the performance of the Funds for Grain Producers against established targets and have an established investment policy that is reviewed annually to ensure the long-term sustainability of the Funds.
  • Continuing to investigate and adjudicate all claims in a fair, equitable and timely manner. I expect the Board to make decisions on claims based on prudent and consistent adherence to established operational procedures, as well as effective customer service in supporting Ontario farmers with the processing of claims and ensuring that the adjudication process is fair and has minimal delays.

Prior to COVID-19, the ministry had begun a review of the Financial Protection Programs and has implemented changes to help ensure the long-term sustainability of the programs and allow boards to play a greater role in helping their sectors manage risks of non-payment. While the consultation with you and other stakeholders has been slowed due to COVID-19, I want to assure you that the Ontario government remains committed to this review process and ministry staff will be providing updates on the next steps once finalized. The Grain Financial Protection Board is a key partner in the review of the programs, and I look forward to your continued support.

I thank you and your fellow board members for your continued support, and for your valuable contributions. Should you have any questions/concerns, please feel free to contact Heather Cassidy, Director of the Farm Finance Branch.

Sincerely,

Ernie Hardeman
Minister of Agriculture, Food and Rural Affairs


For more information:
Toll Free: 1-877-424-1300
E-mail: ag.info.omafra@ontario.ca