Overview of the Farm Products Marketing Act
The Farm Products Marketing Act (FPM Act) and the Milk Act are the legal foundations of the regulated marketing system in Ontario. Through these two acts, the Ontario government provides Ontario farmers with the opportunity to market their commodities as a group through a compulsory marketing board system.
Twenty of the twenty-one marketing boards in Ontario, as well as the three producer associations designated under Section 12, are governed by the FPM Act. The Milk Act provides authority to only one board that regulates milk and cream. Although there are similarities between the two acts, this fact sheet deals only with the FPM Act.
This overview of selected sections is intended only as general information. For a complete context, or for anyone interested in pursuing action related to the FPM Act, reference should be made to the Act and its amendments.
Role of the Ontario Farm Products Marketing Commission
Role of the Agriculture, Food and Rural Affairs Appeal Tribunal
The purpose of the Farm Products Marketing Act is "to provide for the control and regulation in any or all aspects of the producing and marketing within Ontario of farm products including the prohibition of such producing or marketing in whole or in part".
The authority for control and regulation rests with the Ontario Farm Products Marketing Commission, the Minister of Agriculture and Food, and Cabinet.
Each marketing board has a marketing plan that is generally comprised of two sets of regulations. The first set contains 'Cabinet regulations' which constitute the producer marketing board as the organization to administer the plan. The second set contains 'Commission regulations' that specify which marketing powers and authorities each marketing board has to operate its marketing plan. These regulations identify what the Commission, the marketing boards and other people will or can do to carry out the functions laid out in the marketing plan.
It is important to note that each marketing board plan is unique. Although some powers and authorities are common to most or all boards, no board has all of the powers and authorities that are available under the FPM Act.
The provincial Cabinet can make regulations to:
Regulations creating a new marketing board require the final approval of Cabinet after having been approved by the Commission and the Minister.
Subject to the Minister's approval, the Commission may amend existing Cabinet regulations.
Commission Regulations - Production and Marketing Functions
The FPM Act contains a wide variety of functions related to the producing and marketing of farm commodities. Only the Commission can perform some of the functions; some can be performed directly only by a marketing board; and still others can be performed by the Commission or it can delegate that authority to a marketing board.
The common factor is that the Commission is responsible for deciding which functions it will perform and which functions each of the marketing boards may perform. The Commission's authority to perform any of the functions intended for its use comes directly from the Act. It does not have to request that authority from another source. However, the Commission can also choose not to use a power that is available to it in the Act.
Marketing boards can only perform specific functions after the Commission has made a regulation in the board's marketing plan giving it the authority to do so. The Commission is also able to limit when or where a marketing board may perform a particular function when delegating or authorizing that power, and it can terminate or amend that delegation at any time.
Section 3 also provides protection from liability for board members and staff who act in good faith when performing their responsibilities.
The Commission can perform the following functions itself and/or it can delegate the ability to do so to a marketing board.
Generally, the Commission and marketing boards may 'stimulate, increase or improve the marketing of farm products by any means that they consider proper'.
Production and marketing of a commodity can be controlled which may include the following: determining when and where that will occur; requiring producers to sell the commodity to or through a marketing board; or regulating agreements entered into by producers and marketers/processors. The board may be able to exempt certain products or people who would otherwise be regulated by the plan from some or all of the regulations.
Negotiating agencies can be established that are empowered to settle minimum prices, as well as terms and conditions of sale, through agreements between a board and the buyers. Conciliation and arbitration boards can be established to facilitate and ensure there is a resolution to this process.
Advisory committees can be established to make recommendations to any organization represented on the committee. Improving industry relations, promoting greater efficiency in the system, preventing and correcting irregularities/inequities in the marketing of the regulated commodity, improving the quality and variety of the product, as well as the circulation of market information are examples of the types of issues that can be addressed.
All producers, marketers or processors can be required to identify themselves and/or hold a licence, as well as provide information about their operations. If a licence is required, applicants may be required to demonstrate they have the experience, the financial responsibility and/or equipment to properly engage in the relevant activity.
The Commission and marketing boards that have the appropriate delegation, have the power to investigate any matter related to the production, marketing and processing of regulated commodities, as well as investigate and settle marketing disputes between producers and marketers or processors. Formal hearings can be used by either to investigate and/or settle disputes.
The Commission and marketing boards are also able to conduct expression of opinion votes to determine producer positions on issues.
The Commission can 'authorize' a marketing board to perform functions that are generally related to the actual producing or marketing of the commodity. The Commission can not perform these functions directly itself unless Cabinet authorizes it to do so.
Only marketing boards with the appropriate authorization can operate a supply management system. This generally requires that producers of the regulated commodity hold production and/or marketing quota. The board can determine how that quota will be allocated to individual producers/marketers and whether or not an individual can exceed their quota limits.
Marketing boards can be given the authority to determine the price that will be paid to producers for the regulated product.
Some marketing boards can pool the price or money received from the sale of the regulated commodity and then distribute it to producers, or they may only require buyers to send producer payments to the board which then pays producers.
Marketing boards can have the authority to deter-mine the quality of each class, variety, grade and size of the regulated product that can be marketed by each producer and might also be able to stop the marketing of any class, size, variety or grade of a regulated product.
Some marketing boards can appoint agents to perform specific marketing functions on their behalf, and some have the authority to buy and sell the product.
Producers are required to pay licence fees and service charges set by the board to fund its operations. Anyone receiving a regulated product can be required to deduct from their payment to a producer, the licence fee owed to the board and to submit that fee to the board.
Functions typically available only to the Commission enable it to carry out its responsibilities as the central figure accountable for Ontario's regulated marketing system and as the supervisory body of the marketing boards. As noted earlier in this fact sheet, the Commission can choose whether or not it will use an authority available to it.
The Commission can choose to monitor the activities of the marketing boards by requiring them to file their minutes, by-laws, orders, policies, directions, as well as annual financial statements and operating reports with the Commission. The authority is available for the Commission to stipulate that producers, marketers and processors get copies of the annual statement of operations and the financial report of each local board, as well as providing that these reports are published.
Further to its supervisory and accountability responsibilities, the Commission can require a board to furnish any information it needs to determine how the board is operating. For example, it may ask for information on a board's service charges; it's operating deficits or profits; it's reserves; and/or the property it leases or owns.
The Commission may also require a board to do the following: i) provide the Commission with the particulars of any proposed change in the purposes of a board's plan before the proposed change becomes effective; ii) carry out any purpose of the plan that the Commission considers necessary or advisable; iii) vary any purpose of the plan; and iv) to cease and desist from carrying out the purpose or proposed purpose of the plan that the Commission considers unnecessary or inadvisable.
On another note, the Commission must 'bring negotiated agreements and arbitrated awards into force' before they will be binding on all of the producers and buyers of the specified commodity. This action protects the buyers from the anti-competition aspects of federal anti-combines legislation. The Commission can also reopen an agreement, award, or any part of either, for renegotiation after they have been brought into force. This is generally done only if both parties agree to the re-negotiation or if there was a meaningful flaw in the procedure.
Commission Regulations - Enforcement
Since the marketing board system in Ontario is compulsory, enforcement mechanisms are needed to back up the powers and authorities entrusted to the Commission and marketing boards. There are several ways in which boards and the Commission can seek compliance with their regulations.
It has already been mentioned that Section 3 of the Act provides the authority for the Commission and marketing boards to investigate any matter relating to the producing, marketing or processing of a regulated commodity. Sections 3 and 6 also provide the authority to appoint persons to inspect the books, records, documents, lands and premises, and any regulated product of someone producing or marketing a regulated commodity.
Administrative Remedies - Section 7 of the FPM Act authorizes the Commission to make a wide variety of regulations to aid in enforcing a marketing board's marketing and producing regulations. The most basic of these allows the Commission and boards to make 'orders' and issue 'directions' to ensure the provisions of the FPM Act, the regulations, and/or a board's plan are adhered to.
This regulatory power provides for the refusal to grant or renew a licence, or to revoke a licence, where the applicant has failed to comply with the FPM Act, the regulations, any plan or any order of the Commission or a marketing board. The Commission has the authority to determine on what grounds or in what circumstances a licence may be granted, renewed, suspended or revoked.
This section also provides the power for the Commission or a marketing board to impose penalties after a hearing if they believe an applicant or licensee has failed to comply with any terms and conditions tied to a licence or any provision of the FPM Act, the regulations, etc.
Section 7 goes on to define the maximum penalties allowable. For example, a penalty imposed on a producer or buyer under this section shall not exceed 10 per cent of the price payable to the producer during the proceeding twelve-month period. Also for producers, a penalty shall not exceed a 20% reduction in the amount of product that may be marketed during any 12-month period.
Another tool is the authority to require that a buyer furnish security or proof of financial responsibility, or to require a performance bond by an individual or a group of people. The authority to license with terms and conditions, as well as the penalty provisions, provide more enforcement options for non-quota boards and for the Commission. Prior to having these kinds of authorities in the FPM Act, the only option to address non-compliance was to cancel a licence and put a producer or processor/buyer out of business.
In the case of supply management boards, the authority to determine and distribute quotas, and to cancel, reduce, or refuse to increase a quota, is an effective tool for ensuring producer compliance with a board's marketing plan.
The usual preference of these producer-run boards is to use the internal administrative actions available to them to regulate their peers. This has the added advantage of being more timely and cost-effective than 'going to court'.
Recourse to the Courts - Recourse to the civil courts is most common for the collection of unpaid licence fees or service charges. The punitive actions described below serve primarily as deterrents and are used as a last resort when all other remedies have been exhausted.
Section 13 enables the Commission and marketing boards to seek temporary or permanent injunctions in civil court. Injunctions prevent a person from marketing or processing a regulated product where it appears the person is acting in contravention of any regulations or plan, order, direction, agreement or award.
Under Section 14, the Commission can 'vest' in a marketing board, the power to seize and detain regulated product, and to determine its subsequent release or disposal, when an appointed inspector believes an offence against the FPM Act or regulations has occurred.
Section 15 says that any person who contravenes the FPM Act or the regulations is guilty of an offence and, on conviction, is liable to pay significant fines - up to $2,000 for each day they are in contravention for a first offense and up to $10,000 per day for subsequent offences. Prosecution under Section 15 has been used where administrative remedies were either not available or were inappropriate.
Section 16 says that if a person fails to pay the minimum price in an agreement negotiated under the regulations, the person is liable for the amount that was underpaid as well as the fine imposed under Section 15 thus removing the temptation to underpay and pay the fine.
Section 19 states that the onus is on a defendant or accused to prove that the product in dispute is not a regulated product. It also indicates that evidence used in federal court can be applied to this legislation. If a prosecution under the federal government's Agricultural Products Marketing Act (Canada) fails but the evidence proves a similar offense under sections 15 or 16 of the FPM Act, that court can convict the defendant under this Act.
Limitation of the powers held by marketing boards - Section 9 allows the Commission to limit any of the powers it has delegated to a board or the authorities it has authorized a board to exercise, and/or to revoke any existing or proposed regulation, order or direction of a board.
Making Changes to a Marketing Board's Marketing Plan
Individual marketing plans are often amended to meet the changing needs of Ontario's producers and buyers; to adjust to changes in domestic and foreign market places; to maintain orderly marketing; and to ensure the plans continue to work in the best interests of Ontario's agri-food industry.
Any stakeholder can seek a change to a board's marketing plan. However, it is most often the boards and the primary processors who signal a change is needed. Generally, adjustments are made after the affected stakeholders reach a consensus on what the change should be and if the proposed change in how the commodity will be marketed cannot be accommodated under the current regulations.
The catalyst for a change could be a potential market not attainable under current regulations, a change in the domestic marketplace and/or international trade environment, a shift in the political climate, or a technological innovation.
The Commission plays a key role in facilitating potential changes and endeavours to ensure that affected industry participants discuss the issues and pursue a resolution that is acceptable to industry stakeholders. The Commission does this by providing for negotiation and arbitration within individual marketing board plans, chairing industry advisory committees, mediating disputes between the boards and other stakeholders, working with other Ontario stakeholders to negotiate changes to national marketing systems, and amending boards' delegated powers and authorities.
A group of producers can petition the Commission to establish a new marketing board. If the Commission believes the group of producers is representative of the persons engaged in the production of the farm product, the Commission may recommend the establishment of such a plan to the Minister who then makes a recommendation to Cabinet.
This section deals with business entities that carry on activities as both a producer and a processor.
Any person who is a producer and a processor of a regulated product is entitled to all of the rights and privileges, and subject to all of the duties and obligations, of both a producer and a processor. The relevant regulations apply to both processing firms that grow commodities to process and to growers who process a farm product. Anyone processing their own commodity is deemed to have contracted with, and received product from, themselves.
Section 10 goes on to state that when a producer or a corporation of which the producer is a member or shareholder, arranges for the processing of a farm product on their account by a processor, they are also deemed to be both a producer and a processor. In this case, the producer is subject to all of the relevant responsibilities of both a producer and a processor.
Therefore, obligations to financially support a marketing board, and to produce or market a regulated commodity according to a board's marketing plan, are not changed if a person or business processes product they have grown themselves.
Section 12 allows Cabinet to designate an existing, incorporated producer association as the representative association for all producers of a specified commodity in Ontario. These associations are expected to carry out programs to 'stimulate, increase and improve the producing or marketing of the farm product by advertising, education, research or other means'.
If the Commission believes a majority of the affected producers in Ontario are in favour, it can recommend to the Minister, and he or she to Cabinet, that the association be given the Section 12 designation.
The only authority that these associations share with marketing boards is the ability to collect a licence fee from all producers to carry out its programs. As with marketing boards, these associations are required to give the Commission any information and financial statements it requests.
This section allows the Minister of Agriculture and Food to enter into contracts with the Government of Canada to have national marketing agencies perform intra-provincial marketing functions on behalf of the Government of Ontario within Ontario. Conversely, agreements can be made to have the Commission, or a provincial marketing board, perform marketing functions related to inter-provincial and export trade on behalf of the Government of Canada.
Under the Farm Products Marketing Act, Cabinet can create commodity marketing boards that are producer-run and financed. The FPM Act contains a wide variety of powers and authorities that can be delegated by the OFPMC to marketing boards enabling them to control to some degree how their commodities are produced and/or marketed.
Marketing board plans vary widely in the degree to which they control how producers sell their commodities, and how companies who purchase raw agricultural commodities source and purchase their requirements. Generally, if it is determined that the marketing system for a regulated commodity should be changed, and the change is not possible under the current regulations, marketing board plans can often be amended to reflect that change.
The FPM Act also provides the marketing boards and the Commission with a number of administrative remedies to encourage compliance with the act and any regulations related to it, as well as allowing recourse to the courts for more serious infractions
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