Not Worth the Risk

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Not Worth the Risk

Author:	Food Safety Division/OMAFRA
Creation Date:	16 January 2002
Last Reviewed:	12 December 2005

The Ontario Beef Cattle Financial Protection Program (OBCFPP) was established by the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) in 1982 to reduce the risk of selling cattle for beef producers across the province. The program was set up at the request of the Ontario Cattlemen's Association (OCA) and the Ontario Livestock Auction market Association (OLAMA).

How it Works

The OBCFPP can compensate Ontario producers for 90 per cent of their losses when a licensed dealer defaults on a payment. The program is financed by fees from both sellers and auction markets.

What Beef Producers Must Do

The program is set up to protect beef producers, but they must also act to limit their risk. To ensure sales are covered under the program, sellers must follow these steps.

Always deal with a licensed dealer. Don't risk selling to an unlicensed dealer.
If there is any doubt, ask to see the licence.
Ensure payment is made within 2 business days of sale. Day of sale can mean:
- day of weighing where price is determined on a live weight basis;
- day of grading where price is determined on a carcass grade basis; or
- day of purchase where price is determined on a per head basis.
Ensure payment is received in a timely manner. If you receive payment:
- by courier or electronic transfer, then you should receive payment no later than 3 business days
- from the date of sale. If you do not receive payment in that length of time, the payment is late.
- by mail, you should receive payment no later than 7-8 days from the date of sale. If you do not receive payment in that length of time, the payment is late.
Deposit the cheque within 5 banking days of receiving it.
Do not extend credit to the dealer. This means that you should never sell to the same dealer if the payment for a previous sale is late.
If a payment is not received on time, or if a cheque bounces, a producer must notify the OBCFPP Program Manager immediately.
If you are going to make a claim, you must apply within 30 days of when the payment was due.

Producers may also make a claim if a dealer has ceased operation or if a dealer's assets were placed under a trustee or receiver.

Seeking Compensation

A claim for compensation will be considered if it involves:

a producer selling to a licensed dealer;
a licensed dealer selling to another licensed dealer.

Claims are reviewed by the Livestock Financial Protection Board, which includes a broad representation of the beef industry. The program will pay 90 per cent of any approved claim.

Protection for Auction Market Operators

Sales made by public auction are also covered when the auction market is licensed under the Livestock Community Sales Act or when a public auction carried on by a co-operative corporation sells to a producer, provided they are a licensed dealer. In these circumstances, where an auction market sells to a producer who defaults on payment, compensation is 70 per cent, up to a maximum of $75,000. There will be no compensation for claims of less than $5,000.

Private treaty sales made to producers by auction market operators or co-operatives are not covered by this provision.

When making a claim under this limited compensation section, non-payment must be reported within 2 days. When dealing with a feeder finance co-operative, non-payment must be reported within 10 days of auction.

Licensing the Dealer

Under the Ontario Beef Cattle Financial Protection Program, dealers are licensed by OMAFRA. Dealers include packing plant operators, abattoir operators, auction market operators and country dealers.

Dealer applications, along with financial statements, are reviewed by the Ministry before the licence is granted. A dealer who fails to make prompt payment, defaults on payment or issues an NSF cheque may lose their licence.

The Board

The Livestock Financial Protection Board is an eight-member board that deals with claims and administers the compensation fund. The Board approves or refuses payments of claims and recovers any moneys paid out by the Board.

The Board is appointed by the Minister of Agriculture, Food and Rural Affairs based on nominations from the:

Ontario Cattlemen's Association
Canadian Meat Council
Ontario Livestock Auction Markets Association
Ontario Independent Meat Packers and Processors
Ontario Livestock Dealers Association
other industry groups.

The cost of operating the Board and the financial responsibility review is paid for by the OBCFPP, while administration and enforcement costs are covered by OMAFRA.

For more information about the Ontario Beef Cattle Financial Protection Program:

Call: 888-466-2372, ext 63886
519-826-3886
Monday to Friday, 8:30 a.m. to 5:00 p.m.
Calls outside these hours are recorded and all emergency calls are responded to.

For daily updates and the current list of licensed dealers:
Visit: www.omafra.gov.on.ca
Select "English" or "French", then select "Food" or "Alimentation".

Revised October 2005
Disponible en français.

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For more information:
E-mail: food.omafra@ontario.ca