Grain Financial Protection Board - Business Plan for Fiscal Years 2014 - 2017

Table of Contents

Executive Summary

The Grain Financial Protection Board (Board or GFPB) was established in 1985 and is classified as a Trust Agency. As described in the Agency Establishment and Accountability Directive (AEAD), as a Trust Agency, 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 the Ministry's 2013/2014 goal supporting a strong rural Ontario that strengthens the province.

Commitments for 2014-2017

The Board continues 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 four strategic priorities for 2014-2017:

  • 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 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).

Revenue and Expenditures and Expectations for 2014-2017

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. In July 2013, following stakeholder's recommendations, the Minister increased the soybean check-off fee from two cents/tonne to 10 cents/tonne. The wheat check-off fee was also changed, decreasing from 10 cents/tonne to five cents/tonne. The changes were recommended to keep the targeted Fund balances at a level recommended in the 2011 Actuarial Review. No changes were made to either the grain corn or the canola check-off fees.

Amendments to Check-off fees

Commodity Check-off fee prior Jun 30-13 Check-off fees after July 1-13
Grain Corn 0.001/Tonne 0.001/Tonne
Soybeans 0.02/Tonne 0.10/Tonne
Wheat 0.20/Tonne 0.05/Tonne
Canola 0.10/Tonne 0.10/Tonne

To project the future check-off fees, the Board consulted with the Grain Farmers of Ontario and the Ontario Canola Growers Association to determine how much of each commodity would be marketed. The Board has assumed that the projected sale of the four commodities would be similar to previous years. Using the new check-off fee structure introduced in July 2013, check-off fees are estimated at $375,000 annually.

The second source of revenue is from interest earned on the balance of the Funds held. A decline in financial markets has resulted in interest revenue decreasing annually. The Board estimated interest revenue by reviewing the current investment portfolio and projected overall returns on investments will be 2.00% in 2014/2015, and 1.75% in each year afterward.

The Board has been able to effectively manage expenses over the past several years, and actual expenses have been lower than budgeted. For the 2014-17 business plan, the Board has reduced their budgeted expenses to reflect the actual expenses incurred in the 2012-13 year. To capture the effect of inflation, the Board has also budgeted two per cent annual increase in expenses.

Beginning in 2014/15, the Board has included a projected amount for claims. Although the Board has not paid out any claims in the past few years, for budgeting purposes, an amount of $263,000 annually has been included (estimated claim amount from the 2011 actuarial study).

With the addition of a budgeted amount for claims, the annual net revenue has greatly decreased. Looking at the previous claims history for the Board, it is realistic to assume that the likelihood of the Board having to pay claims each year is low, and therefore if the Board continues to experience a low claim rate, no further adjustments to check-off fees will be required to account for the decrease in budgeted annual revenue.

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

The Board conducted its annual review of the Funds in April 2013 and compared the Funds' performance to the recommendations from the 2011 Actuarial Review. With the approval from the Minister to adjust the level of check-off fees for soybeans and wheat, no further action was required from the Board.

Key achievements from 2012/2013:
  • Review and management of Fund performance specifically the soybean fund
  • Stakeholder consultations regarding check-off fee structure
  • Business planning and risk assessment
  • Re-appointment of Board members
  • Annual review of all Board by-laws and policies

The Board worked collaboratively with the Ministry to fill vacant member positions. The Board continues to focus on investigating and adjudicating claims in a fair and equitable manner. The Claims Adjudication Guidelines are reviewed annually to both ensure that the material continues to be relevant, and that the members remain informed on the claims adjudication process. The Board is focused on ensuring that appropriate agreements and directives are up to date and understood by the members so that they continue their commitment of agency transparency and accountability. Legal counsel is available to the Board, and is regularly consulted to interpret new directives or agreements.

Mandate

The Board is responsible to the Minister of Agriculture and Food (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

The Board's legislative mandate is outlined in section 4 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.

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 authority as outlined by the FPPA and in accordance with the Memorandum of Understanding (MOU) between the Minister and the Chair. A revised MOU was approved by the Board and Minister in March 2011 for a term of five years. 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 the Ontario Ministry of Agriculture and Food (OMAF).

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 OMAF's goal of supporting a strong rural Ontario that strengthens the province.

How the Program, the Funds and the Board work together

Grain Financial Protection Program

The Grain Financial Protection Program (the Program) was introduced in the mid-1980s, following a series of grain elevator bankruptcies. The following are the components of the program:

  • Determining the financial responsibility of grain dealers;
  • 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.
  • All income held in the Funds 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 will make a decision on a claim based on the evidence and the law.
  • The Funds are distributed to producers and owners after the Board has determined that their claim is valid and the Board has approved the claim for payment.
  • Claims are infrequent and therefore the Board's main activities are to manage the Funds effectively and prepare for claims when they occur.

Strategic Direction

The Board has set out four 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 grant, refuse and recover claim payments under the FPPA; and
  • To ensure appropriate agreements are reviewed, understood and in place to fulfill the mandate.

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

The five goals which the Board focuses on are:

  1. Long-term sustainability of the Funds – The Board has hired Agricorp for the day-to-day administration 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 as required and they will only invest the Funds in instruments that are approved in the MOU. The Board has an established investment policy that is reviewed annually.
  1. Maintaining 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 activities will assist the Board to ensure that the adjudication process is fair and has minimal delays.
  1. Ensuring 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 agreements.
  1. Ensuring a high preforming Board – The Board works with OMAF 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 training.
  1. Consultation with industry stakeholders – The Board participates in a minimum of one stakeholder meeting per year.

Overview of Current and Future Programs and Activities

The Board administers the Funds and, as such, the Board's focus is on the growth of the Funds and on prudent management of expenditures. The Board does not administer a program, and no new programs are being considered for the 2014-2017 time frame.

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 as required
Funds are invested in instruments that are approved in the MOU
Review and approve quarterly statements
Meet with the Agricorp Controller annually 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 made 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
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
To ensure the Soybean Fund achieves the proposed solvency threshold An annual review of the Soybean Fund to be conducted to monitor a targeted minimal annual growth of 2%
Maintain an adjudication process that is simple, fair, and accessible, with minimal delays To conduct adjudicatory Board meetings and hearings and to issue decisions in a timely and fair manner Have all claims investigated and complete the adjudication process
Maintain the claim adjudication guidelines
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 to 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 documentation required 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 OMAF and stakeholder groups to seek recommendations and approvals for appointments to the Board

Maintain the GFPB Orientation Manual

Consultation with industry stakeholders To provide information regarding the changes to the Board's responsibilities to pay for all Board expenses, and where appropriate, to be transparent on decisions of the Board Participate in one stakeholder meeting per year

Board Structure

The Board is comprised of a minimum of five members as appointed by the Minister. Historically, the membership of the Board is comprised of nominees from the Ontario Canola Growers Association (OCGA), the Grain Farmers of Ontario (GFO) and the Ontario Agri Business Association (OABA). The Minister also has the authority to designate a member of the Board as Chair and as Vice-Chair. There are currently ten Board members including the Chair and Vice Chair. Appendix 1 includes a list of the Board members.

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 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 2011 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, and have experienced very little variation in realizations of yield annually. To maintain the solvency of the Funds, the Board will need to continue to ensure that the Funds are invested in high quality investments as outlined in the Trustee Act provisions referenced in the MOU.

Dealer Consolidation

The consolidation of operations into larger dealers and elevators has raised a concern that the solvency of the Funds may be impacted. There is the potential for larger claims becoming more prevalent, as producers will be dealing with fewer dealers and elevators. However, consolidation may also bring a healthier grain industry as more resources would be available to larger operations, and shifts in the economy may have fewer impacts. Agricorp completes midterm licence reviews to ensure an existing dealer continues to show financial responsibility when an additional facility is added. There is an emerging trend where grain producers are using their excess storage capacity to store grain for other producers, but they may not be complying with the licensing requirements under the Grains Act.

Unlicensed Operators

If a dealer or elevator is not licensed, a review of the organization's financial responsibility is not completed. This may increase the probability that the organization will default on a producer or owner. As reported to the Board by the Chief Inspector, Agricorp continues to see producers increasing their on-farm storage capacity and using their surplus storage capacity to store grain for other producers. An increased awareness campaign by stakeholders has resulted in an increased knowledge of the need to deal with a licensed facility. Agricorp addresses unlicensed facilities and dealers as soon as they are apparent with sanctions under the Grains Act. The number of complaints that Agricorp has received about unlicensed operations has increased. 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, as a dealer or operator may not purchase or store crop until a license is approved.

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 AEAD, issued by 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 and quarterly financial statements.

Legislative, Strategic and Policy Changes

The Board was established under the FPPA, which is administered by OMAF. Changes to the FPPA will have a direct impact on 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.

Financial Responsibility Review Committee (FRRC)

An important part of grain dealer licensing involves determining the financial responsibility of dealers and elevators. The FRRC was 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 recommendations to the Chief Inspector. The Program helps to ensure that financially viable operations are licensed to purchase from producers.

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 ultimately to the Funds. This volatility has made it harder to predict the future of commodity prices.

Internal Drivers

Funds

The 2011 Actuarial Review revealed that the Funds are highly dependent on investment income. The study recommended that the Board continue to monitor all the Funds against targets recommended by the actuary. It was further recommended that the soybean Fund grow by a minimum amount of two per cent annually. A reduction in interest rates since the completion of the Actuarial Review has resulted in the soybean Fund growing by less than two per cent per annum. Effective July 2013, the check-off fee for soybeans has been increased from $0.02/tonne to $0.10/tonne, and the Board will continue to monitor all of the Funds 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 approved the Claim Adjudication Guidelines which assists Board members without previous claims experience to adjudicate claims. Board members bring a variety of skills and experience and an annual review of these guidelines ensures a consistent approach to adjudicating claims.

Board Knowledge Management and Succession Planning

Deliberate planning and consideration is given to the expiry date of members' terms to minimize the loss of experience and knowledge during member transition periods. A continued review of existing Board members' terms is conducted and staggering of expiring terms is planned.

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.

Resources/Services/Supports Provided to the GFPB:

1. Contracted Services - Agricorp

Both Governance/Secretariat and Financial Support Services are provided to the Board by Agricorp. These services are provided as agreed to in the Service Agreement between the Board and Agricorp. No other third party contracts are anticipated for 2014 – 2017.

2. Support Services

Through the MOU, OMAF is committed to providing the GFPB with:

  • Investigative services; and
  • Legal services through the Ministry of the Attorney General, OMAF Legal Services Branch.

Financial Budget - Proposed Operating Expenditures and Projected Revenues

  Budget[1]
2012/13
Actual
2012/13
Budget
2013/14
Budget
2014/15
Budget
2015/16
Budget
2016/17
Revenue ($)
Fees 250,000 249,938 250,000 375,000 375,000 375,000
Interest 299,818 295,584 271,748[2] 242,565[3] 244,2823 245,9593
Recoveries            
Total Revenue 549,818 545,522 521,748 617,565 619,282 620,959
Expense ($)
Claims       263,0004  263,0004 263,0004
Other administration 200   200 200 200 200
Professional Fees (i.e. Actuarial) 0 0 0 0 0 0
Governance/Secretariat Services 60,000 42,761 61,200 45,000 46,000 47,000
Financial Services 47,000 27,209 47,940 30,000 32,000 33,000
Costs of Determining Financial Responsibility 156,000 156,240 156,240 156,240 156,240 156,240
FRRC 24,480 22,937 24,970 25,000 26,000 27,000
Total Expense 287,680 249,147 290,310 519,440 523,440 526,440
Net Balance (Total Revenue - Expenses) 262,138 296,375 231,438 98,125 95,842 94,519
Fund Balance Beginning of Year 13,325,250 13,324,864 13,587,387 13,860,829 13,958,954 14,054,795
Adjustment on adoption of the financial instrument standard   -119,814        
Fund Balance End of Year 13,587,388 13,501,425 13,860,829 13,958,954 14,054,795 14,149,314

Projected Board Expenditures

1. 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 April 1, 2015, to provide these services.

2. Board member Per Diems, Travel and Meal Expenditures

A financial review determined that Board remuneration (per diem and incidental costs, including travel) should be paid by OMAF and not from the Funds. This change came into effect in November of 2010.

3. Costs of Determining Financial Responsibility

Since November of 2010, the Board has had the legal authority to pay for the cost of determining financial responsibility of dealer applicants. The Board has signed a letter of understanding that expires on April 1, 2014 with Agricorp regarding the costs of determining financial responsibility. The renewal letter of understanding is anticipated to be signed soon.

4. Professional, Technical or Other Assistance to the Agency

An example of this type of cost would be an Actuarial Review.

5. Claim Payments

All claim payments and associated costs are paid by the 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.

6. FRRC

This is the cost of a chartered accountant who reviews all grain dealer files annually to determine if they are financially responsible prior to recommending issuance of a license. The present contract expires in September of 2015.

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.

In the fall of 2012 the Board reviewed the current Fund balances and check-off fees and a recommendation was made to the Minister to adjust the check-off fee structure for soybeans and wheat.

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
  • Wheat: 5 cents
  • Soybeans: 10 cents
  • Canola: 20 cents

The Minister has the authority to set these fees as authorized 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.

The Board is subject to an annual audit by the Office of the Auditor General of Ontario. Audited statements are typically provided in November of the completed program year. For example, with a program year end of March 31, 2013, statements would be received in November of 2013.

Proposed Capital Expenditures

The Board does not have any capital expenditures planned for 2014-2017.

The estimated revenues and expenses for the next three years are provided in Table One. The Board has delegated the investment of the Funds to Agricorp, and the Funds are invested in instruments authorized under the MOU. An inflation rate of 2% was also built into the service costs.

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.

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.

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.

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

Performance Measure Baseline Target
12/13
Actual
12/13
Target
13/14
Unqualified audit opinion received Unqualified Unqualified Unqualified Unqualified
Target Fund balances are maintained as per the Actuarial Review
Grain Corn target Fund balance Fund balance of $4,600,000 maintained Fund balance of $4,600,000 maintained Achieved - Fund Balance $5,918,749 Fund balance of $4,600,000 maintained
Wheat target Fund balance Fund balance of $2,200,000 maintained Fund balance of $2,200,000 maintained Achieved - Fund Balance $3,138,832 Fund balance of $2,200,000 maintained
Soybean target Fund balance Fund balance of $4,400,000 maintained Fund balance of $4,400,000 maintained Not Achieved - Actual Fund Balance $3,594,726. The minister approved an increased in check off fees from 0.02/tonne to 0.10/tonne effective July 2013 Fund balance of $4,400,000 maintained
Canola target Fund balance Fund balance of $900,000 maintained Fund balance of $900,000 maintained Achieved - Fund Balance $950,793 Fund balance of $900,000 maintained
Targeted annual growth in Soybean Fund achieved 2% annual growth rate 2% annual growth rate Not Achieved – The Minister approved an increase in check off fees form 0.02/tonne to 0.10/tonne in July 2013 2% annual growth rate
Receive and review Fund financial statements from Agricorp Quarterly Quarterly Achieved Quarterly

Performance Measure Baseline Target
14/15
Target
15/16
Target
16/17
Unqualified audit opinion received Unqualified Unqualified Unqualified Unqualified
Target Fund balances are maintained as per the Actuarial Review
Grain Corn target Fund balance Fund balance of $4,600,000 maintained Fund balance of $4,600,000 maintained Fund balance of $4,600,000 maintained Fund balance of $4,600,000 maintained
Wheat target Fund balance Fund balance of $2,200,000 maintained Fund balance of $2,200,000 maintained Fund balance of $2,200,000 maintained Fund balance of $2,200,000 maintained
Soybean target Fund balance Fund balance of $4,400,000 maintained Fund balance of $4,400,000 maintained Fund balance of $4,400,000 maintained Fund balance of $4,400,000 maintained
Canola target Fund balance Fund balance of $900,000 maintained Fund balance of $900,000 maintained Fund balance of $900,000 maintained Fund balance of $900,000 maintained
Targeted annual growth in Soybean Fund achieved 2% annual growth rate 2% annual growth rate 2% annual growth rate 2% annual growth rate
Receive and review Fund financial statements from Agricorp Quarterly Quarterly Quarterly Quarterly

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

Performance Measure Baseline Target
12/13
Actual
12/13
Target
13/14
Claims processed with minimal delays Claimants notified within 2 days, dealers and elevators within 4 days of receipt of claim Claimants notified within 2 days, dealers and elevators within 4 days of receipt of claim N/A – no claims received Claimants notified within 2 days, dealers and elevators within 4 days of receipt of claim.
Claims are adjudicated fairly Claims are reviewed individually, and follow established adjudication guidelines Claims are reviewed individually and follow adjudication guidelines established N/A – no claims received Claims are reviewed individually and follow adjudication guidelines established
Claimants receive notification of Board decision Within 10 days of Board decision Within 10 days of Board decision N/A – no claims received Within 10 days of Board decision

Performance Measure Baseline Target
14/15
Target
15/16
Target
16/17
Claims processed with minimal delays Claimants notified within 2 days, dealers and elevators within 4 days of receipt of claim Claimants notified within 2 days, dealers and elevators within 4 days of receipt of claim Claimants notified within 2 days, dealers and elevators within 4 days of receipt of claim. Claimants notified within 2 days, dealers and elevators within 4 days of receipt of claim.
Claims are adjudicated fairly Claims are reviewed individually, and follow established adjudication guidelines Claims are reviewed individually and follow adjudication guidelines established Claims are reviewed individually and follow adjudication guidelines established Claims are reviewed individually and follow adjudication guidelines established
Claimants receive notification of Board decision Within 10 days of Board decision Within 10 days of Board decision Within 10 days of Board decision Within 10 days of Board decision

Objective #3: To grant or refuse payment of claims and recover amounts paid as established under the FPPA

Performance Measure Baseline Target
12/13
Actual
12/13
Target
13/14
Claims are reviewed to determine their validity Board refers to Act and regulations to determine validity of claims and the appropriate exercise of discretion, where permitted. Board refers to act and uses legal counsel as required to determine validity of claims N/A – no claims received Board refers to act and uses legal counsel as required to determine validity of claims
Recover any money to which to Board is entitled to under the FPPA Legal counsel is consulted when proceeding with any recovery action Legal counsel is consulted when proceeding with any recovery action N/A Legal counsel is consulted when proceeding with any recovery action

Performance Measure Baseline Target
14/15
Target
15/16
Target
16/17
Claims are reviewed to determine their validity Board refers to Act and regulations to determine validity of claims and the appropriate exercise of discretion, where permitted. Board refers to act and uses legal counsel as required to determine validity of claims Board refers to act and uses legal counsel as required to determine validity of claims Board refers to act and uses legal counsel as required to determine validity of claims
Recover any money to which to Board is entitled to under the FPPA 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 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
12/13
Actual
12/13
Target
13/14
Updated MOU in place Signed MOU to be in place Not applicable - MOU expires March 2016 Not applicable Not applicable
Submit Annual Report Annually December 2012 July 31, 2013*- submitted November 2013 July 31, 2014*
Submit Business Plan Annually March 2013 Achieved March 2014
Submit Quarterly AEAD Report Quarterly Quarterly Achieved Quarterly
Submit Quarterly Risk Assessment Report Quarterly Quarterly Achieved Quarterly

Performance Measure Baseline Target
14/15
Target
15/16
Target
16/17
Updated MOU in place Signed MOU to be in place Not applicable March 2016 Not Applicable
Submit Annual Report Annually July 31, 2015* July 31, 2016* July 31, 2017*
Submit Business Plan Annually March 2015 March 2016 March 2017
Submit Quarterly AEAD Report Quarterly Quarterly Quarterly Quarterly
Submit Quarterly Risk Assessment Report Quarterly Quarterly Quarterly Quarterly

*Note: The Annual Report contains audited financial statements which are completed by the Office of the Auditor General. In recent history, these statements have not been completed until 8 months after the Boards fiscal year end. The Annual Report cannot be submitted to the Minister until the Audited Financial Statements are completed.


Objective #5: To maintain the Board governance strategy and regular communication with stakeholders

Performance Measure Baseline Target
12/13
Actual
12/13
Target
13/14
Work with OMAF to ensure that the Board is at quorum. Ensure information regarding to appointments is submitted to the ministry. As required As required Achieved As required
Provide new Board members with the Orientation Manual Within three months of being appointed Provided to new members within three months of appointment Achieved As required
Stakeholders updated and informed of Board activities 1 update 1 update 1 update 1 update

Performance Measure Baseline Target
14/15
Target
15/16
Target
16/17
Work with OMAF to ensure that the Board is at quorum. Ensure information regarding to appointments is submitted to the ministry. As required As required As required As required
Provide new Board members with the Orientation Manual Within three months of being appointed As required As required As required
Stakeholders updated and informed of Board activities 1 update 1 update 1 update 1 update

Risk Assessment and Management

The AEAD 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 Mitigation Strategy Responsibility Likelihood Impact[4]
Changes to interest rates, dealer consolidation or, commodity prices can negatively impact the Funds. The Board ensures that the Actuarial Review remains current to assess the soundness of all the Funds. The 2011 Actuarial Review recommended a target balance for each of the four Funds. Amendments to adjust the soybean and wheat check-off fees were made by O. Reg 205/13 filed on June 28, 2013. These amendments support the appropriate targeted balances for each Fund. GFPB, OMAF and MRA 2 2
Inability of the Board to fulfil their role due to delays in appointments. Board member transition is monitored and appointment recommendations are sought and forwarded to the Ministry several months prior to the vacancies. This is to reduce the impact to the Board as experienced members leave and new members are appointed. GFPB/Agricorp Support Services, OMAF and MRA 1 1
Board members do not have adequate financial management and risk mitigation skills to fulfill their role. Training for Board appointees is ongoing and a Board Orientation manual has been developed. The Board will recommend to the Minister the appointment of members with the adequate skills to fulfill the role. GFPB/Agricorp Support Services, OMAF and MRA 1 2
Lack of Board Members with Claim experience The Board has a Claim Adjudication Guideline to assist members with adjudicating claims. Legal expertise and investigative services are available to the Board (as outlined in the MOU) to support in the claims process. GFPB, Legal Counsel, Agricorp Support Services 1 2
Lack of Funds available to pay large claims The MOU and the Investment Directive outline strategies for investing the Funds.The Board is taking action on the recommendations of the Actuarial Review to generate the required revenue to meet the Fund targets. GFPB, Agricorp Support Services 1 3
Security breaches of information All Board policies and procedures are maintained electronically. Security breach possibilities are reviewed annually to reduce risks. GFPB, Agricorp Support Services 1 1

Risk Time Horizon
Frequency[5]
Timing[6]
Risk Tolerance[7] Prioritization
Changes to interest rates, dealer consolidation or, commodity prices can negatively impact the Funds. Frequency = 2
Timing = 1
2 Medium Priority 9
Inability of the Board to fulfil their role due to delays in appointments. Frequency=1
Timing= 1
1 5
Board members do not have adequate financial management and risk mitigation skills to fulfill their role. Frequency=1
Timing = 1
2 7
Lack of Board Members with Claim experience Frequency=1
Timing = 1
1 6
Lack of Funds available to pay large claims Frequency=1
Timing =1
1 7
Security breaches of information Frequency=1
Timing =1
1 5

Communication Plan

Schedule C of the MOU between the Board and the Ministry outlines the communication plan that the Board will follow. The MOU is in effect until March 31, 2016.

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 OMAF to determine financial responsibility and administer the licensing and inspection components of the Grain Financial Protection Program.

Vehicle used to communicate key messages

  • In the event of a claim, the Board will advise each claimant via letter on the disposition 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 OMAF.

Appendix 1: Current Board Appointees

Position Member Name Tenure
Chair (Part Time) Campbell, Jim 12-Apr-2005 – 03-Apr-2014
Vice-Chair (Part-Time) Wagner, Fred 06-Mar-2007 – 12-Dec-2015
Member (Part-Time) Buttenham, David 22-Mar-2011 – 21-Mar-2014
Member (Part-Time) Senft, Barry 22-Apr-2011 – 21-Apr-2014
Member (Part-Time) Oliphant, Darcy 30-Jul-2011 – 29-Jul-2014
Member (Part-Time) Davis, Jeff 19-Apr-2012 – 18-Apr-2015
Member (Part-Time) Van Ankum, Henry 19-Apr-2012 – 18-Apr-2015
Member (Part-Time) Brock, Mark 22-Aug-2012 – 21-Aug-2015
Member (Part-Time) Cohoe, Lynne 22-Apr-2008 – 21-Aug-2015
Member (Part-Time) Kobe, Jeff 19-Jul-2007 – 19-Jul-2016

[1] Budgeted numbers from 2013-15 Business Plan AEAD Quarterly Report

[2] Forecasted Interest rate of 2.00%

[3] Forecasted Interest rate of 1.75%

4 Estimated claim amount from 2011 actuarial study

[4] Significant = 3, Moderate = 2, Minor =1, No Impact = 0

[5] Recurring =2, One Time=1, Never = 0

[6] Immediate = 2, In the Future = 1, Never = 0

[7] Low = 4, Moderate = 2, High =1


For more information:
Toll Free: 1-877-424-1300
E-mail: ag.info.omafra@ontario.ca
Author: Grain Financial Proection Board
Creation Date: 27 March 2015
Last Reviewed: 27 March 2015