Agricultural Research Institute of Ontario Business Plan 2015-18

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Executive summary

The agri-food and agri-products industry contributes more than $33 billion to the Ontario economy and employs approximately 700,000 people. Research and innovation are key contributors to the strength of Ontario's agri-food industry. Ontario is a top innovator in agri-food, developing value-added products and providing industry solutions that contribute to a competitive and sustainable agri-food sector.

The Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) is the provincial lead overseeing Ontario's thriving agri-food industry. The ministry works to advance the government's efforts to promote a more competitive and productive agri-food and agri-products sector, and economic growth and opportunities for rural Ontario. The ministry supports rural and urban communities and a high quality of life for all Ontarins. Keys to achieving success include strong rural communities, thriving agriculture and food sectors, and, safe food, healthy animals and a healthy environment.

The Agricultural Research Institute of Ontario (ARIO) is a Board-Governed provincial agency reporting to the Minister of Agriculture, Food and Rural Affairs. ARIO is focused on ensuring Ontario maintains its competitive advantage in agri-food and agri-products research and innovation and concentrates its efforts in these four ways:

  1. Providing strategic advice to the Minister on agri-food and agri-products research and innovation;
  2. Leading the Infrastructure Strategy initiative to modernize the province's agri-food and agri-products research and innovation physical and virtual infrastructure;
  3. Promoting the Ontario agri-food and agri-products research and innovation system; and,
  4. Providing administrative and managerial oversight of open competitive research programs (e.g. New Directions, Food Safety), and the 17 ARIO owned research properties with over 6,500 acres, 300+ buildings with a book value of approximately $83 million (including capital projects under construction), and over 40 tenants that include government, not for profits, industry and private.

In addition to "increasing consumption of local food…" and "open for business…", the OMAFRA's current strategic priority that most directly aligns with the ongoing work of ARIO is "increasing the competitiveness and productivity of Ontario's agri-food and agri-product businesses through market focused innovation". For more information on ARIO's on-going work see the attached appendices.

Key ARIO accomplishments for the 2014/15 fiscal year include:

Infrastructure Strategy

Vineland Research and Innovation Centre (VRIC):
Construction of a new research greenhouse facility is well underway with completion expected in the summer of 2015.

Elora:

  • Construction of the new dairy research facility at Elora which began in the summer of 2013 is nearing completion with a Grand Opening scheduled for late May 2015.

Other Centres:

  • Implementation of the ARIO Infrastructure Strategy recommendations continued:
    • Significant upgrades to the Winchester site (eastern Ontario component of a network of integrated field crop sites) including people, equipment and land (tiling) are in place for the 2015 growing season.
    • Planning continues on a new facility for the Guelph Turfgrass Institute and the relocation of research plots.
    • Ongoing discussions with Beef Farmers of Ontario regarding the consolidation of beef research at Elora and New Liskeard.
Minor Capital program
  • Focus of the 2014-15 programs continued to be the completion of a number of existing large renovation projects. In addition, animal and human safety, regulatory and equipment failure issues were addressed on a case by case basis. A total of 86 projects were supported. A significant investment in infrastructure renewal was made at the Vineland Research Station to support further development of the centre.
  • Responsibility for the administration of the Minor Capital program at the Vineland research station was transferred to the Vineland Research and Innovation Centre (VRIC) from the UofG as part of VRIC's assumption of responsibility for operation and management of the station.
  • Ongoing effective administration and managerial oversight of the current research infrastructure portfolio is provided by the Secretariat.
Research Programs
  • Continued to support modernization of research program administration through ongoing development of the Research Management System (RMS). Focus continued to be on increasing functionality and capacity of RMS to capture and retrieve more research results data, and to accelerate knowledge translation and transfer, thereby, increasing adaptation and commercialization opportunities.
  • Continued effective administration of the Ministry's open research programs (currently New Directions and Food Safety) and other research programs (e.g. plant germplasm royalty reinvestment) by Research and Innovation branch staff (ARIO Secretariat). Total annual expenditures of approximately $3 million.

While continuing the work of managing the research infrastructure portfolio and the administration of the ministry's open research programs, ARIO recognizes the importance of continuing with implementation of its research Infrastructure Strategy and looks forward to the next phases of development and implementation of the research Infrastructure Strategy in the year ahead.

Mandate and mission statement

Background

The Agricultural Research Institute of Ontario (ARIO) was created in 1962 and continues its mandate under the Agricultural Research Institute of Ontario Act. R.S.O. 1990, c. A.13 as amended (ARIO Act) and reports to the Minister of Agriculture, Food and Rural Affairs (OMAFRA).

ARIO is classified as a Board-Governed provincial agency under the Agencies and Appointments Directive (AAD), with a mandate to, among other things, provide strategic advice to the Minister on agri-food research and related issues and interests, manage and hold funds (ARIO manages open, competitive research funds and other trust funds) and to acquire, maintain and dispose of real property in the manner described in the ARIO Act.

ARIO's strategic priorities in supporting the ministries current goals and objectives are described in Section D and are summarized under four main categories as: 1) Strategic Advice 2) Leadership - implementation of the Infrastructure Strategy 3) Promoting Ontario Agri- food and Agri- Products Research & Innovation 4) Managerial Oversight - of the ARIO owned Research Infrastructure.

ARIO Mission Statement

Within this legislative context, ARIO has adopted the following mission statement, in support of OMAFRA's vision for successful and sustainable agri-food and agri-products businesses:

"ARIO, as appointed representative of the agri-food sector,
is dedicated to the strategic use of science and innovation to enhance the sustainability and profitability of Ontario's agri-food and rural sectors"

Environmental scan

Partnering to build a sustainable and thriving agri-food research and innovation system

Governments around the world, including here in Ontario, are faced with a sharply increased focus on public governance, transparency and accountability and value for money when delivering services and programs to citizens and businesses. New partnership models joining industry with governments and academia are key to the long-term success of the agri-food and agri-products industry, and are necessary for sustained economic prosperity and growth.

The ARIO Infrastructure Strategy is based on principles that include:

  1. a shared financial commitment with industry on all research infrastructure capital construction projects
  2. an increased level of industry participation in priority setting and overall governance

This increase in industry involvement and commitment can also be seen under Growing Forward 2 (GF2) federal provincial programs (2013-2018), which has resulted in an overall increase in innovation funding and a requirement to embed innovation throughout GF2 programs. Industry-led research and innovation, along with industry, academic, business and government collaborations are becoming increasingly important to advancing innovation and commercialization, and this is reflected in GF2 programming.

  • In December 2012, Agriculture and Agri-Food Canada (AAFC) announced the federal-only Agri-Innovation Program. This program includes the industry-led research and development Agri-Science Cluster and Agri-Science Project initiatives. The Agri-Science Initiatives will mobilize scientific expertise across industry, academia and government.
  • An industry-led Agri-Innovation Commercialization Program was announced at the same time. This program provides repayable support to industry in order to reduce the financial risk of developing and adopting later stage agri-based innovations, such as technologies, products, processes and services and commercialization opportunities.
  • Under the Research and Innovation Designated Program (Canada-Ontario GF2 Bilateral Agreement), support is being provided to the Agri-Technology Commercialization Centre (ATCC), Innovation Centres (such as VRIC, the Livestock Research and Innovation Corporation and others) and the UofG (for Knowledge Translation and Transfer, Highly Qualified Personnel and commercialization activities through the Catalyst Centre).
  • In addition, innovative projects are receiving a higher level of government support through Ontario's GF2 cost-share programs for producers, processors and collaborations and organizations.

Partnership models and infrastructure review of leading jurisdictions re agri-food for research and innovation

A world-wide scan of how other jurisdictions organize and manage agricultural and agri-food research and development infrastructure was completed by KPMG on behalf of ARIO(1) . This scan concluded that jurisdictions around the world who lead in agricultural research and innovation have these success factors for agri-food and agri-products research and innovation strategic business planning and infrastructure capacity:

  • Linking infrastructure plans to vision and strategy
  • Use of multiple governance models
  • Mission-oriented long-term vision
  • Portfolio of projects
  • Need for an integrated research and development models, e.g. from producer to processor to consumer; or from basic, to strategic, to applied, to demonstration, to scale-up, to financing and commercialization. Also means that different scientific disciplines are integrated into the overall model as appropriate
  • Development of business case and implementation plan
  • Involvement of users in programs or projects
  • Access to world-wide expertise and facilities
  • State of the art equipment and facilities
  • Supporting critical mass, e.g. clustering

Building on foundation of specialized focused capacity to modernize partnerships and infrastructure

The long-term funding agreement and relationship between OMAFRA and the UofG (the Partnership Agreement) is the primary vehicle for delivering the Ministry's agri-food and agri-products innovation agenda and the supporting research Infrastructure Strategy put forward by ARIO. The Agreement provides the research and innovation capacity to help attract and retain investment by government and industry for both discovery and applied scientific research. The UofG as the primary user of the ARIO properties has an active role in the new agri-food and agri-products research and innovation centres emerging under the Infrastructure Strategy and supported through GF2.

Modern partnerships to drive innovation and operating efficiencies

Implementation of the Infrastructure Strategy has been a catalyst for new, industry-influenced governance models that support the strong research and innovation capacity and boost Ontario's economy. The VRIC at Vineland and more recently, the Livestock Research and Innovation Centre (LRIC) at Elora have demonstrated industry's increased commitment to supporting the agri-food innovation system in partnership with governments and the research community. These two centres along with centres in the areas of Bioeconomy, Food for Health, and Field Crop Production will continue to drive the modernization of agri-food research infrastructure and the relationships between innovation partners - governments, industry and the research community.

In conclusion, to continue enabling Ontario's economic growth, Ontario needs to focus its agri-food and agri-products research and innovation, on the development of innovative products, safe food and sustainable and efficient production. To do so effectively, Ontario's agri-food and agri-products sectors must have the appropriate research and innovation infrastructure platforms, with oversight by governance models that reflect increased industry investment, access, and involvement in partnerships between government, industry and academia.


(1) KPMG. Development of a Comprehensive Agri-Food R & D Infrastructure Strategy for the Agricultural Research Institute of Ontario: Background Research Paper. March 7, 2008.

Overview of current and forthcoming programs and activities

The Director of Research for ARIO, the delegates and appointees of the Director of Research for ARIO (under the ARIO Act), the Secretariat and the members of ARIO appointed by the Minister have been, and continue to be, responsible for these key programs and activities:

1. Strategic Advice

  • Continue to advise the Minister on research priorities and issues related to the agri-food and agri-products sectors.
  • Provide advice on the renewed UofG/OMAFRA Partnership Agreement and on emerging research centre governance models e.g. LRIC and the VVRIC.

2. Leadership - Implementation of the Infrastructure Strategy

  • Continue implementation of the research Infrastructure Strategy leading to a modern, integrated agri-food and agri-products research and innovation system with industry-influenced governance models and modern state of the art infrastructure capacity built on shared funding models between industry and government that includes:
    • Consolidate livestock research at the Elora research station, including working with industry to plan for the relocation of swine and poultry research to Elora
    • Enhancing beef research capacity at the Elora research station
    • Working with Infrastructure Ontario to acquire additional lands in proximity to the Elora research station to facilitate consolidation of research at Elora
    • Working with the turfgrass industry and the UofG to develop detailed plans and begin implementation of relocating from the Guelph research station
    • Continue to refine, develop and implement investments in the three remaining centres (enhanced field crops; bioeconomy; food for health).

3. Promoting Ontario's Agri-food and Agri-Products Research and Innovation

  • Through focused outreach opportunities for the Chair and members, build relationships between ARIO and industry stakeholders to broaden awareness, engage and seek support for OMAFRA's research and innovation priorities and the research Infrastructure renewal that is necessary to maintain and strengthen Ontario's local, national and global competitiveness in the agriculture and agri-food and agri-product sectors.

4. Managerial Oversight

  • Provide operational and managerial oversight of the 17 agri-food research properties comprised of over 300 buildings, 6,500 acres and over 40 tenants (both government and non-government) to ensure continuing effective and efficient management of the research property portfolio in support of the various research programs.
    • OMAFRA provides $4 million in annual funding to ARIO in support of the ARIO Minor Capital Program (both Base Building and Infrastructure Renewal). An annual capital program prioritized project list is established during discussions between the Secretariat, and the UofG and VRIC. Once approved by ARIO, day to day site project management and implementation is provided by the UofG and VRIC with oversight by the Secretariat.
    • The Base Building component of the program is used to support projects related to human health and safety, code compliance, building integrity, life cycle replacement, and efficiency, conservation and cost containment to enhance program delivery and building performance.

    • The Infrastructure Renewal (program-related) portion of the program supports projects addressing animal care, including health, safety and well-being, program needs and priorities as well as some dedicated equipment replacements.
  • Continue to provide effective and efficient administration of current OMAFRA Open Research programs (e.g. New Directions; Food Safety, Germplasm Reinvestment)
  • Continue to provide effective and efficient administration of financial operations/ programs including all aspects of financial reporting, consolidation with OMAFRA, and administration of open research programs and other transfer payment agreements on behalf of OMAFRA.

Strategic direction

ARIO Strategic Focus

Together, the Director of Research for ARIO, the delegates and appointees of the Director of Research for ARIO, (including the Secretariat) and the members of ARIO appointed by the Minister are responsible for, and will continue to focus their efforts on four key aspects of the agricultural research system:

1. Leadership - Implementation of ARIO's Infrastructure Strategy

ARIO plays an important role in modernizing the agri-food and agri-products research and innovation system. For example, ARIO has recommended an approach to the Minister that OMAFRA is adopting to modernize the agri-food research and innovation system. OMAFRA has begun implementing some of the various phases of this strategy. The Infrastructure Strategy initiative is the road-map for modernizing research infrastructure and strengthening innovation in Ontario by providing state of the art, modern research platforms necessary to support development of new value added products and technological innovation and commercialization according to the following key criteria of the stakeholder-endorsed policy framework:

  • Government, industry and academia partnerships.
  • Financial operating efficiencies found and savings reinvested into priority areas.
  • Aligning infrastructure investments to specialized intellectual capacity including physical and virtual platforms.
  • Greater utilization of infrastructure across both ARIO portfolio and non-ARIO infrastructure, e.g. industry, government and academia achieve improved access and collaboration.

For more information visit the ARIO website at www.omafra.gov.on.ca/english/research/ario/institute.htm

2. Strategic Advice

A key role of ARIO is to provide strategic advice to the Minister on agri-food and rural research. The current focus is on the Infrastructure Strategy, the renewed Partnership including ongoing research themes and priorities, and the emerging governance models under the Infrastructure Strategy (e.g. LRIC) and on the strategic direction of agri-food research in the province.

3. Promoting Ontario's Agri-food Research and Infrastructure Strategy

ARIO and its members undertake focused activities to generate increased awareness of OMAFRA's agricultural, agri-food and agri-products priorities and generate buy-in for the Infrastructure Strategy through increased ARIO member engagement with agri-food industry stakeholders.

4. Managerial Oversight

ARIO provides operational and managerial oversight of the infrastructure portfolio to ensure effective and efficient management of the research property portfolio in support of the various research programs. ARIO also provides oversight and the effective administration of current OMAFRA Open Research programs and all financial operations/programs including all aspects of financial consolidation of ARIO with OMAFRA.

Resources needed to meet goals and objectives

Resources to meet ARIO's goals and objectives are being provided through transfer payment funding from OMAFRA as well as through secretariat services provided by the Research and Innovation Branch (RIB) of OMAFRA. ARIO also received some revenues from leasing land and buildings within its property portfolio. Funding for major capital projects (implementation of ARIO's research Infrastructure Strategy) is requested and approved annually as a key component of OMAFRA's PRRT: Program Review, Renewal and Transformation process.

Funding for the necessary staffing and operating resources required to support the administration of ARIO have been, and will continue to be, provided through RIB budget allocations within OMAFRA. The cost to administer ARIO has grown over the last few fiscal years, in light of the significantly increased responsibilities resulting from the property transfer. These costs are estimated at approximately $1.4 million annually, including all operating costs and a portion of ministry (RIB) staff salaries and benefits (*see table below). ARIO has no staff of its own and RIB provides all Secretariat functions for ARIO. The actual cost of ARIO member per diems and travel related costs is relatively insignificant and is approximately $50k/yr of the $1.4 million total.

The decision to consolidate ARIO with OMAFRA for the purposes of financial reporting and budgeting and the very significantly increased focus on agency governance, transparency and accountability have greatly impacted financial and operational reporting activities of the Secretariat resulting in a need for additional resources.

Revenues from ARIO's property portfolio (tenants) are used to partially offset the cost of ownership and maintenance of the portfolio.

ARIO continues to seek out non-government sources of capital investment from agricultural and agri-food related industry partners. The livestock sectors have agreed to the current model being used to develop the dairy research facility at Elora, whereby, industry will provide 20% (twenty percent) of the capital costs of any construction/redevelopment projects.

Research and Innovation Branch secretariat support to ARIO:

  Director Research Unit ARIO Secretariat Finance, Infras. & Admin Innovation Unit Total
  ARIO 40% ARIO 50% ARIO 100% ARIO 80% ARIO 30% ARIO $$
Salaries and Benefits 60,268 377,949   539,889 205,617 1,183,998
Operating 42,173 43,578 48,370 24,355 19,163 177,639
Total 102,441 421,527 48,370 564,184 225,116 1,361,638

Risk identification, assessment and mitigation strategies

ARIO is a Board-Governed provincial agency of the government and as such has a Memorandum of Understanding (MOU) with OMAFRA. The MOU outlines the roles and responsibilities of both parties and how the ARIO Act and the various government policies and directives apply to the relationship between ARIO and OMAFRA.

All ARIO business decisions are the sole responsibility of the Director of Research for ARIO. The ARIO Director of Research is currently an OMAFRA Assistant Deputy Minister (Minister's appointment). ARIO has no staff and all Secretariat functions are provided by the ministry through the RIB. Funding for programs and properties administered by ARIO is provided largely through the ministry and the government's budget process.

Implementation of ARIO's Infrastructure Strategy requires significant funding over the next several years. OMAFRA has begun implementing the recommendations of the ARIO Infrastructure Strategy (e.g. new dairy facility at Elora and a new research greenhouse at Vineland); however it is always possible that budget constraints, economic and political realities might cause delays in completing the Infrastructure Strategy recommended. Given that the Infrastructure Strategy supports current priorities of the government and its focus on increasing competitiveness and productivity of the agri-food and agri-products sector, the risk of significant delays or cancellation is low. The ARIO Secretariat continues to work with the ministry's finance department (Business Planning and Financial Management Branch - BPFMB) and central agencies in submission of annual updates and refinements to the strategy captured in there process.

Given the role and decision making structure of ARIO, overall risk (operational, financial, political etc) is relatively low although maintaining financial commitment for the multi year nature of capital infrastructure construction projects is always a political risk. A detailed Agency Risk Management Plan was updated in April 2015 and the summary is included as Appendix D.

Human resources and organizational governance

Membership

ARIO is comprised of up to 15 members appointed by the Minister for OMAFRA and has been maintained at a level between 7 and 9 for many years. Members of ARIO are recognized as leaders in the agriculture, food and rural sectors. They have been drawn from a broad cross section of commodity and business interests and geographic areas. Members do not represent any particular organization but hold positions in their own right.

ARIO Director of Research is appointed by the Minister under the ARIO Act and is responsible for the business and affairs of ARIO. The current ARIO Director of Research is the Assistant Deputy Minister, Research and Corporate Services Division and Chief Administrative Officer of OMAFRA. OMAFRA (RIB) provides administrative, operating and managerial support and acts as the ARIO Secretariat. Operational decision-making and approvals are made by the ARIO Director of Research, or his/her authorized delegate(s). The duties of the Director of Research are detailed in the ARIO Act, as well as in the MOU between ARIO and OMAFRA.

Staff Numbers (Staff Strength)

As mentioned earlier, ARIO does not itself hire or employ staff. OMAFRA staff act as the Secretariat to ARIO by providing all administrative and managerial support in accordance with subsection 9(4) of the ARIO Act. This support is outlined in the MOU between ARIO and OMAFRA. Standard OPS disclosure policies and procedures are applicable to staff providing support to the Secretariat.

In addition to the Secretariat there is an ARIO Board. ARIO Board members are appointed under the ARIO Act and are paid set daily per diems and travel costs to reimburse members for attendance at meetings held throughout the year. These per diems are set by an Order in Council.

The ARIO Act allows for the establishment of standing committees to support strong-decision making within ARIO. The following standing committees were created (in the 2005-06 fiscal) and are still active:

Executive Committee
  • Provides long term strategic leadership to the ARIO including coordination of any other ARIO committee activities and, strategic advice to OMAFRA.
Infrastructure Committee
  • Committee membership currently includes members from ARIO and Secretariat staff. The committee reviews proposals related to the properties, addresses operational issues affecting the ARIO infrastructure portfolio, and makes recommendations that are then presented to ARIO as a whole for discussion and ratification. Recommendations are then made to the Director of Research for decision.

The following diagram summarizes the organizational structure of ARIO in its current form.

ARIO is comprised of up to 15 members appointed by the Minister for OMAFRA. Members of ARIO are recognized as leaders in the agriculture, food and rural sectors. They have been drawn from a broad cross section of commodity and business interests and geographic areas. Members do not represent any particular organization but hold positions in their own right.

Third party initiatives

In the past several years, global fiscal and economic realities facing all governments and the need to do more with less has resulted in a more focused effort and a significant shift towards collaborative research, funding partnerships, and new industry/government governance models. For example, the model being used to build the new dairy facility at Elora whereby the industry stakeholders/producer groups have agreed to fund 20 per cent of capital construction costs, and are taking a much more active role in priority setting and overall governance through the Livestock Research Innovation Corporation, a recently established industry led not for profit. This new model of increased industry involvement and financial commitment is the model for all other sectors (livestock and others) wishing to rebuild their aging provincially supported research infrastructure and is the basis on which the revitalization of research infrastructure for the other primary livestock groups (e.g. swine, poultry, beef) is proceeding.

Currently ARIO receives industry funding ($376k/yr) as a condition of previous capital investments to industry by the province under the Ontario Ethanol Growth Fund (OEGF) to be used to support the ministry's open research programs administered by ARIO.

In addition, ARIO is collaborating with OMAFRA, Agriculture and Agri-Food Canada (AAFC) and other innovation partners to leverage opportunities under GF2, a Federal, Provincial and Territorial agricultural policy framework. GF2 in Ontario was announced jointly by Canada and OMAFRA on April 2, 2013 with a focus on innovation, competitiveness and market development.

RIB provides all secretariats, administrative and managerial support functions for ARIO. With respect to research programs, ARIO and the research institution enter into a Research Funding Agreement that was developed and is reviewed/modified with the Ministry of the Attorney General, Legal Branch assigned to support ARIO.

Other transfer payment initiatives administered by ARIO on behalf of the ministry are developed in consultation with ARIO's assigned legal support and the ministry's BPFMB ensuring compliance with Transfer Payment and Accountability Directives.

Implementation plan for ongoing strategies

For 2015-16, the Director of Research, the members of ARIO and the Secretariat will be responsible for the following key activities:

1. Leadership - Implementation of Infrastructure Strategy

  • Continue implementation of the Infrastructure Strategy leading to a modern, integrated agri-food and agri-products research and innovation system with industry-influenced governance models and infrastructure capacity, some owned by government and some by industry. Upcoming activities related to the infrastructure component of the Infrastructure Strategy includes:
    1. Continue to advance the first two centres under the strategy. ARIO will work with the VRIC as they move forward with the construction of a pre-commercial-scale research greenhouse.
    2. Work with key partners/industry stakeholders on advancing the construction and governance model of the LRIC at Elora. This includes completion of the new dairy research facility as well as advancing future phases at Elora by:
      • Working with Ministry of Infrastructure (MOI) and Infrastructure Ontario (IO) to purchase additional land at Elora
      • Working with the UofG and the Turfgrass Institute to relocate to the UofG and Elora
      • Working with the other primary livestock producers (swine, poultry and beef) to advance plans for relocation to Elora
    3. Continue to work with stakeholders to further implement the remaining centres (Bioeconomy, Field Crops and Food and Health).
    4. Continue to look for opportunities for achieving operational efficiencies to support a world class integrated network of research platforms/facilities.

2. Strategic Advice

  • Continue to advise the Minister and ministry senior management regarding the implementation and strategic positioning of the research Infrastructure Strategy including both new investments and opportunities to achieve operational efficiencies.
  • Continue to provide advice on the Partnership including ongoing research themes and priorities, and the emerging governance models under the Infrastructure Strategy (e.g. LRIC).
  • Continue ongoing support to research priority setting by providing advice via participation in ORAN on new and existing research for the agri-food and agri-products sectors.

3. Promoting Ontario's Agri-food and Agri-Products Research and Innovation

  • Through focused outreach opportunities for the Chair and members, build relationships between ARIO and industry stakeholders to broaden awareness, engage and seek support for OMAFRA's research and innovation priorities and the research Infrastructure renewal that is necessary to maintain and strengthen Ontario's local, national and global competitiveness in the agriculture and agri-food and agri-product sectors.

4. Managerial Oversight

Continue to:

  • Provide operational and managerial oversight of the 17 agri-food research properties comprised of over 300 buildings, 6,500 acres of land and over 40 tenants (both government and non-government) to ensure effective and efficient management of the research property portfolio in support of the various research programs.
  • Provide effective and efficient administration and managerial oversight of current OMAFRA open research programs (currently New Directions, Food Safety, Germplasm Reinvestment, Proof of Principle etc.)
  • Provide effective and efficient administration and managerial oversight of all financial operations/programs including all aspects of financial consolidation of ARIO with OMAFRA.

Communications plan

Objectives

In alignment with both the government's plan to build Ontario up through investments in the economy, people and infrastructure and the Ministry's strategic direction for research and innovation, ARIO effectively promotes Ontario's agri-food and agri-product research and innovation system through the following communication objectives:

  1. Raise awareness to industry, government and the public (e.g. at stakeholder annual meetings, conferences) of the contributions that Ontario's agriculture sector (agri-food and agri-products research, innovation and knowledge transfer) makes to the province in areas such as the economy; health; environmental protection; social good and job creation.
  2. Advance ARIO's Infrastructure Strategy through internal and external communication opportunities and materials that provide progress updates on efforts working with industry stakeholders/partners to modernize research infrastructure that supports Ontario's agri-food competitiveness.
  3. Raise industry and the public's awareness (e.g. at outreach events such as Canada's Outdoor Farm Show) of Ontario's agri-food research priorities and strategic partnerships that align with stakeholders (e.g. industry, AAFC, and universities, particularly the UofG) and strengthen Ontario's agri-food research and innovation system.
  4. Establish and enhance working relationships with key partners and stakeholders (e.g. LRIC, VRIC, Agri Technology Commercialization Centre [ATCC]) to strengthen strategic partnerships to leverage communications/ research/ promotional opportunities to advance agri-food and agri-product research and innovation.

Key Messages

  • Ontario's agri-food sector is one of the province's leading economic engines, contributing $34 billion annually to the province's GDP.
  • Agri-food produces substantial economic returns and the greatest returns come from enhancing the value of food products and processes through research, innovation and knowledge transfer.
  • Research and innovation are keys to the success of agri-food businesses in Ontario and are essential to maintaining a competitive and sustainable agri-food sector in Ontario.
  • Research and innovation creates new opportunities for the agri-food sector and supports enhancement of the public good such as safe, healthy foods and the sustainability of agriculture and the environment.
  • Investments in research and innovation will enhance the sustainability and profitability of Ontario's agri-food and rural sectors, strengthen Ontario's economy and create more good jobs for the people of this province.
  • Partnerships such as with the University of Guelph and the 17 agri-food research properties throughout the province are key pillars that support Ontario's agri-food research and innovation system.

Key Audiences / Stakeholders

  • Innovation partners (e.g. LRIC, VRIC, ATCC);
  • Industry across sectors such as commodity organizations, food processing/retailing bioeconomy, health sciences, agri-technology, knowledge mobilization;
  • Academic institutions such as universities with an interest in agriculture, agri-food, and rural research priorities (e.g. UofG and Trent University); and
  • Other governments and agencies across jurisdictions (e.g. AAFC, provincial counterparts (e.g. Alberta, Quebec) and agencies (e.g. Genome Alberta).
  • General public
  • Farming, rural communities and other rural audiences

Tools & Tactics

  • Internal communication materials to brief the OMAFRA Minister and senior management on progress and successes to date and on implementing next steps of the ARIO research Infrastructure Strategy;
  • Formal annual reports and business plans submitted to the Minister containing updates regarding the research Infrastructure Strategy and the operational and managerial oversight of the 17 research properties ;
  • ARIO meetings that provide an opportunity to engage key partners and stakeholders in supporting planning, evaluation and reviewing, updating and advising on agri-food and agri-products research priorities and issues; and
  • Stakeholder and partner engagement/communications activities planned in consultation with OMAFRA, including opportunities to participate in various industry trade shows, outreach events and annual meetings.

*Potential Communications Opportunities in 2015-16

Event

Date
LRIC (Dairy Research facility opening) May 28, 2015
Stakeholder annual meetings e.g.:
  • Livestock Research Innovation Corporation Annual meeting
June 2015
VRIC Greenhouse Complex opening Fall 2015 (TBD)
LRIC (Beef facility announcement) Summer 2015 (TBD)
Guelph Turfgrass Institute (Relocation announcement) Summer 2015 (TBD)
International Plowing Match Sept. 22-26, 2015
Outdoor Farm Show Sept. 15-17, 2015
Ontario Economic Summit Oct. 27-29, 2015
Royal Agriculture Winter Fair Nov. 6-15, 2015
OMAFRA's Research and Knowledge Transfer Events e.g.:
  • Precision Agriculture
Fall-Winter 2015

* ARIO will be updated on new communication opportunities as they arise and are confirmed.

Financials

Overview of Funding

Under the ARIO Act, the Institute may accept gifts, grants, donations or bequest money for use in research and the Director of Research holds and administers these funds received "in trust".

Investments Held in Trust

ARIO contracts with an investment management company to assist with the management of investments held within the ARIO trust funds. The ARIO's investment policy generally follows the requirements of the Trustee Act R.S.O. 1990, c. T23 as amended (Trustee Act) and the Financial Administration Act R.S.O. 1990, C.F.12 as amended (Financial Administration Act). The investment strategy's first priority is to guarantee preservation of capital, and then, to provide liquidity to meet short-term cash flow requirements, and then after that, maximize returns to funds held by ARIO. This investment plan guarantees that funds are managed on a very conservative basis in accordance with the Financial Administration Act and the Trustee Act.

See Appendix B for the Statement of Investment Policy for the Institute.

Operational Costs

The cost to administer the programs within ARIO (including the proportionate cost of salaries and benefits for OMAFRA staff that spend varying portions of their time on ARIO issues) are paid from OMAFRA's budget within the allocation assigned to the RIB. The current estimate cost to provide the ARIO Secretariat functions is approximately $1.4 million (part of RIB budget).

Per diem rates and travel expenses are set by Orders in Council and are paid to ARIO members for their attendance at scheduled meetings. These per diems follow Treasury Board Guidelines for Agencies, Board and Commissions and are paid out of RIB funds. Details are provided to members in the ARIO member's handbook.

Financial Projections (3-Year Outlook)

ARIO is required to submit its Annual Report including audited financial statements to the Minister within 120 days of its year-end (by July 29th annually). The annual report is prepared by OMAFRA staff and includes financial statements that are prepared and audited by an external auditor (public accountant) contracted by OMAFRA.

A forecasted Balance Sheet and Financial Statement showing projected revenues and expenses for 2015-16, 2016-17 and 2017-18 is included in Appendix C.

ARIO is consolidated for financial reporting purposes with OMAFRA due to its close relationship, the ARIO's reliance on OMAFRA for research program funding and administrative support, and due to the "financial materiality" of ARIO resulting from the transfer of 17 agri-food research properties that had an approximate $60 million book value at the time of the transfer in 2007. ARIO is required to provide a three-year financial outlook to OMAFRA for financial consolidation purposes.

Performance Measures

Infrastructure Planning and Management

Below is a report on achievements in accordance with the current performance measures framework outlined in the ARIO MOU and includes the current focus of the Infrastructure Strategy.

Outcomes

Performance Measures

Achievements (2012-13)
Targets (2012-17)

Increased third party investment/collaboration in R&D infrastructure Level of funding from non-OMAFRA sources that goes toward investment in infrastructure.

Performance Target : - Average 20% of capital investment to come from non-provincial government sources.

Achievements:

The LRIC at Elora: The Livestock Research and Innovation Corporation (LRIC), representing the primary livestock commodity groups (Beef Farmers of Ontario, Ontario Pork, Dairy Farmers of Ontario and the Poultry Industry Council) have confirmed 20% support for the capital costs of redevelopment of Elora into the Livestock Research and Innovation Complex. This has established a new model of shared investment between industry and government that will be used for all future centres under the Infrastructure Strategy.

Targets:

Develop industry-influenced governance and funding models for the up to five (5) new centres recommended under the Infrastructure Strategy -Vineland (Hort), Elora (Livestock), Bioeconomy, Field Crops and Food for Health.

Accountability and efficiency in the operation of infrastructure

Infrastructure Operation & Maintenance measures that consider third party investment in Operation & Maintenance, efficiencies and offsets developed. Achievements:

Identified and recommended opportunities for exploring options re: implementing operating efficiencies in current ARIO holdings, tied to operating needs of existing governance models, e.g. the Partnership and emerging centres under the Infrastructure Strategy, e.g. VRIC, LRIC, etc.

Effective and cost efficient management of ARIO infrastructure/ property portfolio achieved by the ARIO Secretariat and the UofG (on behalf of ARIO).

  Client Service Standards ARIO participates in periodic client service standards review as part of RIB.

Appendix A - Strategic Recommendations to the Minister

ARIO presented the following recommendations to the former Minister of Agriculture, Food and Rural Affairs "Defining an Infrastructure Strategy for Agri-Food and Rural Research, Discovery, Adaptation and Commercialization in Ontario" in 2008.

Recommendation 1

ARIO endorses a new infrastructure vision, mission and principles to guide the implementation and communication of the Infrastructure Strategy

Vision: Ontario has an internationally recognized, world-leading, integrated infrastructure system that is cohesively coordinated to support agri-food and rural research, discovery, adaptation and commercialization.

Mission: ARIO's mission is to facilitate leadership and investment in research infrastructure that is fundamental to the enhancement of Ontario's rural and agri-food value chain.

Guiding Principles: ARIO's leadership in agri-food and rural research infrastructure investment will be guided by the following principles:

  • All recommendations and actions are taken to establish Ontario as having a world-leading integrated system (human and physical capacity) for agri-food research, discovery, adaptation and commercialization,
  • Investment in the system infrastructure must create tangible value for participants in the agri-food sector,
  • Investment in the system infrastructure must provide value to the broader public,
  • Investment in the system infrastructure will be done in close connection with the private sector to assure that the research leads to market-driven products.

Recommendation 2

ARIO will begin a process of developing a network of up to five regionally-led sector-oriented centres (Regional Agri-Food Research and Discovery Centres)

  • Challenging regions across the province to develop concepts for regionally/sector-championed and supported centres for agri-food research, discovery, adaptation and commercialization.

Requiring strong, committed, visionary leaders and teams for driving these ideas forward (champions)

Recommendation 3

Working with champions, develop a purpose and focus for each centre

  • Each centre will:
    • Advance research and innovation (research)
    • Generate new ideas and bring them to market (value-added)
    • Be a visible hub for regional and community activity (community)
  • Centres will share in the direction of effort and results, providing regionally-championed, sector-oriented solutions.

Recommendation 4

Establish logical groups and relationships to create appropriate models

  • Centres will link to the UofG's hub of basic research and knowledge translation, leveraging off OMAFRA's sustained commitment through the new Partnership Agreement,
  • Champions will define the infrastructure requirements to support the value-added vision for agri-food research, discovery, adaptation and commercialization in Ontario, expecting that they include provincial, federal and other infrastructure capacity.

Recommendation 5

Establish parameters by which OMAFRA and ARIO shepherd and support centres

  • Confirm ongoing government role (emphasis may vary and evolve over time):
    • Continue to set strategic direction
    • Continue to provide core funding support
    • Continue to provide regional and technical support
  • Sponsor the creation of new partnerships across governments, with universities, research institutions and the private sector, where appropriate.

Recommendation 6

Actively pursue involvement of federal government, other institutions and the private sector to ensure that existing provincial, federal and regional infrastructure and capabilities are considered together and to encourage collaborative approaches to common issues. This is to occur throughout the process.

Appendix B - Statement of Investment Policy

General

This Statement of Investment Policy expresses the investment objectives and constraints of the ARIO. In addition to providing a framework for general direction of the portfolio, it provides a basis upon which to periodically review and evaluate portfolio performance relative to appropriate asset class benchmarks.

Investment Objectives

The portfolio shall be managed to meet the following objectives (in priority order listed):

  1. Ensure safety of capital over a 1 to 3 year time horizon by investing in high quality fixed income securities, including government bonds and/or professionally-managed pension level bond portfolios,
  2. Provide liquidity, with a significant portion of the portfolio available to adequately meet short-term (up to 1 year) individual program and capital reinvestment cash flow requirements. Investments may include Treasury Bills, Government of Canada/Provincial bonds or coupons, and Bankers Acceptance Paper maturing within one year.
  3. Maximize the rate of return on the portfolio recognizing the constraints imposed by i and ii above

Investment Constraints

Consistent with both the Trustee Act and the Financial Administration Act, the following securities are examples of eligible investments for the ARIO portfolio:

  1. Federal Government Treasury Bills and Bonds,
  2. Provincial Government Treasury Bills and Bonds
  3. Instruments offered by the five major chartered banks, namely, Royal Bank, TD Canada Trust, Bank of Montreal, Canadian Imperial Bank of Commerce and Bank of Nova Scotia including GICs, Term Deposits and Bankers Acceptances (note: investments can be greater than the $60,000 CDIC limit).

Diversification

The Portfolio should be diversified, within constraints of ARIO investment policy, to reduce risk to capital.

Performance Objectives

The performance objectives of each element of the portfolio is to equal the appropriate market benchmark index over a full market cycle, namely, 1-3 years. *Note: this goal is ambitious given that the ARIO portfolio(s) are constrained i.e. Canadian corporate bonds are not eligible investments but are included in the benchmark index, and due to high cash flow demand Cash maturities may average less than 90 days.

Investment Advisor

ARIO shall engage the services of a professional investment firm for investment advice through a competitive process.

ARIO Comptroller

The ARIO Comptroller (currently Manager, Corporate Controllership in the Ministry) shall have responsibility to ensure the Statement of Investment Policy is adhered to.

Reporting

The investment advisor shall prepare and provide detailed monthly statements showing the composition of the portfolio at month end and shall report all transactions during the month.

A comprehensive portfolio review and performance evaluation shall occur annually including performance of the portfolio, as well as updates on the current and future economic outlook and investment strategy.

All fees billed shall be fully disclosed, transparent and included in the monthly/quarterly report as they occur.

Review of Investment Policy

The ARIO investment policy shall be reviewed as required.

Appendix C - ARIO Proforma Financial Statements (2014-15 - 2017-18)

Agricultural Research Institute of Ontario (ARIO) - 2015-16 RbP - Forecast Proforma Statement of Financial Position

Assets 2014-15 Opening (April 1, 2014) 2014-15 Transactions 2014-15 End Balance (Mar 31, 2015) 2015-16 2016-17 2017-18
Cash
1,494,683 396,090 1,890,773 2,589,773 3,597,773 4,966,773
Temporary Investments 29,856,175 8,000,000 37,856,175 18,874,775 18,874,775 18,874,775
Accounts Receivable 154,906   154,906 154,906 154,906 154,906
Capital Assets under construction
22,155,506 2,500,000 24,655,506 19,081,400 26,681,400 26,681,400
Capital Assets - Net (Note 1) 59,059,056 -2,394,158 56,664,898 99,522,358 101,224,312 97,926,266
Total Assets 112,720,326 8,501,932 121,222,258 140,223,212 150,533,166 148,604,120

 

Liabilities 2014-15 Opening (April 1, 2014) 2014-15 Transactions 2014-15 End Balance (Mar 31, 2015) 2015-16 2016-17 2017-18
Accounts Payable 1,736,885   1,736,885 1,736,885 1,736,885 1,736,885
Holdbacks 458,609   458,609 458,609 458,609 458,609
Deferred Revenue 381,091   381,091 381,091 381,091 381,091
Sub Total 2,576,585 0 2,576,585 2,576,585 2,576,585 2,576,585
Deferred Capital Contribution - Original Infra. Tfr (Notes 1d) 32,188,072 -2,394,158 29,793,914 26,495,868 23,197,822 19,899,776
Deferred Capital Contribution - Mission 2050 - Prov Funding (Note 1e) 49,273,486 10,500,000 59,773,486 59,773,486 64,773,486 64,773,486
Deferred Capital Contribution - Mission 2050 - Private Funding (Note 1e)    
-
11,600,000 14,200,000 14,200,000
Deferred Capital Contribution - Research Cluster Centres - Prov Funding
   
-
-
-
-
Deferred Capital Contribution - Other Investment - Provincial Funding   0
-
-
-
-
Sub Total 81,461,558 8,105,842 89,567,400 97,869,354 102,171,308 98,873,262
Total Liabilities 84,038,143 8,105,842 92,143,985 100,445,939 104,747,893 101,449,847

 

Equity 2014-15 Opening (April 1, 2014) 2014-15 Transactions 2014-15 End Balance (Mar 31, 2015) 2015-16 2016-17 2017-18
Fund Balances
8,879,681 396,090 9,275,771 9,974,771 10,982,771 12,351,771
Unclaimed Expenditures (Research Programs) 5,798,706   5,798,706 5,798,706 5,798,706 5,798,706
Accumulated Remeasurement Losses -33,487   -33,487 -33,487 -33,487 -33,487
Contributed Equity (Note 1d) 14,037,283   14,037,283 24,037,283 29,037,283 29,037,283
Sub Total 28,682,183 396,090 29,078,273 39,777,273 45,785,273 47,154,273
Total Liabilities and Equity 112,720,326 8,501,932 121,222,258 140,223,212 150,533,166 148,604,120

Notes:

2014-15
Province will provide $10M, $2M for GTI and $8M for GTI/Beef Barn that will be commenced in 2015-16. $8M deposited into Temp Invest.

2015-16
Stage 1 funding $10.981M moved from temporary investments and applied to capital assets under construction

Of the $10.51M provided by the government, $10M to be used to purchase land, added to capital assets and contributed equity
Private funding of $4.0M expected in 2014-15 forecasted to be received in 2015-16 and added to capital assets under construction
$7.6M private investment applied to capital under construction
Dairy barn and other constructed assets under construction are completed and put into service. Moved $26.155M to capital assets

2016-17
Government funding of $10.51M , $5M applied to capital under construction
Land purchased for $5M and added to capital assets and contributed surplus


Agricultural Research Institute of Ontario (ARIO) - 2015-16 RbP - Forecast - Details regarding Capital Investment and Amortization (Buildings Only)

2014-15

  Opening Investment Capitalized Amortization Closing
Colleges
38,410,502       38,410,502
Research Stations 22,037,911       22,037,911
Accumulated Amortization - Initial Transfer
-15,458,283     -2,394,158 -17,852,441
Accumulated Amortization - Additional Investment
0     0 0
Subtotal 44,990,130
0 0 -2,394,158 42,595,972
Livestock / Energy / Environment (Elora) 22,155,506 2,500,000   N/A 24,655,506
Additional Infrastructure - Other Sources       N/A 0
Total 67,145,636 2,500,000 0 -2,394,158 67,251,478
Total - Accumulated Amortization -15,458,283   0 -2,394,158 -17,852,441

2015-16

  Opening Investment Capitalized Amortization Closing
Colleges
38,410,502       38,410,502
Research Stations 22,037,911
      22,037,911
Accumulated Amortization - Initial Transfer
-17,852,441     -3,298,046 -21,150,487
Accumulated Amortization - Additional Investment
0     0 0
Subtotal 42,595,972 0 0 -3,298,046 39,297,926
Livestock / Energy / Environment (Elora)
24,655,506 30,581,400 -36,155,506 N/A 19,081,400
Additional Infrastructure - Other Sources 0     N/A 0
Total 67,251,478 30,581,400 -36,155,506 -3,298,046 58,379,326
Total - Accumulated Amortization -17,852,441   0 -3,298,046 -21,150,487

2016-17

  Opening Investment Capitalized Amortization Closing
Colleges

38,410,502

      38,410,502
Research Stations 22,037,911       22,037,911
Accumulated Amortization - Initial Transfer -21,150,487     -3,298,046 -24,448,533
Accumulated Amortization - Additional Investment
0     0 0
Subtotal 39,297,926 0 0 -3,298,046 35,999,880
Livestock / Energy / Environment (Elora) 19,081,400 7,600,000   N/A 26,681,400
Additional Infrastructure - Other Sources
0     N/A 0
Total 58,379,326 7,600,000 0 -3,298,046 62,681,280
Total - Accumulated Amortization -21,150,487   0 -3,298,046 -24,448,533

2017-18

  Opening Investment Capitalized Amortization Closing
Colleges 38,410,502       38,410,502
Research Stations 22,037,911       22,037,911
Accumulated Amortization - Initial Transfer -24,448,533     -3,298,046 -27,746,579
Accumulated Amortization - Additional Investment
0     0 0
Subtotal 35,999,880 0 0 -3,298,046 32,701,834
Livestock / Energy / Environment (Elora) 26,681,400 0   0 26,681,400
Total
62,681,280     -3,298,046 59,383,234
Total - Accumulated Amortization -24,448,533   0 -3,298,046 -27,746,579

Agricultural Research Institute of Ontario 2015-16 RbP Forecast for the Year Ended March 31

Revenue

Research
 

Full Fiscal Year (12 months)

2015-16 Plan

2016-17 Outlook

2017-18 Outlook

Grants - Provincial

2,450,000

2,450,000

2,650,000
2,650,000

Grants - Federal


 

   
Grants - Other
378,000
378,000
378,000
378,000
Intellectual Property

1,259,343

900,000

900,000 900,000

Sub Total

4,087,343

4,087,343

4,087,343
4,087,343
Property
Grants - Provincial - Minor Capital
4,500,000 4,000,000 4,000,000 4,000,000
Rental income - Provincial
830,176
860,000
865,000
870,000
Rental income - Private industry
700,422
710,000
720,000 730,000
Operations and Maintenance - Provincial
0 0 0 0
Operations and Maintenance - Private industry
0 0 0 0
Transfer payments - payments in lieu of taxes
750,000
750,000
750,000
750,000
Payments in lieu of taxes - IO
82,356 82,000
82,000
82,000
Payments in lieu of taxes - UG and Vineland
170,453 118,000 118,000 118,000
Amortization of deferred capital contribution
2,394,158 3,298,046 3,298,046 3,298,046
Sub Total 9,427,565
9,818,046 9,833,046 9,848,046
Other
Other expenses
0 0 0 0
Investment income
115,659 151,000 145,000 141,000
Sub Total 115,659 151,000 145,000 141,000
Total Revenues (A)
13,630,567 13,697,046 13,906,046 13,917,046

Expenditures

Research
  Full Fiscal Year (12 months) 2015-16 Plan 2016-17 Outlook 2017-18 Outlook
Research project\program
3,382,381 3,400,000 3,300,000 2,950,000
Intellectual Property
918,044 590,000 590,000 590,000
Sub Total 4,300,425 3,990,000 3,890,000 3,540,000
Property
Payments in lieu of taxes
983,069 890,000 890,000 890,000
Minor capital 4,736,715 4,000,000 4,000,000 4,000,000
Operations and maintenance
820,000 820,000 820,000 820,000
Amortization of capital assets
2,394,158 3,298,046 3,298,046 3,298,046
Sub Total 8,933,942 9,008,046 9,008,046 9,008,046
Other
Other expenses 110
0 0 0
Write down of investment 0 0 0 0
Sub Total 110 0 0 0
Total Expenditures (B) 13,234,477 12,998,046 12,898,046 12,548,046
Net Surplus (Deficit) (A - B) 396,090 699,000 1,008,000 1,369,000

Agricultural Research Institute of Ontario (ARIO) for the Year Ended March 31 - Notes to the Proforma Financial Statements

1. Capital Assets 2014-15

  Open. Balance Additions Amortization Balance
Land
Original ARIO Property 9,793     9,793
Colleges 3,092,104     3,092,104
Research Stations 10,967,029     10,967,029
Total Land 14,068,926     14,068,926
Buildings
Colleges 38,410,502     38,410,502
Research Stations 22,037,911     22,037,911
Livestock / Energy / Environmental (Elora) - Prov        
Other Infrastructure        
Total Buildings 60,448,413     60,448,413
Less: Accumulated Amortization -15,458,283   -2,394,158 -17,852,441
Net Book Value - Bldgs 44,990,130   -2,394,158 42,595,972
Total 59,059,056   -2,394,158 56,664,898

Agricultural Research Institute of Ontario (ARIO) for the Year Ended March 31 - Notes to the Proforma Financial Statements

1. Capital Assets 2014-15

  2015-16 2016-17 2017-18
Land
Original ARIO Property 9,793 9,793 9,793
Colleges 3,092,104 3,092,104 3,092,104
Research Stations 20,967,029 25,967,029 25,967,029
Total Land 24,068,926 29,068,926 29,068,926
Buildings
Colleges 38,410,502 38,410,502 38,410,502
Research Stations 22,037,911 22,037,911 22,037,911
Livestock / Energy / Environmental (Elora) - Prov 36,155,506 36,155,506 36,155,506
Other Infrastructure      
Total Buildings 96,603,919 96,603,919 96,603,919
Less: Accumulated Amortization -21,150,487 -24,448,533 -27,746,579
Net Book Value - Bldgs 75,453,432 72,155,386 68,857,340
Total 99,522,358 101,224,312 97,926,266

Notes and Assumptions:

(a) Legal transfer of Colleges and Research Stations was completed in March 2007 in the amount of $60.9M. The total transfer amount was based on the net book value of land and buildings held by ORC on behalf of the Ministry of Public Infrastructure and Renewal.


(b) Ongoing renewal and rehabilitation + base building investments to all infrastructure are costs that represent total Capital Transfer Payment received for each fiscal year. Ongoing renewal and
base building expenditures are funded by OMAFRA's TP - Capital. They represent the costs to repair structures, purchase of program-related equipment and leasehold improvements and other upgrades to infrastructure, which are currently not capitalized by the Provincial Govt. Therefore, they are expensed for this exercise instead of capitalized.


(c) Annual amortization for buildings estimated at $2.050 M for existing transferred properties. Amortization for new/additional buildings is calculated at annual cost spread over 40 years estimated useful life. Example: $3.0M/40 years = $75k per year


(d) Transfer of Capital Assets from MGS (ORC) to ARIO results in the following balances:

Note: Balance of Deferred Revenue is reduced by $2.16M annually, which represents the estimated annual amortization charged on the buildings originally transferred/donated by MBS.

Original Transfer (06/07):

  Colleges Research Stations Total
Land
3,099,400
10,979,680
14,079,080
Buildings
27,423,615
19,493,512
46,917,127
Acc Amort'n
0
0
0
Net Bldgs
(Also "Def Revenue")
27,423,615
19,493,512
46,917,127
Total
30,523,015
30,473,192
60,996,207

(e) Elora Livestock Researcn and Innovation Centre at Elora (Mission 2050) - Phase 1 of the Livestock Centre located in Elora, Ontario should be completed (tentatively) by end of the 2014-15 fiscal year or early in 2015-16 and in use shortly afterwards. Therefore, the building will be amortized beginning in 2015-16 with an estimated useful life of 40 years. Amortization is estimated at a total of $675k per year ($27 million / 40 years). Deferred Capital Contributions will also be amortized at the same rate. Provincial funding of $22.15M will be amortized at $550k per year...and Private funding of $5M will be amortized at $125k per year.

2. Balance Sheet

(a) All current ARIO trust funds and related accounts are included in these proforma financial statements.

3. Statement of Revenues and Expenditures

(a) Revenues - Revenues include annual Transfer Payments (TP's) for operations and capital improvements from the Provincial Government as well as contributions from non-provincial sources such as the Federal Govt. and other private agencies/individuals as needed.

(b) Expenditures - Assumed that OMAFRA annual allocations will fund the cost of administration of ARIO (i.e. salaries/wages, employee benefits, ODOE) from a human resources perspective. The actual costs of additions/betterments to the capital assets (land and bldgs) is not shown as an expenditure, but is added to the balance of Capital Assets as shown on the Balance Sheet.

(c) Research/Program funds: include revenues and expenditures for all current research funds and programs, including the following:

  • Plant Germplasm Royalties
  • Technology Royalties
  • New Directions in Research
  • Food Safety

Appendix D - Agency Risk Management Plan (Updated April 2015)

ARIO Risk Management Plan Summary

Risk Category: Strategic

Risk Statement Existing Risk Mitigation Activities Risk Priorit-
ization
Risk Priorit-
ization
Risk Priorit-
ization
Risk Management Plan
    Score
Rating Rationale  
Strategic direction /objectives / mandate not clearly understood by external stakeholders and some internal ministry staff Communications plans for major initiatives (e.g. Infrastructure Strategy) have been developed and/or refined for all relevant stakeholders. Discussions between external stakeholders and ARIO members continue to take place as needed 9 Low See Scores Option Chosen: Accept Rationale: Risk is low and is mitigated on an ongoing basis
Inadequate funding for programs and capital infrastructure
ARIO provides advice to the ministry on program resource requirements and allocation. Decisions on allocations are the responsibility of ministry. Program: Continue to identify allocation needs through the annual Results-based Planning (RbP) process, leverage additional funds from other levels of government (GF2), industry partners, & academia. Infrastructure: Continue to identify capital allocation needs through the annual Results-based Planning process, leverage additional funds from other levels of government, industry partners & academia. As part of 2014-15 PRRT (RbP) process $15 million re profiled to fiscal 2018 and 2019 17 Medium Key component of long term research program effectiveness
Option Chosen: Accept Rationale: No choice but to continue to inform & advocate to senior management through annual RbP
Inability to generate stakeholder support for the strategy to revitalize the agri-food research infrastructure system Have now established industry support for Infrastructure Strategy, including a joint committee in the livestock sector that is working on new governance and funding models. Turfgrass industry has notionally accepted the need for industry commitment to rebuild GTI. Continued identification of needs and progress through OPS annual RbP process
14

Low
Have established financial contribution parameters that have been accepted by industry groups. Risk Option: Accept Rationale: Industry has helped to establish a precedent by committing to contributing 20% of the cost of the new Elora dairy research facility now under construction. Industry contribution will be one of the determinants in future decisions on which projects to support.
Advice and recommendations on research needs and resource allocation not reflective of sector needs The advice provided to the Minister by ARIO is an important part of setting the direction & resource allocation for agricultural and agri-food related research in the province. Ministry staff work closely with and assist ARIO members in developing recommendations made by ARIO to the ministry. ARIO only provides advice to the Minister. All decisions on research direction & resource allocation are the responsibility of the ministry & take into account ARIO recommendations & other stakeholder recommendations / feedback. 6
Low See Scores Risk Option: Accept Rationale: ARIO provides advice on research needs and resource allocation & is only 1 component of the decision making process. All decision making authority rests with the ministry. ARIO is only one part of the advice informing priority setting & resource allocation.

Risk Category: Accountability/Governance

Risk Statement Existing Risk Mitigation Activities Risk Prioritization Risk Prioritization Risk Prioritization Risk Management Plan
  Score
Rating Rationale  
Perceived conflict of interest re governance structure with respect to the current dual role of Director of Research/ CAO and dual role of staff secretariat The Director of Research of ARIO is appointed under the ARIO Act to administer the business and affairs of the Institute. The Director of Research is the ADM of Research & Corporate Services Division. Continued training & orientation of ARIO membersEnsure ministry staff & ARIO members are familiar with ARIO-OMAFRA Memorandum of Understanding (MOU) which details all roles & responsibilities as defined in the ARIO Act 14 Low
Role of ARIO has been established for a very long time.
Risk Option: Accept Rationale: No other option
Central agencies understanding of ARIO agency's role and structure Continued discussions with central agency staff to communicate role of ministry staff, ARIO role & governance structures & relationship to ministry 14 Low
Continue to work with and educate central agency staff.
Risk Option: Accept Rationale:
No other option. Mitigation is continual & ongoing
Inability to maintain sufficient and qualified number of members, as well as timely appointments to fill vacancies in membership Quorum for meetings is defined by the ARIO Act as 50% of the appointed members The ARIO Act allows members to continue to serve past the end of their term until they are replaced.Appointments are at the sole discretion of the Minister.Ensure appropriate advertising of open positions through the PAS system. 6 Low Some difficulty in addressing priorities due to gaps in membership expertise. e.g food processing Risk Option:
Mitigate Rationale: Continued focused effort to identify good candidates that fill gaps in the membership.
Member roles and responsibilities not clearly understood by the members Ensure all current and new members are provided with orientation materials and appropriate training is provided. Ensure program staff & members are familiar with MOU which details all roles & responsibilities as defined in the ARIO Act 8 Low See Score Risk Option: Accept Rationale: New member training and role of ARIO often discussed at meetings
Inherent government liability in ARIO agreements (e.g. leases, research funding etc.) allowing exposure to legal actions Legal review of all agreements before they are finalized to ensure liabilities are minimized where possible. Standardization of agreements where possible 8 Low Ongoing work with legal on all agreements - research and tenant Risk Option: Accept Rationale: Mitigation is continual & ongoing through extensive reliance on Legal & BPFMB on any and all agreements etc.

Risk Category: Operational

Risk Statement Existing Risk Mitigation Activities Risk Prioritization Risk Prioritization Risk Prioritization Risk Management Plan
    Score Rating Rationale  
Inability to effectively & efficiently operate & manage the infrastructure portfolio. All of the ARIO owned properties are operated & managed under agreements with third parties. The University of Guelph operates & manages all of the properties except the Vineland research station which is operated & managed by VRIC. The risk is low given the UofG's experience in managing the same properties for many years. The licence agreement between ARIO, UofG & the ministry & the management agreement between ARIO & VRIC details all roles and responsibilities of each party for operation, management and maintenance of the properties. The UofG & VRIC submit an annual prioritized capital plan that details need property maintenance & repairs. Decisions on funding are the responsibility of ARIO.There is a very good working relationship between ARIO, UofG, VRIC and the ministry.Notice requirements in the licence agreement and management agreement provide ARIO adequate time to contract a replacement property manager if required. ARIO Secretariat (Research and Innovation Branch) is governed by OMAFRA emergency and business continuity planning which is considered adequate for ARIO purposes. 13 Low
Ongoing work with service providers (UofG & VRIC). Issues identified and dealt with on as they arise.
Risk Option: Accept Rationale: Issues are identified & managed on an ongoing daily basisRelationship with service providers well established and very strong (UofG and VRIC)
Inadequate business continuity plans ARIO Secretariat (Research and Innovation Branch) is governed by OMAFRA emergency and business continuity planning which is considered adequate for ARIO purposes. 6 Low All services are provided to ARIO by ministry staff in RIB. RIB/ ministry contingency plans are adequate
Risk Option: Accept Rationale: All facilities have individual emergency management procedures/plans
Tenant or delivery agent activities which result in changes in PIL/Tax and assessment Tenants and delivery agents are carefully screened to ensure that they are compatible with ARIO's mandate and direction. Sublet agreements require Director of Research approvalAll new leases/ licences/ operating agreements contain a clause that states that if assessments/PILs increase as a result of the tenant/occupant's activities they are liable for the increase.Approval of new buildings to consider operating budget impacts including PILs. In the case of a tenant owned building on ARIO property a land use agreement will be completed to spell out responsibilities & cost allocation. 14 Low Overall financial implications are minor. Risk Option: Accept Rationale: No other choice. Overall risk/ impact is lowMost tenant agreements make tenant financially responsible.

Risk Category: Information Technology and Infrastructure

Risk Statement Existing Risk Mitigation Activities Risk Prioritization Risk Prioritization Risk Prioritization Risk Management Plan
    Score Rating Rationale  
Potential damage or destruction of property The risk of loss is low. ARIO has owned the research properties since 2007. There are no significant property losses or destruction on record during ARIO's ownership or during the previous Ontario government ownership of these properties. Leases and occupancy agreements require tenants (including the UofG) to carry adequate liability insurance. Tenants are required to include ARIO and the government as additional insureds on their policies.ARIO as an agency of the government is included in the government of Ontario's self insurance scheme per Ontario Government policy. If ARIO's existing resources are insufficient a request for funding for repair of damage would be made to the Ministry.Lease revenue and capital TP are available to assist with repair of major and uninsured damage when it occurs. 13 Low See mitigation activities. ARIO as a government agency is included in the government's self insurance scheme per government policy. Risk Option: Accept Rationale: Property risks (theft, fire vandalism) are well managed. Each site has individualized emergency management procedures/plans. Service provider (UofG) very responsive to any items that come up.
Lack of process documentation and / or knowledge transfer (including cross training) Implement plans to ensure cross-training of staff occurs when needed. Annual review of branch plans will pinpoint any required improvements in documentation for ARIO purposes. 14 Low Continuously working with service providers. Risk Option: Mitigate Rationale: RIB is focusing on developing succession plans.RIB is in the process of implementing a pilot KMS.

Risk Category: Other

Risk Statement Existing Risk Mitigation Activities Risk Prioritization Risk Prioritization Risk Prioritization Risk Management Plan
  Score
Rating Rationale  
Potential financial losses incurred on investments Funds are invested with a "conservative" strategy as required by the Financial Administration Act to safeguard form capital losses of public funds. Investment management firm (RBC as of April 2015) fees are based on the value of investments, so the firm has incentive to maximize value and returns and avoid losses. 11
Low

Risk Option: Mitigate Rationale: Investments are managed externally by a profession firm with oversight from RIB staff.Investment plan is very conservative focused on capital preservation.

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For more information:
E-mail: research.omafra@ontario.ca
Author: ARIO liaison
Creation Date: 26 November 2015
Last Reviewed: 26 November 2015