Annual Report 2013-2014 of the Agricultural Research Institute of Ontario (ARIO)
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The Government of Ontario's priorities during 2013-14 included Investing in Infrastructure, Investing in People, and Helping Business Succeed.
The Ministry of Agriculture and Food [prior to January 2013 and currently as of July 2014 known as the Ministry of Agriculture, Food and Rural Affairs], works to advance the government's priorities through its efforts to promote a more competitive and productive agri-food and agri-products sector, economic growth and opportunities for rural Ontario.
The Ontario Ministry of Agriculture and Food ["OMAF"] invests significantly in agri-food research, education, technology transfer and analytical and diagnostic services to achieve their vision. A strategic and coordinated research priority setting system, combined with modern world-class research infrastructure/facilities are keys to delivering research results that help drive innovation.
The Agricultural Research Institute of Ontario ("ARIO"), is a body corporate whose duties and responsibilities are defined within the Agricultural Research Institute of Ontario Act R.S.O. 1990, c A.13. ARIO is an agency of the Crown reporting to the Minister of Agriculture and Food. The ARIO contributes by promoting economic growth, sustainability and profitability of the agri-food and agri-products sector across the entire province by providing strategic advice on research and continuing implementation of the research infrastructure strategy. The ARIO is an important component of the agri-food research and innovation system in the province.
Role of the Agricultural Research Institute of Ontario (ARIO)
ARIO fills a unique role in providing advice on strategic directions for research priorities/activities that contribute to prosperous, competitive and sustainable agricultural, food and rural sectors in Ontario. In addition, ARIO owns the provincial government's agriculture & food research and education infrastructure (currently 17 research stations), and has the responsibility for operating and managing these assets in support of Ontario's agriculture and food sector. The Institute 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 ("the Act"). ARIO's mandate, as defined by the Act, is to select and recommend areas of research for the betterment of agriculture, veterinary medicine and household sciences and to increase production efficiency and marketing of agricultural products by stimulating interest in research.
ARIO mission statement
ARIO, is an Operational Services Agency reporting to the Minister of Agriculture and Food, and is dedicated to the strategic use of science and innovation to enhance the sustainability and profitability of Ontario's agri-food and rural sectors.
2013-14 ARIO Members
ARIO is comprised of up to 15 members appointed by the Minister of Agriculture and Food.
AAFC ex officio representative:
Director of Research, ARIO:
Secretariat support to ARIO is provided by the Research and Innovation Branch staff of OMAF:
The Honourable Jeff Leal
Dear Minister Leal,
I am pleased to submit the 50th annual report of the Agricultural Research Institute of Ontario (ARIO) for the fiscal year April 1, 2013 to March 31, 2014. Over the past year ARIO has seen considerable progress on several significant milestones that are detailed in this annual report.
One of the most visible and important achievements this past year was the start of construction of the new dairy research barn at Elora which is planned for completion in the fall of 2014. This project is the first stage in the redevelopment of the Elora research station and the implementation of the ARIO Infrastructure Strategy.
During the past year ARIO has continued to work to advance the Infrastructure Strategy, build partnerships both across the value chain and between sectors, and improve the industry's understanding of the importance of research and innovation as the way to build and maintain competitive advantage and move the sector forward. The agri-food and agri-products sector continues to be one of the largest manufacturing sectors in the province and remains a cornerstone of Ontario's economic strength and success.
Together, with industry partners and the research community, we can drive targeted research and innovation that will benefit Ontario's economy, position us as a global leader in our sector, and bring high-quality safe agri-food products to the rest of the world.
We are pleased to provide some highlights from the 2013-14 fiscal year for the Agricultural Research Institute of Ontario (ARIO) and agri-food research and innovation in Ontario.
Research Infrastructure Strategy
ARIO's research infrastructure strategy provides an approach for modernizing Ontario's aging network of agri-food and agri-products research infrastructure. ARIO's infrastructure strategy will result in a system of modern, state of the art, integrated, multi-disciplinary research and innovation platforms focused on consumer, market and economic outcomes. Benefits include, driving innovation through the creation of new and value-added products, developing solutions to current and emerging issues, and validating new technologies and approaches to Ontario conditions. ARIO's strategy encourages industry participation and leadership where industry works with government to deliver the sectors highest research priorities and needs. Research and innovation are critical to maintaining and strengthening the agri-food and agri-products sectors competitiveness both provincially and globally. Modernized, relevant research infrastructure enables scientific excellence, knowledge dissemination and industry adoption all of which are necessary to the economic growth of the agri-food and agri-products sector for the province.
Since its recommendations in 2008, ARIO continues to advance the strategy and has achieved several significant milestones. Considerable progress has been made and continues on the first two centres of the modernization strategy for Ontario's network of agri-food and agri-products research; the Vineland Research and Innovation Centre (VRIC) located at the Vineland research station, and the Livestock Research and Innovation Centre at Elora. Construction of the new research greenhouse at Vineland station is expected to begin in the first quarter of 2014-15 and construction of the new dairy facility at Elora is well underway with construction completion expected in the fall of 2014.
Progress continues to be made on the possible future relocation of the Guelph Research Station facilities and programs. We continue to work closely with stakeholders from the Guelph Turfgrass Institute (GTI), the University of Guelph (U of G) the Ministry of Infrastructure (MOI) and its agency Infrastructure Ontario (IO) as there is significant interest by the U of G and GTI to relocate elements of the GTI to the U of G's arboretum.
In addition, industry consultations to identify needs and preliminary development planning continues for up to three additional centres for Bioeconomy, Field Crops, and Food and Health as put forward in ARIO's infrastructure strategy recommendations to the Minister of OMAF.
Construction of the new dairy research facility at the Elora research station began in the summer of 2013 followed by an official launch event in October. Construction was well advanced by the spring of 2014 and is expected to be completed by the fall of 2014.
VRIC is an incorporated research organization. VRIC assumed responsibility from the University of Guelph (U of G) for the operation and management of the Vineland research station effective November 1, 2013.
VRIC has made significant progress in the revitalization of the Vineland research station. In March 2013, VRIC was given approval in principle for the construction of the new greenhouse complex. During 2013-14 VRIC worked to finalize the design and meet the conditions for approval. Final approval and signing of the agreement for the new greenhouse is expected in the first quarter of 2014-15 with the start of construction expected to begin immediately thereafter. Completion is expected in the spring of 2015.
VRIC and ARIO have completed negotiations on a land lease for the land occupied by the former Agriculture and Agri-Food Canada (AAFC) building now owned by VRIC. Approval and a fully signed agreement is expected in the first quarter of 2014-15.
The minor capital program allocates funds across the ARIO portfolio for repairs, life cycle renovations and program-related improvements. The program is funded through an annual transfer payment from OMAF and is supplemented by revenues generated by the ARIO. External stakeholders continue to contribute funding to several of the large renovation and capital projects and to some dedicated research field equipment purchases. The minor capital funding from OMAF continues to allow ARIO to make significant headway in addressing accumulated deferred maintenance and ongoing life cycle building and program maintenance upgrades.
Program focus for the 2013-14 was on completing a number of existing large renovation projects. Safety (human and animal), regulatory, and equipment failure issues that affected building and program operations were addressed on a case by case basis as they arose throughout the year.
The U of G continues to deliver ARIO's annual minor capital program at all locations except the Vineland research station. VRIC has taken over administration of the minor capital program for the Vineland research station as part of their assumption of the responsibility for overall operations and site management.
ARIO supports renewal and refurbishment of the physical infrastructure on its properties and enhancement of capacity through the minor capital program and other funding. The University of Guelph and other stakeholders are strongly encouraged to seek out additional funding to support these construction projects. For example, the $3.8 million Reek building rebuild at Ridgetown completed in 2013-14, was made possible by $2.6 million in contributions from other stakeholders.
ARIO's open research programs (New Directions and Food Safety) continue to be highly responsive to emerging, high priority research needs. For example, 2013-14 saw the launch of a separate New Directions call for proposals related to Bee Health and Best Management Practices in Field Crop Production, to help provide new knowledge related to bee health and the potential role and management of neonicotinoid insecticides. Other exciting research is underway in 2014 related to climate change, rural, antimicrobial resistance and food safety.
The VRIC has become the voice of the horticulture industry in Ontario and their efforts in research priority setting have been very influential in the ministry's priority setting process under the OMAF Research Advisory Network. The Livestock Research Innovation Corporation is likewise engaging their industry partners and will play an increasing role in supporting the ministry's research programming.
The Research Management System (RMS) continues to be an effective platform for research program administration. Several important enhancements this past year include the development of a Subject Matter Specialist Workbench to improve the capture of research project information and support technology transfer across the ministry. In addition, new ways of cataloguing funded research and supporting training and continuous improvement to the RMS software platform have been implemented.
Alfred and Kemptville campuses
In March 2014, the U of G announced that they would be ending diploma education program delivery at the Alfred and Kemptville campuses effective May 2015. This decision may have long term implications for these sites. The province retained two consultants in July 2014 to explore options for sustainable paths forward for each campus. No final decisions will be made until after identification and review of all possible sustainable options.
Rena Hubers was appointed as Director of Research in October 2013 replacing Karen Chan who accepted another assignment in the Ontario public service.
ARIO has no staff of its own. Secretariat support for the institute is provided by ministry staff. A realignment of responsibilities resulted in the transfer of controllership functions to the ministry financial administration staff. As a result of this realignment, Heather Harrison was appointed Comptroller of ARIO replacing Rob Cunnington.
We would like to thank all those who support agri-food research and innovation across the province - industry, academia and various levels of government. Together, we can, and are, making a difference.
This past year saw the start of several key initiatives that will have a significant impact on agri-food research and innovation in Ontario and we look forward to continuing down this path in the year ahead.
Stewart Cressman, Chair
Rena Hubers, Director of Research
The accompanying financial statements of the Agricultural Research Institute of Ontario (ARlO) have been prepared in accordance with Canadian generally accepted accounting principles. Management is responsible for the accuracy, integrity, and objectivity of the information contained in the financial statements.
The preparation of financial statements necessarily involves the use of estimates based on management's best judgment, particularly when transactions affecting the current accounting period cannot be finalized with certainty until future periods. These financial statements have been prepared within reasonable limits of materiality with information available up to and including June 18, 2014.
In discharging its responsibility for the integrity of the financial statements, management maintains financial and management control systems and practices designed to provide reasonable assurance that transactions are authorized, assets are safeguarded, and proper records are maintained.
The financial statements have been examined by RLB LLP, independent external auditors appointed by the Ontario Ministry of Agriculture and Food on behalf of ARlO. The external auditors' responsibility is to express an opinion on whether the financial statements are presented fairly in accordance with generally accepted accounting principles. The Auditors' Report outlines the scope of their examination and opinion.
On behalf of management:
To the members of: Agricultural Research Institute of Ontario
We have audited the accompanying financial statements of Agricultural Research Institute of Ontario, which comprise the statement of financial position as at March 31, 2014 and the statements of revenues and expenditures and changes in fund balances, remeasurement losses and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management's responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of Agricultural Research
Institute of Ontario as at March 31, 2014 and the results of its
operations and its cash flows for the year then ended in accordance
with Canadian public sector accounting standards.
Chartered Accountants, Licensed Public Accountants
As at March 31, 2014
Total liabilities plus net assets
For year ended March 31, 2014
For year ended March 31, 2014
Cash provided by (used in) operating activities
Items not requiring an outlay of cash
Changes in non cash working capital
Cash provided by (used in) investing activities
Net change in cash for the year
The Agricultural Research Institute of Ontario (ARIO) is a non profit corporate body reporting directly to the Ministry of Agriculture and Food (OMAF), formerly the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA). ARIO is a non profit organization within the meaning of the Income Tax Act (Canada) and is exempt from income taxes. It was created by the ARIO Act with specific responsibilities over the co ordination and direction of agricultural research programs in Ontario. These programs relate to a broad range of commodities and disciplines, covering all aspects of the agri food system.
Funding for programs supported by ARIO is available from various sources. The Ontario Government, through the Ministry of Agriculture and Food, is the primary source of funding. The Ontario Government also provides funding for the open research programs. Under the ARIO Act, ARIO may accept grants and donations for research. Other funds usually come from commercial sources (such as agri business, marketing boards, and producer associations) and can be either designated for specific projects or non designated. In addition, with the approval of the Minister of Agriculture and Food, ARIO is able to hold patents and earn royalties on research developments.
All receipts are held in trust by the Director of Research and are allocated in accordance with the terms of the funds.
The current research trust funds managed by the secretariat to ARIO are as follows:
The financial statements have been prepared in accordance with Canadian public sector accounting standards for government not for profit organizations, including the 4200 series of standards, as issued by the Public Sector Accounting Board ("PSAB for Government NPOs") and include the following significant accounting policies:
Basis of accounting
ARIO follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue of the appropriate research trust fund in the year in which the related expenses are incurred. Unrestricted contributions are recognized as revenue of the appropriate research trust fund when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured.
The organization initially measures its financial assets and liabilities at fair value, except for certain non arm's length transactions.
The organization subsequently measures all its financial assets and financial liabilities at amortized cost, except for investments, which are measured at fair value. Changes in fair value are recognized in the statement of remeasurement losses.
Financial assets measured at amortized cost include cash and accounts receivable. Financial liabilities measured at amortized cost include accounts payable and accruals, holdbacks payable, unclaimed expenditures, deferred capital funded contributions and deferred capital contributions.
The organization's financial assets measured at fair value include the investments.
Financial assets measured at amortized cost are tested for impairment when there are indicators of impairment. If an impairment has occurred, the carrying amount of financial assets measured at amortized cost is reduced to the greater of the discounted future cash flows expected or the proceeds that could be realized from the sale of the financial asset. The amount of the write down is recognized in the statement of revenues and expenditures. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in the statement of revenues and expenditures.
The organization recognizes its transaction costs in expenditures in the period incurred. However, financial instruments that will not be subsequently measured at fair value are adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption.
Unclaimed expenditures are defined as the total approved budget for open research projects less expenses incurred to date.
Capital assets are recorded at cost and are amortized using the following annual rates and method: Buildings and components 25 to 40 years straight line.
Impairment of long lived assets
Long lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized when the carrying value exceeds the total undiscounted cash flows expected from their use and eventual disposition. The amount of the impairment loss is determined as the excess of the carrying value of the asset over its fair value.
Deferred capital contributions
Deferred capital contributions are amortized at the same rate as the buildings to which they relate.
Restrictions on the expenditure of funds
The purpose, funding, terms and conditions and duration of each research trust fund are stipulated in the relevant Order in Council, memorandum of understanding or Ministry correspondence.
Use of estimates
The preparation of financial statements in accordance with PSAB for Government NPOs requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Significant areas requiring the use of management estimates and assumptions relate to the valuation of accounts payable and accruals and the useful life of capital assets. Actual results could differ from those estimates.
For certain of ARIO's financial instruments, the carrying amounts
of cash, accounts receivable and accounts payable and accruals,
approximate fair value due to the short term maturity of these financial
ARIO's financial instruments are all classified as Level 1 as at March 31, 2014 and 2013.
There were no transfers in or out of Level 1 for the years ended March 31, 2014 and 2013.
Market price risk is the risk that the value of an instrument will fluctuate as a result of changes in market prices, whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market. As all of ARIO's financial instruments are carried at fair value with fair value changes recognized in the statement of remeasurement losses, all changes in market conditions will directly affect the increase (decrease) in accumulated remeasurement losses. Market price risk is managed by the Investment Manager through construction of a diversified portfolio of instruments traded on various markets and across various industries.
A 1% increase (decrease) in the value of the investments would increase (decrease) the asset value and the change in unrealized gains in investments by $298,562 (2013 $123,275). The price of the investments is affected by changes in market values, foreign exchange rates and interest rates impacting the underlying financial instruments held within the individual investments managed by the Investment Manager.
Interest rate risk refers to the adverse consequences of interest rate changes on the Institute's cash flows, financial position and income. Interest rate changes have an indirect impact on the investment assets in ARIO. ARIO uses investment diversification to manage this risk.
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.
All of ARIO's fixed income securities are considered to be readily realizable as they can be quickly liquidated at amounts close to their fair value in order to meet liquidity requirements.
Foreign currency risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. ARIO is not exposed to significant foreign currency risk.
Credit risk is the risk that a customer or counterpart may be unable or unwilling to meet a commitment that it has entered into with ARIO. ARIO is not exposed to significant credit risk.
Contributed assets of $14,037,283 (2013 - $14,037,283) are recorded in the Infrastructure Fund and represent the cost of the land transferred to ARIO from the Government of Ontario.
Total land and building assets
As at March 6, 2007, the titles for capital assets (land and buildings) with a carrying value of approximately $60.9 million were transferred to ARIO from the Government of Ontario. Carrying value is being used as the transfer value since the transfer took place between non arm's length parties, is non monetary in nature and does not have commercial substance. As an agency of the Government of Ontario, ARIO reports these capital assets (and other assets and liabilities) in consolidation with the Ministry of Agriculture and Food on an annual basis.
During the year, capital additions with a carrying value of $1,200,000 (2013 $72,294) were contributed to the organization by external stakeholders. Carrying value is determined as the cost of the contributed assets to the contributors which approximates fair value due to the relatively short period between the date of purchase by the contributor and the asset being contributed to the organization.
Deferred capital contributions relating to construction of capital funded projects represents the amount of grants and other restricted funding received by ARIO for construction projects.
The funding sources are as follows:
Deferred capital contributions represent the unamortized amount of the net book value of the buildings transferred to ARIO from the Government of Ontario in 2007. The amortization of capital contributions is recorded as revenue in the statement of revenues and expenditures. The changes in the deferred capital contributions are as follows:
Fund balances ($)
The following grants have been received from the Ontario Ministry of Agriculture, Food and Rural Affairs and successor ministries:
The following Provincial Government capital transfer payment grants have been partially capitalized as Deferred Capital Funded Contributions and partially recognized as Revenues as follows:
Elora Livestock Environmental and Energy Complex
As at March 31, 2014
Total liabilities plus fund balances
For the year ended March 31, 2014
The annual multi-year business plan serves as a framework for ARIO's business activities. Four key areas of activity continue to be:
The ARIO, with the University of Guelph (U of G) as its primary service provider, continues to provide effective and efficient property management of the province's agri-food research infrastructure (6,500 acres 300+ buildings and over 45 tenants) providing the platforms necessary to support implementation of agri-food research programs and projects addressing ministry and industry partner priorities.
ARIO as a crown agency is exempt from paying municipal property tax on its portfolio and makes payments in lieu of taxes to the municipalities in recognition of municipal services provided. The municipality filed an appeal of the assessment of the Vineland research station. This appeal is likely to have a minor impact on the ARIO's payment in lieu of tax obligations overall.
Effective November 1, 2013 VRIC assumed the responsibility for the operation and management of the Vineland research station from the U of G.
The Order in Council that authorized the transfer of the ownership of the AAFC owned building at the Vineland research station from AAFC to VRIC in 2011 provided that VRIC would occupy the land under the same terms and conditions as AAFC and required that ARIO and VRIC complete a lease agreement for the use of the land within five (5) years. VRIC and ARIO have completed negotiations on a land lease with approval and signature expected in the first quarter of 2014-15.
|Author:||Wilma Macfarlane, ARIO Liason/RIB|
|Creation Date:||10 February 2015|
|Last Reviewed:||26 May 2015|