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Better Farming Ontario magazine is published 11 times per year. After each edition is published, we share featured articles online.


Changes proposed for grain financial protection program

Saturday, February 11, 2012

by SUSAN MANN

A temporary provision to allow deferred payments under the Ontario Grain Financial Protection program was slated to expire in July but proposed amendments to the program’s regulations will make it permanent.

It’s one of several amendments the Ontario Ministry of Agriculture, Food and Rural Affairs is proposing to the program’s regulations. Grain Farmers of Ontario and the Ontario Agri Business Association requested the changes. Other stakeholder groups support the amendments.

The Grain Financial Protection program was established in 1984 to reduce the risk of a producer loss if a licensed buyer defaults. It also protects grain owners who store their grain in a licensed elevator.

A full list appears on the province’s regulatory registry. Public comments will be accepted until March 15.

Other amendments include:

  • Extending the payment requirement for dealers on sales from storage to five days instead of the current timeline that payments must be made by 2 p.m. the next day. This is being done to better reflect industry practice.
  • Reducing the initial payment amount from dealers to producers on basis contracts to 60 per cent from 75 per cent to better manage the risks and volatility in the marketplace.
  • Increasing the compensation for canola and soybean producers.
  • Allowing compensation related to deferred payments on a sliding scale.

There are two parts to the protection program. One is the annual licensing of grain dealers and elevator operators under the Grains Act. To get a license, dealers must prove financial responsibility and/or post security.

The other part is the Grain Financial Protection Board, which administers the compensation funds that are supported by a mandatory check-off fee. As of March 31, 2011 the funds’ combined balance was $13.2 million. The board also adjudicates the validity of any claims and determines how much a producer is eligible to receive.

The proposed changes won’t cost government any additional money and won’t result in any measurable impact on the actuarial soundness of the funds, it says in the background documents to the amendments. BF

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