Fee changes proposed for Ontario's grain financial protection program

Friday, May 10, 2013

by SUSAN MANN

Grain Farmers of Ontario supports the Ontario agriculture ministry’s proposed fee changes to the Grain Financial Protection program.

The proposal includes:

• An eight-cent per tonne fee increase for soybean farmers to 10 cents per tonne from two cents per tonne.
• A five-cent per tonne decrease in fees for wheat farmers to five cents per tonne from 10 cents per tonne.
• No changes in fees for grain corn and canola growers.

Barry Senft, CEO of Grain Farmers of Ontario, says overall the price changes aren’t significant “in these times of current commodity prices.” The impact on farmers with all of the combined changes taken into account depends on the amount of their soybean production compared to wheat.

The changes are being proposed in response to an actuarial study done in 2011 to establish if the funds were at the appropriate amounts to operate the program effectively.

With increased commodity prices, the actuarial review found the soybean fund was slightly underfunded, he says, and that’s why the small soybean fee increase is needed. For wheat, the fund was found to be slightly overfunded and that’s why there is a reduction in fees for farmers in that fund.

“In the case of a failure, the worst thing that producers would want is a fund that was underfunded and not able to reimburse the producer,” he says.

The Grain Financial Protection program was established in 1984 to reduce farmers’ risk of financial loss if a licensed grain buyer defaults on payment. It also protects grain owners who store their products at licensed grain elevators.

The mandatory producer fees ensure there is enough money in the fund to pay valid claims. If a licensed grain buyer defaults on a payment, an agriculture minister-appointed board of industry representatives determines if a farmer’s claim is valid and how much they’re eligible to receive.

In addition to administering the producer compensation fund, the program issues licenses to grain dealers and elevator operators who can prove they are financially responsible.

Senft says the grain financial protection program isn’t used very often. “It’s there as an insurance program.”

Farmers can comment on the proposed fee changes until May 17. The proposal is on the provincial government’s Service Ontario regulatory registry. BF