2015–2016 Grain Financial Protection Board annual report
1. Message from the chair
The vision of the board is to protect the financial interests of Ontario producers who have sold grain corn, soybeans, wheat, and canola and owners who stored grain with elevator operators. This is directly linked to one of the ministry's goals of ensuring the sustainability of agriculture in Ontario.
The Grain Financial Protection Program (GFPP) was introduced in the mid-1980's following a series of grain elevator bankruptcies. GFPP consists of two components which are:
- The annual licensing of grain dealers and elevator operators under the Grains Act. Agricorp, is under contract with OMAFRA to administer the program.
- The administration of the funds. The board is responsible for the administration of the funds. All income held in the funds comes from producer check-off fees and investment income. The purpose of the funds is to provide producers/owners with financial compensation in the event that a dealer or elevator defaults on their obligation or if there is a storage shortfall. This year the board continued to focus on managing the funds to ensure long-term sustainability and ability to provide farmers with an effective risk management tool.
The board conducts an annual review each year on the performance of the funds. The balances and growth rates are compared to the recommendations in the 2011 actuarial report. Historically, all of the funds with the exception of the soybean fund have met the established target balances as outlined in the actuarial report. The soybean fund had been below the targeted balance, but with steady growth over the past few years this year met the established target balance.
The board worked with the minister throughout the year on reappointing members to the board. Two board members were reappointed and one new member was appointed in 2015-16. As of March 31, 2016 the board has three vacancies and is working actively to fill these in a timely manner. By continuing to work collaboratively with the ministry, the board will remain effective in its operations and ensure appropriate governance is in place to fulfill its mandate.
Looking forward, the board will continue to focus on ensuring the long-term sustainability of the funds.
Respectfully submitted,
Jim Campbell
Chair, Grain Financial Protection Board
Preface
The Grain Financial Protection Board (board) was established in 1985 and is classified as a board-governed provincial agency under the Agencies and Appointments Directive (AAD). The board, "administers funds or other assets for beneficiaries named under statute." The board's mandate, strategies and activities have always been focused on prudent management of the funds to ensure financial compensation is available to grain corn, soybean, wheat, and canola producers/owners when required. The board's mandate of administering the funds, investigating, granting or refusing claims, and recovering money is directly linked to one of the ministry's 2015-2016 goals of ensuring the sustainability of agriculture in Ontario.
2. Governance
The board members are accountable to the Minister of Agriculture Food and Rural Affairs (the minister), through the chair, for setting goals, objectives, and the strategic direction for the board. It operates under authority as outlined by the Farm Products Payments Act (FPPA) and in accordance with the Memorandum of Understanding (MOU) between the minister and the chair. The board and minister approved a revised MOU in March 2011 for a term of five years. The MOU sets out the operational and reporting relationship between the board and the minister, and also outlines the administrative, financial, and auditing arrangements with the Ontario Ministry of Agriculture Food and Rural Affairs (OMAFRA). This report covers the fiscal year April 1, 2015 to March 31, 2016.
3. Board objectives and activities
The board's primary focus is on the prudent management of the funds and preparing for claims when they occur. Claims are infrequent; however, the board remains current on the claims procedure and is prepared to adjudicate claims when required. The board makes decisions on claims based on the evidence and the law and if applicable payments to producers and owners are made after the board has approved the claim.
Mandate
The board is responsible to the minister and is constituted under the authority of the FPPA, R.S.O. 1990, c. F. 10, as amended and its regulations:
- O. Reg. 70/12 Payments From Funds For Grain Producers
- O. Reg. 321/11 Fees Payable to boards
The board's legislative mandate is outlined in section 4 of the FPPA as:
It is the function of a board and it has power,
- to administer its fund
- to investigate all claims made to it under this Act and to determine the extent of their validity
- to grant or refuse the payment of claims or any part thereof and determine the amounts and manner of payment
- to recover any money to which it is entitled under this Act by suit in a court of competent jurisdiction or otherwise.
Business plan
To assist the board with achieving their mandate , they have established goals with corresponding objectives and activities. For 2015–16, the board established the following five goals:
- Long-term sustainability of the funds: The board has hired Agricorp for the day to day administration of the funds; however, the board is ultimately responsible for the oversight and management of the funds. The board regularly reviews and approves policy decisions, and reviews financial statements and risk assessment reports quarterly. All board policies, guidelines and By-laws were reviewed and updated as required this year.
- Maintain an adjudication process that is simple, fair and accessible with minimal delays: The board has approved claim adjudication guidelines and has established operational procedures to assist with the processing of claims. The board received five claims from four claimants.
- Ensure agreements and directives are understood and documentation required under the MOU is in place: The board endeavors to ensure that it remains in compliance with the MOU and that the members fully understood what documentation is required to be on file. Legal counsel is available to assist the board with any needed agreements.
- Ensure a high performing board: Tenures of members are regularly reviewed and the board works with OMAFRA and stakeholder groups to seek recommendations of qualified candidates at least six months prior to the expiry of a term. The board also maintains an orientation manual which is reviewed by the board on an annual basis and is updated as required. New members to the board will receive training within two months of being appointed. This year, two members were re-appointed to the board, and 1 new member was appointed.
- To consult with industry stakeholders: The board participates in meetings with stakeholders as required.
The affairs of the board are subject to an annual audit by the Office of the Auditor General of Ontario. The Office of the Auditor General of Ontario typically makes audited financial statements available four months after the fiscal year end.
Board key activities
The board held four meetings over the 2015/16 fiscal year that focused on:
- adjudicating claims
- delivering on the new requirement for 2015-16 on agency attestation
- reviewing quarterly financial statements
- business planning and risk assessment
- performance reporting
- appointment process management
- reviewing the adjudication guidelines
- staying current regarding stakeholder issues
- planning activities occurred for April stakeholder meeting
- reviewing and updating policies and by-laws.
Board staff
The board does not have staff. The board has contracted with Agricorp for Governance/Secretariat and Financial Support Services.
Legal services
Legal services have been retained through Ministry of the Attorney General, Legal Services Branch, OMAFRA. The assigned lawyer provides the board with advice and legal assistance in Judicial Reviews of board decisions, and regarding the recovery of monies owed to the board, and also assists in the continual education of board members.
Investigative services
The Regulatory Compliance Unit of OMAFRA provides investigative services for the board.
4. Board appointments
Board structure
The FPPA requires that the board be composed of no fewer than five members appointed by the minister. The membership of the board has been traditionally comprised of nominees from each of the Ontario Canola Growers' Association, the Ontario Agri Business Association and the Grain Farmers of Ontario. Both the chair and the vice chair position are filled by the minister's appointment.
Two members were re-appointed to the board in 2015-16, and one new member was appointed to the board. Listed below are the appointees for the fiscal year 2015–16. Three members of our board fulfilled their terms including the former vice chair. The board has submitted a recommendation to the minister for a new vice chair but as of December 2015 this role remains vacant.
| Member name | Position | Tenure |
|---|---|---|
| Jim Campbell | Chair | 12 April 2005 – 03 April 2017 |
| Fred Wagner | Vice chair *position vacant | 06 March 2007 – 12 December 2015 (fulfilled term December 2015) |
| David Buttenham | Member | 22 March 2011 – 21 March 2017 |
| Jeff Kobe | Member | 19 July 2007 – 18 July 2016 |
| Darcy Oliphant | Member | 30 July 2011 – 29 July 2017 |
| Barry Senft | Member | 22 April 2011 – 21 April 2017 |
| Jeff Davis | Member *GFO nominee vacant | 19 April 2012 – 18 April 2015 (fulfilled term April 2015) |
| Henry Van Ankum | Member | 19 April 2012 – 18 April 2018 |
| Mark Brock | Member | 22 August 2012 – 21 August 2015 |
| Lynne Cohoe | Member *Dealer nominee vacant | 22 April 2008 – 21 August 2015 (fulfilled term August 2015) |
| Markus Haerle | Member | 29 June 2015 – 28 June 2018 |
5. Operational performance
The board's operational performance is focused on effectiveness, efficiency, and reliability.
The board conducted its annual review of the investment of the funds in June 2015. This review showed that the corn, canola, and wheat funds continue to meet the minimum target balances as outlined in the 2011 actuarial report. The soybean fund had been below the minimum target balance the past few years but in 2015–16 with more growth it met the target balance.
The board annually reviews their established policies to ensure they are current. No changes to the established policies were recommended this year. The board's investment policy is aligned with the MOU and the board conducted a review of the policy and MOU to ensure it remains relevant.
It has been a best practice of the board to conduct an actuarial review on the funds every five years to ensure that they remain actuarially sound. The next review is scheduled for 2016, and the board is preparing for this review.
The board annually reviews the claim adjudication guidelines to ensure members are familiar with the claim process. The board infrequently (once every four or five years on average), receives claims and a regular review of the guidelines helps members stay up to date on the claims process and will assist with ensuring that the adjudication process is fair and has minimal delays.
In 2015-16 the board received and adjudicated five claims from four claimants. The board reviewed the information submitted and engaged the services of the Regulatory Compliance Unit to investigate the claims. After thoroughly considering the facts and circumstances of each of the claims presented, the board declined to pay one claim and made payments to four claimants. Decision letters were sent to each of the claimants as well as the grain dealer involved and the chief inspector appointed under the Grains Act.
The board continued to work collaboratively with the minister and stakeholder groups to fill a number of vacant positions. Three member positions were filled in the past year. The board continues to monitor its vacancies and act proactively to make recommendations to ensure it has the appropriate governance in place to fulfill its mandate.
Over the past year, the board implemented its business plan and has delivered on its goals and objectives. The table in section 4 summarizes the board's performance targets and results. The board was able to either meet all of its objectives, or was able to implement strategies to assist it in meeting its objectives in the future.
6. Performance measures and targets
The board's principal activities are to manage the funds effectively and prepare for claims when they occur.
The board's principal objectives for the period ending March 31, 2016 were as follows:
- Maintain a solvent compensation fund managed in the interest of grain producers.
- Conduct adjudicatory hearings and issue decisions in a fair and timely manner.
- Grant or refuse claims and seek recovery of amounts paid.
- Ensure that the board is compliant with directives, policies, and agreements.
The following indicators define the outcomes the board committed to achieving. These indicators are the basis for measuring and evaluating impact.
| Performance measure | Baseline | Target 15/16 | Actual 15/16 | Target 16/17 | Target 17/18 | Target 18/19 |
|---|---|---|---|---|---|---|
| Annual financial audit achieves an unqualified audit opinion in accordance with Canadian generally accepted accounting principles | Unqualified | Unqualified | Achieved | Unqualified | Unqualified | Unqualified |
| Grain Corn target fund balance | Minimum fund balance $4,600,000 maintained. | Minimum fund balance $4,600,000 maintained. | Achieved — balance $5,975,106. | Minimum fund balance $4,600,000 maintained. | Minimum fund balance $4,600,000 maintained. | Minimum fund balance $4,600,000 maintained. |
| Wheat target fund balance | Minimum fund balance $2,200,000 maintained. | Minimum fund balance $2,200,000 maintained. | Achieved — balance $3,518,486. | Minimum fund balance $2,200,000 maintained. | Minimum fund balance $2,200,000 maintained. | Minimum fund balance $2,200,000 maintained. |
| Canola target fund balance | Minimum fund balance $900,000 maintained. | Minimum fund balance $900,000 maintained. | Achieved — balance $1,002,635. | Minimum fund balance $900,000 maintained. | Minimum fund balance $900,000 maintained. | Minimum fund balance $900,000 maintained. |
| Soybean target fund balance | Minimum fund balance $4,400,000 maintained. | Minimum fund balance $4,400,000 maintained. | Not Achieved — balance $4,442,789. Check-off fees increased in 2014 and fund increasing as a result. | Minimum fund balance $4,400,000 maintained. | Minimum fund balance $4,400,000 maintained. | Minimum fund balance $4,400,000 maintained. |
| Soybean target fund balance | 2% Annual growth in fund balance. | 2% Annual growth in fund balance. | Achieved — actual annual growth rate of 8%. | 2% Annual growth in fund balance. | 2% Annual growth in fund balance. | 2% Annual growth in fund balance. |
| Receipt and review fund financial statements from Agricorp | Quarterly | Quarterly | Achieved | Quarterly | Quarterly | Quarterly |
Minimum target fund balances are maintained as per actuarial review. Note soybean fund is the only one that has a annual growth target due to the fact that it has been below the minimum fund balance the past few years.
| Performance measure | Baseline | Target 15/16 | Actual 15/16 | Target 16/17 | Target 17/18 | Target 18/19 |
|---|---|---|---|---|---|---|
| Claims processed with minimal delays | Claimants notified within 2 days, dealer and elevators within 4 days of receipt of claim. | Claimants notified within 2 days, dealer and elevators within 4 days of receipt of claim. | Achieved — in 2015/16 the board received 5 claims and in all cases the targets were achieved. | Claimants notified within 2 days, dealer and elevators within 4 days of receipt of claim. | Claimants notified within 2 days, dealer and elevators within 4 days of receipt of claim. | Claimants notified within 2 days, dealer and elevators within 4 days of receipt of claim. |
| Claims are adjudicated fairly | Claims are reviewed individually, and follow adjudication guidelines established. | Claims are reviewed individually, and follow adjudication guidelines established. | Achieved. | Claims are reviewed individually, and follow adjudication guidelines established. | Claims are reviewed individually, and follow adjudication guidelines established. | Claims are reviewed individually, and follow adjudication guidelines established. |
| Claimants received notification of board decision | Within 10 days of a board decision. | Within 10 days of a board decision. | Achieved — In 2015/16 the board received 5 claims and in all cases the claimants received notification within 10 days of a board decision. | Within 10 days of a board decision. | Within 10 days of a board decision. | Within 10 days of a board decision. |
| Performance measure | Baseline | Target 15/16 | Actual 15/16 | Target 16/17 | Target 17/18 | Target 18/19 |
|---|---|---|---|---|---|---|
| Claims are reviewed to determine their validity | Board refers to FPPA and uses legal counsel as required to determine validity of claims. | Board refers to FPPA and uses legal counsel as required to determine validity of claims. | Achieved. | Board refers to FPPA and uses legal counsel as required to determine validity of claims. | Board refers to FPPA and uses legal counsel as required to determine validity of claims. | Board refers to FPPA and uses legal counsel as required to determine validity of claims. |
| Recover any money to which the board is entitled to under the FPPA | Legal counsel is consulted when proceeding with any recovery action. | Legal counsel is consulted when proceeding with any recovery action. | Achieved The board recovered all monies from which they were entitled from the claimants. | Legal counsel is consulted when proceeding with any recovery action. | Legal counsel is consulted when proceeding with any recovery action. | Legal counsel is consulted when proceeding with any recovery action. |
| Performance measure | Baseline | Target 15/16 | Actual 15/16 | Target 16/17 | Target 17/18 | Target 18/19 |
|---|---|---|---|---|---|---|
| Updated MOU in place (expiry March 8, 2016) | Updated as per the Agencies and Appointments Directive section 1.9.1 | N/A | Valid MOU in place. | Updated as per the Agencies and Appointments Directive section 1.9.1 | Updated as per the Agencies and Appointments Directive section 1.9.1 | Updated as per the Agencies and Appointments Directive section 1.9.1 |
| Submit annual report | Annually | Within 90 days of the agency's receipt of the audited financial statement — July 31, 2016 | On track to meet AAD requirement. Received the audited financial statements — August 5, 2016 | Within 90 days of the agency's receipt of the audited financial statement — July 31, 2017 | Within 90 days of the agency's receipt of the audited financial statement — July 31, 2018 | Within 90 days of the agency's receipt of the audited financial statement — July 31, 2019 |
| Submit business plan | Annually | March 2015 | Achieved | March 2016 | March 2017 | March 2018 |
| Submit quarterly AAD | Quarterly | Quarterly | Achieved | Quarterly | Quarterly | Quarterly |
| Submit quarterly risk assessment report | Quarterly | Quarterly | Achieved | Quarterly | Quarterly | Quarterly |
| Submit agency attestation — new requirement for 2015/16 | Annually | Annually | Achieved | Annually | Annually | Annually |
7. Analysis of financial performance
The Office of the Auditor General of Ontario finalized the audit of the 2015–16 financial statements in August 2016 and the board submitted the annual report to the minister shortly thereafter.
Annually, the board conducts a full review of their investment strategies, including the investigation of alternate strategies, to ensure that returns are maximized within the investment framework. The board concluded that they are maximizing their return on investments, and no changes in investment strategies were recommended this year.
The amount of interest earned this year is 8% below what was earned last year but is 4% over budget. The average return on investment is 1.76% which is slightly below last year return of 1.96%. This is considered an acceptable rate of return given the current low interest rate environment.
| Fiscal year | Budget 2014/15 | Actual 2014/15 | Budget 2015/16 | Actual 2015/16 |
|---|---|---|---|---|
| Fees | $375,000 | $414,162 | $375,000 | $432,092 |
| Interest | $242,565 | $279,016 | $242,246 | $255,307 |
| Recoveries | $0 | $0 | $0 | $7,617 |
| Total revenue | $617,565 | $693,178 | $621,246 | $695,016 |
| Fiscal year | Budget 2014/15 | Actual 2014/15 | Budget 2015/16 | Actual 2015/16 |
|---|---|---|---|---|
| Claims | $263,000 | $0 | $263,000 | $7,617 |
| Governance/secretariat services | $45,000 | $5,890 | $45,000 | $28,050 |
| Financial services | $30,000 | $23,527 | $30,000 | $15,183 |
| Costs of determining financial responsibility | $181,440 | $176,139 | $168,940 | $172,112 |
| Total expense | $519,440 | $205,556 | $506,940 | $222,962 |
| Fiscal year | Budget 2014/15 | Actual 2014/15 | Budget 2015/16 | Actual 2015/16 |
|---|---|---|---|---|
| Net balance (total revenue - expenses) | $98,125 | $487,622 | $114,306 | $472,054 |
| Beginning of year fund balances | $13,860,829 | $13,979,340 | $13,958,954 | $14,466,962 |
| Adjustment on the adoption of the financial instrument standard | $0 | $0 | $0 | $0 |
| End of year fund balance | $13,958,954 | $14,466,962 | $14,073,260 | $14,939,016 |
Financial statements of the Grain Financial Protection Board (Funds for producers of grain corn, soybeans, canola, wheat) — year ended March 31, 2016
Management's responsibility for financial reporting
The accompanying financial statements have been prepared by management in accordance with Canadian public sector accounting standards. Management is responsible for the accuracy, integrity and objectivity of the information contained in the financial statements. The financial statements include some amounts that are necessarily based on management's best estimates and have been made using careful judgment.
In discharging its responsibility for the integrity and fairness 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 systems include formal policies and procedures and an organizational structure that provides for appropriate delegation of authority and segregation of responsibilities.
The board of directors is responsible for ensuring management fulfills its responsibilities for financial reporting and internal control. The board meets regularly to oversee the financial activities and annually reviews the financial statements.
These financial statement s have been audited by the auditor general of Ontario. The auditor general's responsibility is to express an opinion on whether the financial statements are fairly presented in accordance with Canadian public sector accounting standards. The independent auditor's report, which appears on the following page, outlines the scope of the auditor general's examination and opinion.
Signed by:
Erich Beifuss
CFO, Agricorp
Steven Becker
Finance Manger, Agricorp
August 12, 2016
Independent auditor's report
To the Grain Financial Protection Board and to the Minister of Agriculture, Food and Rural Affairs
I have audited the accompanying financial statements of the Grain Financial Protection Board (Funds for producers of grain corn, soybean, canola and wheat), which comprise the statement of financial position as at March 31, 2016, and the statement of operations and fund balances, remeasurement gains and 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.
Auditor's responsibility
My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I 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 n 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 l presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
Opinion
In my opinion, the financial statements present fairly, in all material respects, the financial position of the Grain Financial Protection Board (Funds for producers of grain corn, soybean, canola and wheat) as at March 31, 2016 and the results of their operations, their remeasurement gains and losses and their cash flows for the year then ended in accordance with Canadian public sector accounting standards.
Toronto, Ontario
August 12, 2016
Susan Klein, CPA, CA, LPA
Assistant auditor general
The Grain Financial Protection Board (Funds for producers of grain corn, soybeans, canola, wheat)
Statement of financial position as at March 31, 2016
| Fiscal year | Grain corn 2016 | Grain corn 2015 | Soybeans 2016 | Soybeans 2015 | Canola 2016 | Canola 2015 | Wheat 2016 | Wheat 2015 | Total 2016 | Total 2015 |
|---|---|---|---|---|---|---|---|---|---|---|
| Cash | $114,982 | $28,603 | $297,124 | $67,748 | $12,933 | $6,233 | $85,160 | $20,485 | $510,199 | $12,369 |
| Accounts receivable (note 3) | $1,111 | $431 | $39,617 | $27,262 | $300 | $500 | $8,486 | $1,646 | $49,514 | $29,839 |
| Investments (note 4) | $5,957,165 | $5,986,412 | $4,218,727 | $4,085,241 | $1,001,088 | $990,980 | $3,455,960 | $3,416,653 | $14,632,940 | $14,478,986 |
| Total assets | $6,073,258 | $6,015,446 | $4,555,468 | $4,180,251 | $1,014,321 | $997,413 | $3,549,606 | $3,438,784 | $15,192,653 | $14,631,894 |
| Fiscal year | Grain corn 2016 | Grain corn 2015 | Soybeans 2016 | Soybeans 2015 | Canola 2016 | Canola 2015 | Wheat 2016 | Wheat 2015 | Total 2016 | Total 2015 |
|---|---|---|---|---|---|---|---|---|---|---|
| Accounts payable | $79,688 | $20,717 | $101,561 | $25,468 | $8,126 | $1,435 | $1,81 | $5,5892 | $208,194 | $53,512 |
| Total liabilities | $79,688 | $20,717 | $101,561 | $25,468 | $8,126 | $1,435 | $1,81 | $5,5892 | $208,194 | $53,512 |
| Fund balances | $5,975,106 | $5,945,811 | $4,442,789 | $4,127,061 | $1,002,635 | $988,044 | $3,518,486 | $3,406,046 | $14,939,019 | $14,466,962 |
| Accumulated remeasurement gains | $18,864 | $48,918 | $11,118 | $27,722 | $3,560 | $7,934 | $12,301 | $26,846 | $45,443 | $111,420 |
| Total fund balances | $5,993,570 | $5,994,729 | $4,453,907 | $4,154,783 | $1,006,195 | $995,978 | $3,530,787 | $3,432,892 | $14,984,459 | $14,578,382 |
| Total liabilities and fund balances | $6,073,258 | $6,015,446 | $4,555,468 | $4,180,251, | $1,014,321 | $997,413 | $3,549,606 | $3,438,784 | $15,192,653 | $14,631,894 |
See accompanying notes to financial statements.
Jim Campbell
Chair
David Buttenham
Member
The Grain Financial Protection Board (Funds for producers of grain corn, soybeans, canola, wheat)
Statement of operations and fund balances - Year ended March 31, 2016
| Fiscal year | Grain corn 2016 | Grain corn 2015 | Soybeans 2016 | Soybeans 2015 | Canola 2016 | Canola 2015 | Wheat 2016 | Wheat 2015 | Total 2016 | Total 2015 |
|---|---|---|---|---|---|---|---|---|---|---|
| Fees from producers | $6,505 | $6,355 | $347,792 | $321,102 | $5,711 | $5,414 | $72,084 | $81,291 | $432,092 | $414,162 |
| Investment income | $105,099 | $119,277 | $72,938 | $77,345 | $17,344 | $18,725 | $59,926 | $63,669 | $255,307 | $279,016 |
| Claim recoveries | $2,153 | N/A | $5,464 | N/A | N/A | N/A | N/A | N/A | $7,617 | N/A |
| Total revenue | $113,757 | $125,632 | $426,194 | $398,447 | $23,055 | $24,139 | $132,010 | $144,960 | $695,016 | $693,178 |
| Fiscal year | Grain corn 2016 | Grain corn 2015 | Soybeans 2016 | Soybeans 2015 | Canola 2016 | Canola 2015 | Wheat 2016 | Wheat 2015 | Total 2016 | Total 2015 |
|---|---|---|---|---|---|---|---|---|---|---|
| Financial responsibility review | $65,887 | $67,070 | $83,925 | $83,578 | $6,735 | $4,999 | $15,565 | $20,492 | $172,112 | $176,139 |
| Governance and secretariat | $10,655 | $579 | $13,675 | $3,689 | $1,122 | $491 | $2,598 | $1,131 | $28,050 | $5,890 |
| Financial services | $5,767 | $9,186 | $7,402 | $10,912 | $607 | $630 | $1,407 | $2,799 | $15,183 | $23,527 |
| Claims paid | $2,153 | N/A | $5,464 | N/A | N/A | N/A | N/A | N/A | $7,617 | N/A |
| Total expenses | $84,462 | $76,835 | $110,466 | $98,179 | $8,464 | $6,120 | $19,570 | $24,422 | $222,962 | $205,556 |
| Fiscal year | Grain corn 2016 | Grain corn 2015 | Soybeans 2016 | Soybeans 2015 | Canola 2016 | Canola 2015 | Wheat 2016 | Wheat 2015 | Total 2016 | Total 2015 |
|---|---|---|---|---|---|---|---|---|---|---|
| Excess of revenue over expenses | $29,295 | $48,797 | $315,728 | $300,268 | $14,591 | $18,019 | $112,440 | $120,538 | $472,054 | $487,622 |
| Fund balances, beginning of year | $5,945,811 | $5,897,0014 | $4,127 | $3,826793 | $988,044 | $970,025 | $3,406,046 | $3,285,508 | $14,466,962 | $13,979,340 |
| Fund balances, end of year | $5,975,106 | $5,945,811 | $4,442,789 | $4,127,061 | $1,002,635 | $988,044 | $3,518,486 | $3,406,046 | $14,939,016 | $14,466,962 |
See accompanying notes to financial statements
The Grain Financial Protection Board (Funds for producers of grain corn, soybeans, canola, wheat)
Statement of remeasurement gains and losses - year ended March 31, 2016
| Fiscal year | Grain corn | Soybeans | Canola | Wheat | 2016 | 2015 |
|---|---|---|---|---|---|---|
| Accumulated remeasurement gains, beginning of year | $48,918 | $27,722 | $7,934 | $26,846 | $111,420 | $106,980 |
| Unrealize (losses) gains on investment | ($25,054) | ($14,208) | ($3,846) | ($12,842) | ($55,950) | $10,287 |
| Realized (gains) reclassified to the statement of operations and fund balances | ($5,400) | ($2,396) | ($528) | ($1,703) | ($10,027) | ($5,847) |
| Net change for the year | ($30,454) | ($16,604) | ($4,374) | ($14,545) | ($65,977) | $4,440 |
| Accumulated remeasurement gains, end of year | $18,464 | $11,118 | $3,560 | $12,301 | $45,443 | $111,420 |
See accompanying notes to financial statements
The Grain Financial Protection Board (Funds for producers of grain corn, soybeans, canola, wheat)
Statement of cash flows — year ended March 31, 2016
| Fiscal year | Grain corn | Soybeans | Canola | Wheat | 2016 | 2015 |
|---|---|---|---|---|---|---|
| Cash provided by operating activities excess of revenue over expenses | $29,295 | $315,728 | $14,591 | $112,440 | $472,054 | $487,622 |
| Fiscal year | Grain corn | Soybeans | Canola | Wheat | 2016 | 2015 |
|---|---|---|---|---|---|---|
| Realized (gains) on investments | ($5,400) | ($2,396) | ($528) | ($1,703) | ($10,027) | ($5,847) |
| Fiscal year | Grain corn | Soybeans | Canola | Wheat | 2016 | 2015 |
|---|---|---|---|---|---|---|
| Accounts receivable | ($680) | ($12,355) | $200 | ($6,840) | ($19,675) | ($11,720) |
| Accounts payable | $58,971 | $76,093 | $6,691 | $12,927 | $154,682 | $4,399 |
| Total | $58,291 | $63,738 | $6,891 | $6,087 | $135,007 | ($16,119) |
| Fiscal year | Grain corn | Soybeans | Canola | Wheat | 2016 | 2015 |
|---|---|---|---|---|---|---|
| Net proceeds (purchase) of investments | $4,193 | ($147,694) | ($14,254) | ($52,149) | ($209,904) | $414,171 |
| Increase in cash | $86,379 | $229,376 | $6,700 | $64,675 | $387,130 | $51,485 |
| Cash, beginning of year | $28,603 | $67,748 | $6,233 | $20,485 | $123,069 | $71,584 |
| Cash, end of year | $114,982 | $297,124 | $12933 | $85,160 | $5410,199 | $123,069 |
The Grain Financial Protection Board (Funds for producers of grain corn, soybeans, canola, wheat)
Notes to the financial statements — year ended March 31, 2016
1. Establishment of the funds
The Grain Financial Protection Board (the board) was established in 1984 as an agency of the Ontario Government under the Farm Products Payments Act. It is a trust agency responsible for administering the funds for producers of grain corn, soybeans, canola and wheat (the funds). The funds were established to operate on a not-for-profit basis on behalf of the producers:
- Producers of grain corn — established November 3, 1984.
- Producers of soybeans — established November 3, 1984.
- Producers of canola — established July 22, 1989.
- Producers of wheat — established December 13, 2004. The Ontario Wheat Producers' Marketing Board made a $1 million non-recurring unrestricted contribution to establish the fund.
The purpose of the funds through regulations made under the Farm Products Payments Act is to protect producers (of grain com, soybean, canola and wheat) against losses resulting from dealer payment default. Effective July 1, 2012, producers can be reimbursed 95% of an approved claim for any defaults by dealers. The board attempts to recover any claims paid from the dealers.
2. Significant accounting policies
a) Basis of accounting
The financial statements have been prepared by management in accordance with Canadian Public Sector Accounting Standards (PSAS) for governments as recommended by the Public Sector Accounting Board of Chartered Professional Accountants of Canada (CPA Canada). The board has also elected to apply the section 4200 standards for Government Not-For-Profit Organizations. These financial statements are, in management's opinion, properly prepared within reasonable limits of materiality, statutory requirements and the framework of the accounting policies summarized below.
b) Revenue recognition
The funds' revenue comprises of producer check-off fees paid under the Farm Products Payments Act and investment income. Check-off fees are paid to either the Ontario Canola Growers Association (OCGA) or the Grain Farmers of Ontario (GFO), as designated by the Regulation. The OCGA and GFO then remit the fees to the board.
All transactions are recorded on the accrual basis except for claim recoveries which are recorded when received due to the inherent uncertainty regarding the amounts and timing of the recovery.
c) Expense allocation
Expenses, including claims, are allocated to the four funds based on the proportionate value of each crop sold, except for Canola. The Canola allocation of expenses is set at a minimum of 4% (2015 - 3%), and will increase 1% annually until it reaches 5%.
d) Financial instruments
The funds' financial instruments consist of cash, investments, accounts receivable and accounts payable.
All financial instruments are recorded at cost or amortized cost unless management has elected to carry the instruments at fair value. Management has elected to record short-term demand deposit type investments as amortized at cost, which approximates fair value and all other investments at fair value. Guaranteed Investment Certificates (GIC's) are valued based on cost plus accrued interest, which approximates fair value.
Unrealized changes in fair value are recognized in the statement of remeasurement gains and losses until they are realized, when they are transferred to the statement of operations and fund balances.
All financial assets are assessed for impairment on an annual basis. When a decline is determined to be other than temporary, the amount of the loss is reported in the statement of operations and fund balances. Any unrealized gains and losses previously recognized in the statement of remeasurement gains and losses are reversed and recognized in the statement of operations and fund balances.
The board is required to classify fair value measurements using a fair value hierarchy, which includes three levels of information that may be used to measure fair value:
- Level 1 — unadjusted quoted market prices in active markets for identical assets or liabilities.
- Level 2 — observable or corroborated inputs, other than level 1, such as quoted prices for similar assets or liabilities in inactive markets or market data for substantially the full term of the assets or liabilities.
- Level 3 — unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.
e) Use of estimates
The preparation of financial statements in conformity with PSAS requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses. Significant items subject to such estimates and assumptions include the carrying amounts of accounts receivable and allocation of expenses across funds. Actual results could differ from those estimates.
3. Accounts receivable
Accounts receivable represent producer check-off fees due from Grain Farmers of Ontario (GFO) or Ontario Canola Growers Association (OCGA).
4. Investments
a) Portfolio profile at fair value and maturity profile
| 2016 | Grain corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|
| Short-term (<1 year) | $4,166,396 | $3,083,707 | $653,070 | $2,252,937 | $10,156,110 |
| 2016 | Grain corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|
| Province of Ontario | $1,173,674 | $706,755 | $242,477 | $846,194 | $2,969,100 |
| Financial institutions | $617,095 | $429,265 | $105,541 | $356,829 | $1,507,730 |
| Total | $1,790,769 | $1,135,020 | $348,018 | $1,203,023 | $4,476,830 |
| 2016 | Grain corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|
| Total | $5,957,165 | $4,218,727 | $1,001,088 | $3,455,960 | $14,632,940 |
| 2015 | Grain corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|
| Short-term (<1 year) | $3,534,942 | $2,685,980 | $617,956 | $2,174,963 | $9,013,841 |
| 2015 | Grain corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|
| Province of Ontario | $1,208,630 | $652,990 | $240,051 | $837,729 | $2,939,400 |
| Province of Quebec | $1,242,838 | $46,273 | $132,673 | $403,961 | $2,525,745 |
| Total | $2,451,468 | $1,399,263 | $372,724 | $1,241,690 | $5,465,145 |
| 2015 | Grain corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|
| Total | $5,986,410 | $4,085,243 | $990,680 | $3,416,653 | $14,478,986 |
b) Fair value hierarchy
| 2016 | Level | Grain Corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|---|
| Cash equivalents | 1 | $383,027 | $611,688 | $96,099 | $339,416 | $1,430,230 |
| Bonds | 1 | $2,426,216 | 1,461,003 | 376,329 | 1,253,745 | 5,517,293 |
| GIC's | 2 | $3,147,922 | $2,146,036 | $528,660 | $1,862,799 | $7,685,417 |
| Total | N/A | $5,957,165 | $4,218,727 | $1,001,088 | $3,455,960 | $14,632,940 |
| 2015 | Level | Grain Corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|---|
| Cash equivalents | 1 | $1,126,821 | $1,127,882 | $318,888 | $1,137,785 | $3,711,376 |
| Bonds | 1 | $4,001,677 | $2,400,988 | $545,516 | $1,799,021 | $8,747,202 |
| GIC's | 2 | $857,912 | $556,373 | $126,276 | $479,847 | $2,020,408 |
| Total | N/A | $5,986,410 | $4,085,243 | $990,680 | $3,416,653 | $14,478,986 |
There were no transfers of investments between Level 1 and Level 2.
5. Financial instruments risk management
a) Market risk
Market risk is the risk that changes in market prices will affect the fair value of reported assets and liabilities. Market factors include three types of risk: interest rate risk, currency risk and equity risk. The funds are not exposed to significant currency or equity risk as they do not transact in foreign currency or hold equity financial instruments. The funds operate within the constraints of the investment policy which restricts the investments to highly liquid, high-grade instruments such as deposit notes, bonds, debentures, and other forms of indebtedness, issued by federal and provincial governments, and domestic financial institutions.
b) Interest rate risk
Interest rate risk refers to the adverse consequences of interest rate changes on the funds' financial position, operations and cash flow.
Fluctuations in interest rates have a direct impact on the market valuation of the funds' fixed income securities portfolio. The average return on investments is 1.75% (2015 — 1.96%). Fluctuations in interest rates could have a significant impact on the fair value of the fixed income securities profile.
Although investments are generally held to maturity, realized gains or losses could result if liquidation of long term investments is required to meet obligations. There have been no significant changes from the previous year in the exposure to risk or to policies, procedures and methods used to measure the risk.
c) Credit risk
Credit risk is the risk that other parties fail to perform as contracted. The funds are exposed to credit risk principally through balances receivable from the OCGA and GFO, as well as through investment securities.
Credit risk on balances receivable arises from the possibility that the entities which owe money to the funds may not fulfill their obligation. Collectability is reviewed regularly and an allowance for doubtful accounts, if necessary, is established to recognize the impairment risks identified.
Credit risk on investment securities arises from the funds' position in term deposits, government bonds and corporate debt securities. Board investment policy restricts the types of investments to high-grade Canadian debt instruments, which significantly reduces credit risk.
6. Related party transactions
Effective November 1, 2010, a Memorandum of Understanding between the board and the Minister of Agriculture, Food and Rural Affairs established that the funds are financially responsible for expenses related to governance, secretariat, financial services, and financial responsibility review. The board has entered into an agreement to acquire these services from Agricorp. These expenses are included in the statement of operations and fund balances and total $199,474 (2015 — $185,657)
Certain administrative expenses, specifically the costs of board meetings, are absorbed by OMAFRA, and are not included In the statement of the operations and fund balances.
7. Comparative figures
Certain 2015 figures have been reclassified to conform to current year's presentation.