2021–2022 Grain Financial Protection Board annual report
Message from the chair
On behalf of the Grain Financial Protection Board (GFPB), we are pleased to present to you the annual report for the fiscal year ending March 31, 2022.
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 or program) was introduced in the mid-1980's following a series of grain elevator bankruptcies. The GFPP consists of two components:
- 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 operator defaults on their obligation or if there is a storage shortfall.
The board continued to focus on managing the funds to ensure sustainability and providing grain farmers with an effective risk management tool.
The board conducted an annual review on the performance of the funds. The balances and growth rates are compared to the recommendations in the 2011 and 2016 actuarial reports. As of March 31, 2022, all of the funds have met the established target balances.
In the 2021–22 fiscal year, the board conducted an actuarial review in line with its good governance practices to complete a review approximately every five years. This initiative involved a third-party vendor, to determine how potential claim payments and/or expenditures may impact the funds. Given the changes in the cost-share model that occurred in 2020 and the increased program delivery costs coming out of the funds, it was a good time for an actuarial review to examine any impact to the funds. The last actuarial review occurred in 2016–17 fiscal year. The board reviews and monitors the soundness of all the funds on an annual basis and reviewed the results from this actuarial review in February 2022, discussing them with stakeholders and targeting 2022–23 fiscal year to making recommendations to the minister if needed on the overall soundness of the funds.
The next actuarial review is planned for 2026–27 fiscal year as it is a good governance practice to complete a review approximately every five years.
There were no claims received in 2021–22 to adjudicate and no dollars paid for claims from the funds.
The board worked with the minister of Agriculture, Food and Rural Affairs throughout the year on appointing members to the board. In 2021–22, three members were reappointed to the board for an additional 3-year term each and one member's term expired, bringing the compliment to 12 part-time members at fiscal year end. For a list of the board members for the 2021–22 fiscal year, go to page 9 of this report.
Looking ahead to 2022–23, the board has submitted recommendations to the minister for consideration for any upcoming vacancies and will work actively to fill any in a timely manner. By continuing to work collaboratively with the ministry, the board will remain effective in its operations and ensure that appropriate governance is in place to fulfill its mandate.
The board will also continue to focus on ensuring the sustainability of the funds as we continue to meet our mandate.
Respectfully submitted,
Dave Buttenham
Chair, Grain Financial Protection Board
Governance
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) as it “administers funds or other assets for beneficiaries named under statute”.
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 the authority of the FPPA and in accordance with the Memorandum of Understanding (MOU) between the minister and the chair.
The board's mandate, strategies and activities have always been focused on prudent management of the funds to ensure that 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 goals of promoting the sustainability of agriculture in Ontario.
Memorandum of Understanding
The MOU reflects the relationship between the Grain Financial Protection Board and Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) and establishes the accountability framework between the minister and the chair. The MOU outlines the responsibilities between the minister, the chair, the deputy minister and the board as well the administrative, financial, and auditing arrangements with OMAFRA.
Effective December 2, 2021, the chair and minister affirmed the existing MOU (that was effective June 5, 2017). The MOU will be effective until it is revoked or a new MOU is signed by the Parties.
Board mandate, objectives and activities
The board's primary focus is on the prudent management of the funds and preparing for claims when they occur. The board remains current on the claims procedure and is prepared to adjudicate claims when required. New board members complete claims adjudication training which includes an overview of the claims adjudication guidelines. 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 a claim.
Mandate
The board is responsible to the minister and is constituted under the authority of the FPPA and its regulations:
- Ontario Regulation 70/12 (Payments From Funds For Grain Producers)
- Ontario Regulation 321/11 (Fees Payable to Boards)
- Ontario Regulation 467/19 (Boards' Payment of Expenses)
The board's legislative mandate is set out in subsection 4 (1) 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; and
- to carry out the functions, and exercise the powers, prescribed by regulation.
Minister's mandate letter
The board chair received the 2021–22 mandate letter from the minister which outlined high-level, achievable expectations for the fiscal year. The board has aligned its strategic approach and priorities to support these as follows:
- Ensure long-term sustainability and effective oversight, risk management and expenditure management of the funds (e.g. use tactics such as an actuarial review).
- Support transparency and accountability by meeting all AAD provisions and requirements and identifying appropriate skills, knowledge and experience needed to support agency governance and accountability (i.e. agency attestation).
- Continue to support improved customer service by measuring and communicating the performance of the funds to stakeholders.
- Continue to investigate and adjudicate claims in a fair and equitable manner.
- Continue to support the ministry's review of the financial protection programs to ensure they are aligned with the current agricultural risk management landscape and sector trends.
To assist the board with achieving its mandate and the minister's, they have established goals with corresponding objectives and activities. For 2021–22, the board established the following five goals with results reported:
- 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 annually measures the performance of the funds against established targets and for 2021–22 the four funds continue to meet the minimum target balances. The board has an established Statement of Investment Policy (SIP) that is reviewed annually. The annual review of the SIP was deferred from the fall of 2021–22 until the actuarial review was completed. Staff will complete a review early in 2022–23 fiscal and bring forward for the boards review and approval although based on feedback from the actuarial review, no changes are anticipated to the board's SIP.
In line with good governance practice, the board had a third-party vendor conduct an actuarial review in 2021–22 fiscal year. Results from this actuarial review will be discussed with stakeholders and target 2022-23 fiscal year to make recommendations to the minister, if needed, on the overall soundness of the funds. - 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. These tools assist the board to ensure that the adjudication process is fair and has minimal delays.
In 2021–22, board members completed claims adjudication training and/or refresher, which included an overview of the claims adjudication guidelines and end-to-end process for claims. The board received no claim applications in the 2021–22 fiscal year. See Appendix 1 for a history of claims. - Ensure agreements and directives are understood and documentation required under the MOU is in place — The board reviews the documentation required under the MOU to ensure that it is both understood and that the appropriate documentation is on file to remain in compliance with the MOU. Legal counsel is available to assist the board with any needed agreements and regarding claims as required. The board met all obligations and timelines under the AAD. See page 13–14 for details.
- Consultation with Industry Stakeholders — The board participates in meetings with stakeholders as required, generally every two to three years or more frequently, as needed.
The board will inform stakeholders of the results from the 2021–22 actuarial review and will consider the results and recommendations of this review during their business planning period. If there are any recommendations that involve industry (i.e. remittance fees), the board will engage OMAFRA and stakeholders for further discussion.The board continues to support the ministry's review of the financial protection programs by participating in discussions.
- Ensure a high-performing board — The board regularly reviews tenures of members and works with OMAFRA and stakeholder groups to seek recommendations of qualified candidates for appointments to the board. The board also maintains an orientation manual and provides new members with training. This year, three members were reappointed and one member's term expired. See page 9 for a list of board members.
Board key activities
The board held four meetings by video/conference call (using Teams communication platform) and one e-mail discussion for approval over the 2021–22 fiscal year that focused on:
- reviewing quarterly financial statements;
- business planning and risk assessment;
- reviewing and making investment decisions;
- approve deliverables and independent third party vendor for the actuarial review;
- continuing to support the ministry's review of the financial protection program by participating in industry consultation sessions; and
- reviewing and updating the board's guidelines and policies including the SIP.
Board staff/support
The board does not have staff. The board has entered into an agreement with Agricorp to provide the board with secretariat, governance and financial services support. Staff that provide the services to the board are not involved in the review and licensing of grain dealers/elevators. These functions are separate to avoid any perception of a possible conflict of interest when supporting the board in its adjudicating of claims.
In 2017–18, the board entered into a service agreement with Agricorp for governance, secretariat and financial support services for three years, which included an option to extend it for two additional one-year terms. The board exercised its option to extend the service agreement for one year in 2019, and also extended for one additional year in both 2020 and 2021. In February 2022, the board agreed to extended the service agreement for another one-year term, with Agricorp, as it was set to expire March 31, 2022. The extended agreement was signed March 2022 and expires on March 31, 2023.
Legal and investigative services
A minister's regulation (O. Reg. 467/19) made under the FPPA requires the board to pay legal and investigative costs effective April 1, 2020 (except costs related to any judicial reviews to the Divisional Court of the board's decisions on claims and any appeals beyond). The board continues to use the ministry to support its legal and investigative services.
Legal services are provided by OMAFRA through the Ministry of the Attorney General, Legal Services Branch. The assigned lawyer provides the board with confidential advice regarding agreements, claims, any 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 on claims adjudication.
Investigative services are provided by the Regulatory Compliance Unit (RCU) within OMAFRA's Food Safety & Traceability Programs Branch for the board upon request.
About the board
Board structure
The Farm Products Payments Act (FPPA) requires that the board be composed of no fewer than five members appointed by the minister. Board members are generally appointed for terms of two or three years and may be reappointed.
The membership of the board has been traditionally comprised of dealer and producer nominees from the grain industry: Ontario Canola Growers' Association, the Ontario Agri Business Association and the Grain Farmers of Ontario. All members, including the chair and the vice chair positions, are filled by the minister's appointment. The board continued to work collaboratively with the minister and stakeholders to address upcoming vacancies.
In 2021–22, three members were reappointed to the board for 3-year terms, and one member's term expired. 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.
Listed below are the appointees for the fiscal year 2021–22 (April 1, 2021 to March 31, 2022).
| Member Name | Position | Tenure |
|---|---|---|
| Dave Buttenham | Chair | 22–Mar–2011 — 17–Sep–2023 |
| Henry Van Ankum | Vice chair | 19–Apr–2012 — 30–Aug–2022 |
| Markus Haerle | Member | 29–Jun–2015 — 01–Jan–2022 |
| Jennifer Macdonald | Member | 13–Mar–2017 — 02–Mar–2023 |
| Paul Hazzard | Member | 21–Aug–2020 — 20–Aug–2023 |
| Lindsay Menich | Member | 27–Oct–2017 — 26–Oct–2023 |
| Nadine Schwandt | Member | 27–Oct–2017 — 26–Oct–2023 |
| Ron Campbell | Member | 29–Jan–2018 — 04–Feb–2024 |
| Tyler McBlain | Member | 21–Aug–2019 — 20–Aug–2024 *reappointed in August 2021 |
| Jeff Barlow | Member | 28–Mar–2022 — 27–Mar–2025 *newly appointed in March 2022 |
| Keith Black | Member | 28–Mar–2022 — 27–Mar–2025 *newly appointed in March 2022 |
| Jeff Harrison | Member | 22–May–2019 — 21–May–2025 *reappointed in March 2022 |
| Jennifer Doelman | Member | 26–Jun–2019 — 25–Jun–2025 *reappointed in March 2022 |
Operational performance
The board is focused on effectiveness, efficiency, and reliability.
The Office of the Auditor General conducts an annual audit of the accounts and financial transactions of the board. The audit of the 2021–22 fiscal year was completed in December 2022 with an unqualified opinion. The funds (grain corn, soybean, wheat and canola) continue to meet the minimum target balances as outlined in the 2011 and 2016 actuarial reports.
Recommendations from the board's actuarial review to determine how potential claim payments and/or expenditures may impact the funds were shared in February 2022 and the board will consider the results and recommendations of that review in the 2022–23 fiscal year. The board will continue to monitor all the funds annually and make the appropriate changes as needed.
Effective January 1, 2020, the board and industry have been required to pay for all program delivery costs (licencing, enforcement, fund management and claims adjudication) as part of the new minister's regulation (O. Reg 467/19: Boards Payment of Expenses) made under the FPPA related to the administration of the Grains Act. Although the board is required to pay all administrative program expenses, they have no authority for licencing and enforcement under the Grains Act.
As well, effective April 1, 2020, the board began to pay investigative and most legal costs under the FPPA associated with the adjudication of claims. The board is not required to pay expenses related to judicial reviews of its decisions. The board continues to use the ministry to support its legal and investigative services. This change resulted in an increase in board expenses as of January 1st (2020–21 reflects a full year of the board paying for all administrative program delivery costs and 2021–22 the board paying for all investigative and legal costs).
Ontario's 2019 budget committed the government to a review the financial protection programs to ensure that grains (and beef cattle) producers have access to stable risk management tools that provide the confidence to invest in and grow their businesses. These discussions began in 2019 and were put on hold in 2020 due to COVID-19. The Ontario Ministry of Agriculture, Food and Rural Affairs' (OMAFRA) Farm Finance Branch (FFB) is the policy lead for the program review which resumed in early 2021 and they prepared a comprehensive package of legislative changes based on feedback received from the board and industry/stakeholders. They are keeping the board and stakeholders informed on its status.
As part of the review of the financial protection programs, OMAFRA and stakeholders (e.g. Grain Farmers of Ontario, Ontario Canola Growers Association, Ontario Agri-Business Association and Grain Financial Protection Board) agreed to review the terms of reference for the Financial Responsibility Review Committee (FRRC) to assess its continued role in supporting the Program and identify any potential changes in its mandate. Based on feedback from industry stakeholders and Agricorp, it was determined that the FRRC continues to play an important role in supporting the Program.
The board had previously discussed ways to improve the claims application form and to educate producers on the claims process. It was identified that the customer experience may be improved by exploring opportunities to complete and submit forms electronically. The board continued to collaborate with Agricorp to redesign and implement a claim form which will be available online with the ability for customers to submit electronically in 2022–23 fiscal year.
Over the past fiscal year, the board implemented its business plan and has delivered on its goals and objectives. The table on page 12 summarizes the board's performance targets and results. The board met or exceeded all of its objectives.
The board remains compliant with directives, policies and agreements including meeting AAD requirements for the submission of the MOU, business plan and annual report to the minister. These documents are translated and publicly posted by OMAFRA on its website following the minister's approval.
Performance measures and targets
The board's principal objectives for the fiscal year ending March 31, 2022 were as follows:
- Maintain a solvent compensation fund managed in the best interests of grain producers and owners;
- Conduct adjudicatory proceedings and issue decisions in a fair and timely manner;
- Grant or refuse claims and seek recovery overpayments; and
- Ensure that the board is compliant with directives, policies, and agreements.
The following indicators define the outcomes the board committed to achieving and are the basis for measuring and evaluating impact:
| Performance measure | Baseline | Target 2021–22 | Actual 2021–22 | Target 2022–23 | Target 2023–24 | Target 2024–25 |
|---|---|---|---|---|---|---|
| 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 $6,003,815 | 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 $4,469,644 | 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 $1,073,272 | 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 | Achieved: balance $6,339,790 | Minimum fund balance $4,400,000 maintained | Minimum fund balance $4,400,000 maintained | Minimum fund balance $4,400,000 maintained |
| Receipt and review fund financial statements from Agricorp | Quarterly | Quarterly | Achieved | Quarterly | Quarterly | Quarterly |
Minimum target fund balances are maintained as per 2011 and 2016 actuarial review.
| Performance measure | Baseline | Target 2021–22 | Actual 2021–22 | Target 2022–23 | Target 2023–24 | Target 2024–25 |
|---|---|---|---|---|---|---|
| Claims processed with minimal delays | Claimants notified within 2 calendar 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 | Not applicable as there were no claims adjudicated by the board in 2021–22. | 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 | Not applicable as there were no claims adjudicated by the board in 2021–22. | 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 calendar days of a board decision | Within 10 days of a board decision | Not applicable as there were no decision letters issued as there were no claims to adjudicate in 2021–22. | 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 2021–22 | Actual 2021–22 | Target 2022–23 | Target 2023–24 | Target 2024–25 |
|---|---|---|---|---|---|---|
| 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 | Not applicable as there were no claims adjudicated by the board in 2021–22 | 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 | Not applicable as there were no claims adjudicated therefore no payouts from the funds in 2021–22 to recover. | 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 2021–22 | Actual 2021–22 | Target 2022–23 | Target 2023–24 | Target 2024–25 |
|---|---|---|---|---|---|---|
| Updated 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 (if applicable) | In December 2021, the chair and minister affirmed the existing MOU (effective as of June 5, 2017). | Updated as per the Agencies and Appointments Directive section 1.9.1 (if applicable) | Updated as per the Agencies and Appointments Directive section 1.9.1 (if applicable) | Updated as per the Agencies and Appointments Directive section 1.9.1 (if applicable) |
| Submit annual report to minister | Annually | Within 90 days of the agency's receipt of the audited financial statement meeting AAD requirements. | Achieved; met AAD requirement. Report was submitted to minister through the OMAFRA liaison on February 11, 2022 within 90-days of completing the financial audit (February 1, 2022) thereby meeting the AAD requirements. | Within 90 days of the agency's receipt of the audited financial statement meeting AAD requirements. | Within 90 days of the agency's receipt of the audited financial statement meeting AAD requirements. | Within 90 days of the agency's receipt of the audited financial statement meeting AAD requirements. |
| Submit business plan to minister | Annually | March 2021 | Achieved. Submitted 2022-2025 business plan on March 1, 2022. | March 2022 | March 2023 | March 2024 |
| Submit quarterly Risk Assessment Report to OMAFRA | Quarterly | Quarterly | Achieved. Submitted to ministry liaison. | Quarterly | Quarterly | Quarterly |
| Submit agency attestation to minister (New requirement since 2015-16) | Annually | Annually | Achieved. Submitted to agency liaison on March 18, 2022. | Annually | Annually | Annually |
Analysis of financial performance
The Office of the Auditor General of Ontario finalized an audit of the 2021–22 financial statements in December 2022 and the board submitted the annual report to the minister shortly thereafter. The GFPB's fiscal year is April 1 to March 31.
Revenue
Revenue from producer check-off fees that are received when a producer sells one of the four commodities, is slightly lower in 2021–22 compared to 2020–21.
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 conducts a review of their investment portfolio every quarter as well as when an investment is maturing. The board makes any changes necessary to ensure that they are maximizing their return on investments.
The Bank of Canada's interest rate dropped in March 2020 to 0.25% and remained unchanged until March 2022 when it was increased to 0.5%. The rate is expected to increase through fiscal 2023. The impact of these anticipated rate increases will not be reflected immediately in the board's investments as the board uses a laddering strategy to reduce the influence of interest changes and to maximize returns. The interest earned on investments in 2021–22 provide a lower rate of return by 53 basis points or 22%. The average return on investment in 2021–2022 was 1.85%, as compared to 2.32% in 2020–21. The rate of return for fiscal year 2023 is expected to remain at the same rate or slightly improve for fiscal year 2022.
Total revenue for 2021–22 was $811,709, compared to $939,234 in 2020–21. The decrease from the previous year is due to decreased check-off fees as well as reduced investment income.
The board will continue to monitor the check-off fees and annual growth rate of all four funds to ensure they continue to meet the targeted fund balances. All four funds continue to maintain the minimum target fund balances as per the 2016–17 and 2021–22 actuarial reviews.
Expenses
The board continues to effectively manage expenses over the past several years.
Since November 2010 and as indicated in the current MOU, the board is obliged to pay the person or persons who are responsible for determining whether grain dealer license applicants and grain dealer licensees are financially responsible (determining financial responsibility). Agricorp provides these program services.
In 2021–22, there were no claims received to adjudicate and no money paid from the funds.
The expenses for governance/secretariat services were slightly higher in 2021–22 compared to 2020–21 due to additional support for the actuarial review (i.e. support in the procurement process, coordinate with the vendor to provide data requirements and other information as requested which was used for their analysis purpose, etc.).
Effective January 1, 2020, as part of the new minister's regulation (O. Reg. 467/19: Boards Payment of Expenses) made under the Farm Products Payments Act (FPPA), the board and industry have been required to pay for all expenses relating to the administration of both the FPPA (expenses related to fund management and claims adjudication) and the Grains Act (expenses related to annually determining financial responsibility of dealers, licensing, inspections and enforcement). This change resulted in an increase in board expenses as of January 1, 2020. The expenses in 2021–22 for determining financial responsibility/licensing and enforcement (program administrative costs) were $462,312 which is a slight increase compared to $440,742 in 2020–21. Generally the program administrative costs do fluctuate slightly on an annual basis for operational items such as issues with licensing, elevator/dealer defaults, and providing information required for claim adjudication. The costs align with the 5-year average for program delivery costs for the GFPP.
Effective April 1, 2020, the board is also paying the costs for legal services associated with the administration of the FPPA and investigative costs. Legal Services also reviews any board agreements, governance documents and provides any other advice as requested by the board. This is a new expense reflected in the board's financials for 2020–21 onward (a cost previously covered by the ministry). The expenses in 2021–22 were $248, compared to $792 in 2020–21 primarily driven by a claim received in 2020–21 where Legal Services provided advice to the board for claim adjudication. In 2021–22 fiscal year, there were no claims. Therefore, there were no legal services expenditures for claims adjudication.
Total expenses for 2021–22 were $539,044, compared to $480,523 in 2020–21. This variance is primarily due to the actuarial review that was conducted.
The following expenses are paid by the board to related parties:
- Governance/secretariat services, financial services and determining financial responsibility/licencing & enforcement are paid to Agricorp; and
- Board legal and investigative services are paid to OMAFRA.
Financial table: The numbers have been rounded-up to the nearest dollar for ease of reporting purposes only.
| Fiscal year | Budget 2020–21 ($) | Actual 2020–21 ($) | Budget 2021–22 ($) | Actual 2021–22 ($) |
|---|---|---|---|---|
| Fees | $460,000 | $561,720 | $448,000 | $502,735 |
| Investment interest | $414,000 | $377,964 | $271,000 | $308,974 |
| Claim recoveries | $0 | $0 | $0 | $0 |
| Total revenue | $874,000 | $939,234 | $719,000 | $811,709 |
| Fiscal year | Budget 2020–21 ($) | Actual 2020–21 ($) | Budget 2021–22 ($) | Actual 2021–22 ($) |
|---|---|---|---|---|
| Claims | $263,000 | $0 | $263,000 | $0 |
| Governance/secretariat services | $47,000 | $12,488 | $52,000 | $16,137 |
| Financial services | $33,000 | $26,501 | $33,000 | $26,097 |
| Determining financial responsibility/licencing & enforcement | $610,000 | $440,742 | $530,000 | $462,312 |
| Board legal and investigative services | $14,000 | $792 | $60,000 | $248 |
| Professional fees (e.g. actuarial review) | $0 | $0 | $14,000 | $34,250 |
| Total expenses | $967,000 | $480,523 | $952,000 | $539,044 |
| Fiscal year | Budget 2020–21 ($) | Actual 2020–21 ($) | Budget 2021–22 ($) | Actual 2021–22 ($) |
|---|---|---|---|---|
| Net balance (total revenue - expenses) | ($93,000) | $458,711 | ($233,000) | $272,665 |
| Fiscal year | Budget 2020–21 ($) | Actual 2020–21 ($) | Budget 2021–22 ($) | Actual 2021–22 ($) |
|---|---|---|---|---|
| Fund balance beginning of year | $17,155,145 | $17,155,145 | $17,155,145 | $17,613,856 |
| Fund balance end of year | $17,062,145 | $17,613,856 | $16,922,145 | $17,886,521 |
Appendix 1: History of claims (as of March 31, 2022)
| Fiscal year (April 1 - March 31) | # of claims reviewed by board/decision made | # of claims paid | Total claim amount paid from funds | Dollars recovered to the funds | Amount paid out by the funds |
|---|---|---|---|---|---|
| 1985–1986 | 264 | 92 | $1,059,602.00 | $312,699.00 | $746,903.00 |
| 1986–1987 | 7 | 6 | $27,603.04 | $26,280.00 | $1,350.04 |
| 1987–1988 | Nil | Nil | N/A | N/A | N/A |
| 1988–1989 | 2 | 2 | $15,806.69 | $0.00 | $15,806.69 |
| 1989–1990 | 13 | 13 | $249,748.02 | $0.00 | $249,748.02 |
| 1990–1991 | 20 | 18 | $279,367.75 | $2,000.00 | $277,367.75 |
| 1991–1992 | Nil | Nil | N/A | N/A | N/A |
| 1992–1993 | 11 | 11 | $266,814.40 | $40,000.00 | $226,814.40 |
| 1993–1994 | 27 | 24 | $270,500.59 | $0.00 | $270,500.59 |
| 1994–1995 | 5 | 1 | $15,993.09 | $8,000.00 | $7,993.09 |
| 1995–1996 | Nil | Nil | N/A | N/A | N/A |
| 1996–1997 | 51 | 45 | $434,282.39 | $0.00 | $434,282.39 |
| 1997–1998 | Nil | Nil | N/A | N/A | N/A |
| 1998–1999 | Nil | Nil | N/A | N/A | N/A |
| 1999–2000 | 21 | 21 | $57,786.98 | $0.00 | $57,786.98 |
| 2000–2001 | Nil | Nil | N/A | N/A | N/A |
| 2001–2002 | Nil | Nil | N/A | N/A | N/A |
| 2002–2003 | Nil | Nil | N/A | N/A | N/A |
| 2003–2004 | 8 | 8 | $147,204.67 | $11,379.00 | $135,825.67 |
| 2004–2005 | Nil | Nil | N/A | N/A | N/A |
| 2005–2006 | Nil | Nil | N/A | N/A | N/A |
| 2006–2007 | Nil | Nil | N/A | N/A | N/A |
| 2007–2008 | Nil | Nil | N/A | N/A | N/A |
| 2008–2009 | 19 | 18 | $731,797.00 | $267,000.00 | $464,797.00 |
| 2009–2010 | Nil | Nil | N/A | N/A | N/A |
| 2010–2011 | Nil | Nil | N/A | N/A | N/A |
| 2011–2012 | 3 | 0 | $0.00 | $0.00 | $0.00 |
| 2012–2013 | Nil | Nil | N/A | N/A | N/A |
| 2013–2014 | Nil | nil | N/A | N/A | N/A |
| 2014–2015 | Nil | Nil | N/A | N/A | N/A |
| 2015–2016 | 5 | 4 | $7,617.23 | $7,617.23 | $0.00 |
| 2016–2017 | Nil | Nil | N/A | N/A | N/A |
| 2017–2018 | 15 | 2 | $29,132.89 | $29,132.89 | $0.00 |
| 2018–2019 | 8 | 0 | $0.00 | $0.00 | $0.00 |
| 2019–2020 | Nil | Nil | N/A | N/A | N/A |
| 2020–2021 | 1 | 0 | N/A | N/A | N/A |
| 2021–2022 | Nil | Nil | N/A | N/A | N/A |
| Total | 480 | 265 | $3,593,283.74 | $704,108.12 | $2,889,175.62 |
Appendix 2: Audited financial statements for year ending March 31, 2022
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 statements 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.
Becky Philpott
Chief Financial Officer, Agricorp
Theresa Moisan
Controller, Agricorp
December 16, 2022
Independent Auditor’s report
To the Grain Financial Protection Board and to the Minister of Agriculture, Food and Rural Affairs,
Opinion
I have audited the financial statements of the Grain Financial Protection Board (the funds for producers of grain corn, soybeans, canola, wheat) (the board), which comprise the statement of financial position as at March 31, 2022, and the statements of operations and fund balances and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the board as at March 31, 2022 and the results of its operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.
Basis for opinion
I conducted my audit in accordance with Canadian generally accepted auditing standards. My responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of my report. I am independent of the board in accordance with the ethical requirements that are relevant to my audit of the financial statements in Canada, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Other information
Management is responsible for the other information. The other information comprises the information, other than the financial statements and my auditor’s report thereon, in the board’s 2021-22 annual report. My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon.
In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.
Responsibilities of management and those charged with governance 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.
In preparing the financial statements, management is responsible for assessing the board’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the board either intends to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the board’s financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, I exercise professional judgment and maintain professional skepticism throughout the audit. I also:
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit 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 board’s internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the board’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the board to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.
Susan Klein, CPA, CA, LPA
Assistant Auditor General
Toronto, Ontario
December 16, 2022
The Grain Financial Protection Board (Funds for producers of grain corn, soybeans, canola, wheat)
Statement of financial position as at March 31, 2022
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Cash | $600,638 | $809,945 | $889,951 | $597,667 | $101,742 | $107,165 | $310,584 | $189,922 | $1,902,915 | $1,704,699 |
| Short term investments (note 4) | $2,860,344 | $3,308,630 | $2,771,487 | $3,646,424 | $501,754 | $629,322 | $2,061,884 | $2,733,368 | $8,195,469 | $10,317,744 |
| Accounts receivable (note 3) | $517 | $447 | $23,887 | $19,103 | $2,321 | $1,004 | $3,572 | $3,165 | $30,297 | $23,719 |
| Total current assets | $3,461,499 | $4,119,022 | $3,685,325 | $4,263,194 | $605,817 | $737,491 | $2,376,040 | $2,926,455 | $10,128,681 | $12,046,162 |
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Long term investments (note 4) | $2,609,913 | $2,012,699 | $2,742,921 | $1,926,557 | $477,026 | $343,495 | $2,119,410 | $1,416,546 | $7,949,270 | $5,699,297 |
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Total assets | $6,071,412 | $6,131,721 | $6,428,246 | $6,189,751 | $1,082,843 | $1,080,986 | $4,495,450 | $4,343,001 | $18,077,951 | $17,745,459 |
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Accounts payable | $67,597 | $ 52,870 | $ 88,456 | $59,231 | $9,571 | $6,580 | $25,806 | $12,922 | $191,430 | $131,603 |
| Total liabilities | $67,597 | $52,870 | $88,456 | $59,231 | $9,571 | $6,580 | $25,806 | $12,922 | $191,430 | $131,603 |
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Fund balances | $6,003,815 | $6,078,851 | $6,339,790 | $6,130,520 | $1,073,272 | $1,074,406 | $4,469,644 | $4,330,079 | $17,886,521 | $17,613,856 |
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Liabilities and fund balances | $6,071,412 | $6,131,721 | $6,428,246 | $6,189,751 | $1,082,843 | $1,080,986 | $4,495,450 | $4,343,001 | $18,077,951 | $17,745,459 |
See accompanying notes to financial statements
Approved on behalf of the board
Dave Buttenham
Board chair
Board 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, 2022
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Fees from producers | $7,630 | $7,012 | $352,711 | $432,555 | $7,089 | $5,361 | $135,305 | $116,342 | $502,735 | $561,270 |
| Investment income | $107,421 | $134,737 | $105,174 | $125,685 | $18,842 | $23,652 | $77,537 | $93,890 | $308,974 | $377,964 |
| Claim recoveries | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Total revenue | $115,051 | $141,749 | $457,885 | $558,240 | $25,931 | $29,013 | $212,842 | $210,232 | $811,709 | $939,234 |
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Financial responsibility review, licensing and enforcement | $163,249 | $177,063 | $213,624 | $198,366 | $23,116 | $22,038 | $62,323 | $43,275 | $462,312 | $440,742 |
| Financial services | $8,958 | $10,372 | $11,593 | $11,377 | $1,417 | $1,450 | $4,129 | $3,302 | $26,097 | $26,501 |
| Governance and secretariat | $5,698 | $5,017 | $7,457 | $5,621 | $807 | $624 | $2,175 | $1,226 | $16,137 | $12,488 |
| Legal and investigation | $88 | $718 | $115 | $56 | $12 | $6 | $33 | $12 | $248 | $792 |
| Actuarial fees | $12,094 | N/A | $15,826 | N/A | $1,713 | N/A | $4,617 | N/A | $34,250 | N/A |
| Claims paid | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Total expenses | $190,087 | $193,170 | $248,615 | $215,420 | $27,065 | $24,118 | $73,277 | $47,815 | $539,044 | $480,523 |
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Excess (deficiency) of revenue over expenses | ($75,036) | ($51,421) | $209,270 | $342,820 | ($1,134) | $4,895 | $139,565 | $162,417 | $272,665 | $458,711 |
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Fund balances, beginning of year | $6,078,851 | $6,130,272 | $6,130,520 | $5,787,700 | $1,074,406 | $1,069,511 | $4,330,079 | $4,167,662 | $17,613,856 | $17,155,145 |
| Fund balances, end of year | $6,003,815 | $6,078,851 | $6,339,790 | $6,130,520 | $1,073,272 | $1,074,406 | $4,469,644 | $4,330,079 | $17,886,521 | $17,613,856 |
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, 2022
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Excess (deficiency) of revenue over expenses | ($75,036) | ($51,421) | $209,270 | $342,820 | ($1,134) | $4,895 | $139,565 | $162,417 | $272,665 | $458,711 |
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| (Increase) decrease in accrued interest | $3,138 | ($5,871) | $4,565 | ($801) | $917 | ($747) | $5,095 | $350 | $13,715 | ($7,069) |
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Decrease (increase) in accounts receivable | ($70) | ($35) | ($4,784) | ($5,156) | ($1,317) | $824 | ($407) | ($1,421) | ($6,578) | ($5,788) |
| Increase in accounts payable | $14,727 | $10,693 | $29,225 | $15,506 | $2,991 | $1,547 | $12,884 | $3,190 | $59,827 | $30,936 |
| Cash provided from (utilized by) operating activities | ($57,241) | ($46,634) | $238,276 | $352,369 | $1,457 | $6,519 | $157,137 | $164,536 | $339,629 | $476,790 |
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Purchase of investments | ($2,002,066) | ($1,853,398) | ($2,335,992) | ($2,393,076) | ($402,880) | ($396,460) | ($1,916,475) | ($1,881,112) | ($6,657,413) | ($6,524,046) |
| Proceeds from investments | $1,850,000 | $2,299,400 | $2,390,000 | $1,958,000 | $396,000 | $418,300 | $1,880,000 | $1,540,300 | $6,516,000 | $6,216,000 |
| Cash provided from (utilized by) investing activities | ($152,066) | $446,002 | $54,008 | ($435,076) | ($6,880) | $21,840 | ($36,475) | ($340,812) | ($141,413) | ($308,046) |
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Increase (decrease) in cash | ($209,307) | $399,368 | $292,284 | ($82,707) | ($5,423) | $28,359 | $120,662 | ($176,276) | $198,216 | $168,744 |
| Fiscal year | Grain corn 2022 | Grain corn 2021 | Soybeans 2022 | Soybeans 2021 | Canola 2022 | Canola 2021 | Wheat 2022 | Wheat 2021 | Total 2022 | Total 2021 |
|---|---|---|---|---|---|---|---|---|---|---|
| Cash, beginning of year | $809,945 | $410,577 | $597,667 | $680,374 | $107,165 | $78,806 | $189,922 | $366,198 | $1,704,699 | $1,535,955 |
| Cash, end of year | $600,638 | $809,945 | $889,951 | $597,667 | $101,742 | $107,165 | $310,584 | $189,922 | $1,902,915 | $1,704,699 |
See accompanying notes to financial statements
The Grain Financial Protection Board (Funds for producers of grain corn, soybeans, canola, wheat)
Notes to the financial statements — year ended March 31, 2022
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 (FPPA). It is an 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; and
- 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, established through regulations, under the FPPA is to protect producers (of grain corn, soybeans, 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.
Under Ontario Regulation 467/19, the board is responsible for all expenses relating to the administration of the FPPA and the Grains Act.
As a board-governed provincial agency, the Grain Financial Protection Board is exempt from income taxes.
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.
b) Revenue recognition
The funds' revenue includes fees from producers paid under the FPPA, investment income and claim recoveries. Fees from producers are paid to either the Ontario Canola Growers Association (OCGA) or the Grain Farmers of Ontario (GFO), as designated by Regulation. Revenue is recognized when fees from producers are receivable from the OCGA and GFO. Investment income is recognized as earned and amounts not yet received are included in the carrying value of investments. Claim recoveries are recorded when entitled to receive payment, unless uncertainty exists regarding the amounts and timing of the recovery. When uncertainty exists, claim recoveries are recorded when received.
c) Expense allocation
Expenses, other than legal and investigation and claims paid, are allocated to the four funds based on the proportionate value of each crop sold, with a minimum set at 5% (2021 - 5%). Legal and investigation and claims paid are allocated to the fund of the commodity being claimed.
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 investments at fair value. Guaranteed Investment Certificates (GICs) are recorded at 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. A statement of remeasurement gains and losses has not been presented as there is nothing to report therein.
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 when realized.
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; and
- 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 funds. Actual results could differ from those estimates.
3. Accounts receivable
Accounts receivable represent fees from producers due from the GFO or OCGA.
4. Investments
| 2022 | Fair value hierarchy | Grain corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|---|
| Financial institutions — deposits | Level 1 | $2,146,343 | $2,144,270 | $380,860 | $1,591,953 | $6,263,426 |
| Financial institutions — GICs | Level 2 | $714,001 | $627,217 | $120,894 | $469,931 | $1,932,043 |
| Total short-term | N/A | $2,860,344 | $2,771,487 | $501,754 | $2,061,884 | $8,195,469 |
| 2022 | Fair value hierarchy | Grain corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|---|
| Financial institutions — GICs | Level 2 | $2,609,913 | $2,742,921 | $477,026 | $2,119,410 | $7,949,270 |
| Total long-term | N/A | $2,609,913 | $2,742,921 | $477,026 | $2,119,410 | $7,949,270 |
| 2022 | Fair value hierarchy | Grain corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|---|
| Total investments | N/A | $5,470,257 | $5,514,408 | $978,780 | $4,181,294 | $16,144,739 |
| 2021 | Fair value hierarchy | Grain corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|---|
| Financial institutions — deposits | Level 1 | $1,429,276 | $1,228,276 | $227,980 | $830,478 | $3,716,010 |
| Financial institutions — GICs | Level 2 | $1,879,354 | $2,418,148 | $401,342 | $1,902,890 | $6,601,734 |
| Total short-term | N/A | $3,308,630 | $3,646,424 | $629,322 | $2,733,368 | $10,317,744 |
| 2021 | Fair value hierarchy | Grain corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|---|
| Financial institutions — GICs | Level 2 | $2,012,699 | $1,926,557 | $343,495 | $1,416,546 | $5,699,297 |
| Total long-term | N/A | $2,012,699 | $1,926,557 | $343,495 | $1,416,546 | $5,699,297 |
| 2021 | Fair value hierarchy | Grain corn | Soybeans | Canola | Wheat | Total |
|---|---|---|---|---|---|---|
| Total investments | N/A | $5,321,329 | $5,572,981 | $972,817 | $4,149,914 | $16,017,041 |
Transfers of investments between Level 1 and Level 2 totaled $1,617,023 (2021- $1,573,646).
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 1.85% (2021 – 2.32%).
Although investments are generally held to maturity, realized gains or losses could result if liquidation of investments is required to meet obligations. There have been no significant changes from the previous year in the exposure to risk or to the 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 its investment securities.
Credit risk on balances receivable arises from the possibility that the entities that 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, corporate debt securities, and government bonds. Board investment policy restricts the types of investments to high-grade Canadian debt instruments, which significantly reduces credit risk.
6. Related party transactions
The board entered into an agreement with Agricorp to provide services related to financial responsibility review, licensing and enforcement; financial services; and governance and secretariat. These services provided by Agricorp amounted to $500,482 (2021– $475,481) and are included in the respective expenses on the Statement of operations and fund balances.
The board is responsible to pay for expenses related to legal and investigation services provided by the Ministry of Agriculture, Food and Rural Affairs (OMAFRA). In the current year, legal and investigative services amounted to $248 (2021 – $792) and are included in expenses on the Statement of operations and fund balances.
Footnotes
- footnote[1] Back to paragraph Expenses included in financial responsibility review includes the determining financial responsibility, two Financial Responsibility Review Committee (FRRC) and other administration (i.e.: bank charges). FRRC are invoices from the firm of Graham, Scott and Enns LLP and from Gee, Lambart and Courtney less any dealer FRRC fees.
- footnote[2] Back to paragraph For the 2020–21 budget, the dealer or licence fees collected are not netted against the anticipated expenses.