Grain Financial Protection Board business plan for the fiscal years 2023–2026

Executive summary

The Grain Financial Protection Board (board or GFPB) was established in 1985 and is classified as a trust 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 administrating the funds, investigating, granting and refusing claims, and recovering money is directly linked to one of the ministry's goals of ensuring the sustainability of agriculture in Ontario.

The board will continue to administer the funds in a sound manner, and this provides producers/owners with an effective risk management tool that allows them to remain competitive. The board has outlined four strategic priorities for 2023–2026:

• To ensure long-term sustainability of the funds administered by the board;
• To continue to investigate and adjudicate claims in a fair and equitable manner;
• To grant, refuse and recover claim payments under the Farm Products Payments Act (FPPA), as appropriate; and
• To ensure appropriate agreements are reviewed, understood and in place to fulfill the mandate.

Revenue and expenditures and expectations for 2023–2026

The financial audit of the 2021–22 fiscal year was completed in December 2022 with an unqualified opinion. The funds (grain corn, soybean, wheat and canola) meet the minimum target balances as outlined in the 2022 actuarial report. Total revenue for 2021–22 was $811,709 and total expenses were $539,044.

Revenue

The board receives revenue for the funds from two sources. The first is in the form of producer check-off fees that are received when a producer sells one of the four commodities: grain corn, soybean, canola or wheat. Each commodity has its own check-off fee which is expressed in $/tonne. The minister adjusted check-off fees in 2013 to assist the funds in meeting the targeted fund balances.

Assuming that the projected sales of the four commodities would be similar to previous years, the projected check-off fees revenue for 2023–26 will be approximately $498,000 per annum based on an average from the last three-years plus current year activities.

The second source of revenue is from investment interest earned on the balance of the funds held. As the Bank of Canada held its policy rate to record lows from March 2020 to March 2022, existing investment returns had deteriorated as reinvestments were made at lower rates than previous holdings. As a result, investment returns for fiscal 2023 were projected to be approximately 1.5%.

In fiscal 2023, the Bank of Canada had successively increased its policy rate commencing March 2022 from 0.25% to the present rate of 4.5% effective January 25, 2023. This has resulted in a rapid increase in interest rates throughout the fiscal year, increasing interest income on cash balances as well as increased returns on investments made during fiscal 2023. Overall, interest returns for fiscal 2023 are forecasted to be 2.9% and returns are anticipated to increase further from 2023–25 fiscal years. While interest rates are rising in the short term, there is an inverted investment curve at present indicating lower rates for longer terms (i.e. 3 to 5 year terms). This anticipated decline results in a slight decrease to expected returns for fiscal 2026.

As interest rates have begun to strengthen, and through the laddering of investments to reduce the influence of interest changes to maximize returns, overall returns for the next three years are expected to increase over current year returns.

Expenses

The board has been able to effectively manage expenses over the past several years. For 2022–23, the budgeted expenses are estimated to remain similar compared to the previous year.

Effective January 1, 2020, as part of the new minister's regulation (O. Reg. 467/19: Boards' Payment of Expenses) made under the 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). As well under that regulation, effective April 1, 2020, the board also began to pay investigative and some legal costs under the FPPA which was reflected in the board's 2020–21 budget and expenses going forward. The board is not required to pay expenses related to judicial reviews of its decisions or expenses related to any subsequent appeals under the FPPA. The board is also not required to pay expenses related to appeals, judicial reviews, prosecutions and legal fees with respect to the Grains Act. The expenses from 2023–2026 reflects the board paying for all administrative program delivery costs 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.

In 2021–22 fiscal, the board conducted an actuarial review in line with its good governance practice to complete a review approximately every five years. This initiative involved an independent 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 review occurred in 2016–17 fiscal. The board reviews and monitors the soundness of all the funds on an annual basis and reviewed the results from this actuarial review in March 2022. The results indicated that the funds are highlight dependent upon revenue (check-off fees and investment income). The target surplus position for the grain corn and canola funds are decreasing over time which indicates that the funding is insufficient and recommends the grain corn and canola check-off fee be increased in the near future to ensure these funds remain solvent. The board discussed these recommendations with stakeholders on December 16, 2022 and are seeking letters of support from stakeholders to move forward and respectfully recommend to the minister a change in the check-off fees for grain corn and canola. Any changes to the check-off fee would require minister approval. The board will continue to monitor all the funds against the target levels to ensure they are growing or maintained at an appropriate level.

Based on the board's projections for 2023–2026, we anticipate generating enough revenue to cover the expenses (administrative program delivery and board support service expenses only), however claims are the unknown factor relevant to the board's operating expenses. A projected amount of $347,000 is included annually for budgeting purposes to be paid out of the funds. Revenue is also very dependent on the interest rates and check-off fees.

Key achievements from 2022–2023

• A new information sheet is now available on agricorp.com to help farmers understand the claim process and required timelines;
• Review and management of fund performance completed;
• Chair and vice chair participated in interviews for agency mandate review as conducted by the Ministry of Agriculture, Food and Rural Affairs;
• Actuarial review completed by an independent third party vendor;
• Business planning and risk assessment completed;
• Appointment and re-appointment of board members achieved;
• Orientation for new board members completed; and
• Annual review of policies and guidelines was undertaken with minor (non-materials) or no updates made.

In 2022–23, there were no claims submitted from producers or owners seeking payment from the funds and no payout from the funds.

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. The ministry is leading this programs review and has engaged the board and grain industry stakeholders in these discussions. These discussions began in 2019 and the ministry completed consultations in 2021 regarding proposed legislative changes based on feedback received from the board and stakeholders. Ontario Ministry of Agriculture, Food and Rural Affairs' (OMAFRA) is finalizing next steps and will keep the board and stakeholders informed on the status.

The board worked collaboratively with the ministry to make recommendations for vacant member positions. The board continues to focus on the effective management of the funds. All policies and guidelines are reviewed annually to both ensure that the material continues to be relevant, and that the members remain informed.

Mandate

The board is responsible to the Minister of Agriculture, Food and Rural Affairs (minister) and is constituted under the authority of the FPPA and the regulations made thereunder:

• O. Reg. 70/12 (Payments From Funds For Grain Producers)
• O. Reg. 321/11 (Fees Payable to Boards)
• O. Reg. 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,

1. To administer its fund;
2. To investigate all claims made to it under this Act and to determine the extent of their validity;
3. To grant or refuse the payment of claims or any part thereof and determine the amounts and manner of payment;
4. To recover any money to which it is entitled under this Act by suit in a court of competent jurisdiction or otherwise; and
5. to carry out the functions, and exercise the powers, prescribed by regulation.

The vision of the board is to protect the financial interests of Ontario producers who have sold grain corn, soybeans, wheat and canola, as well as owners who stored grain with elevator operators. The board's vision supports the Ontario Ministry of Agriculture, Food and Rural Affairs' (OMAFRA or ministry's) priorities of a thriving agri-food sector and rural communities seizing economic opportunities.

Governance

The board members are accountable to the minister, through the chair, for setting goals, objectives and the strategic direction for the board. The board operates under the authority set out in the FPPA and in accordance with the Memorandum of Understanding (MOU) between the minister and the chair. The MOU defines the relationship between OMAFRA and the board, including the roles and responsibilities of the minister, the deputy minister, the board chair and the board members. Effective December 2, 2021, the chair and minister affirmed the existing MOU (that was effective June 5, 2017). The MOU is effective until it is revoked or the parties sign a new MOU. 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 OMAFRA.

The board must comply with provincial government directives that guide agencies in the delivery of services to the public. The Agencies & Appointments Directive is a Management Board of Cabinet Directive and sets out the requirements for the board as a provincial agency.

Board structure

The board is comprised of a minimum of five members as appointed by the minister for terms of up to three years. Members are eligible for reappointment. The minister also has the authority to appoint a chair and a vice chair. Currently, if either the chair or the vice chair position are vacant, the ministry will publicly post a job advertisement on the Public Appointment Secretariat (PAS) website where existing board member and general public can apply”

To ensure stakeholder confidence in its decisions, the board requests stakeholders to identify candidates for recommendation to the minister for appointment. Currently membership of the board includes nominees from the Grain Farmers of Ontario (GFO), the Ontario Agri Business Association (OABA), and the Ontario Canola Growers Association (OCGA). These industry groups select candidates based on the board's key competency needs of: industry experience as a primary agricultural producer or grain dealer; financial experience in accounting or investments; board governance and risk management. These key competencies enable the board to continue to meet its mandate and enhance performance as a board.

The board typically meets quarterly, or as required by business demands (e.g. to review and adjudicate claims).

By convention, the board has considered a full complement to be eleven part-time members. There are currently 11 board members including the chair. The vice chair role was vacant since August 30, 2022 however following a PAS job advertisement for the vice chair role the minister appointed an existing board member to the position of vice chair effective February 24, 2023. Appendix 1 includes a list of the board members.

Mandate letter of direction from minister

As part of the AAD process the minister issues an agency mandate letter of direction to the chairs of all board-governed agencies on an annual basis to inform their business plan. The board chair received the mandate letter of direction from the minister in October 2022 which outlines high-level, achievable expectations for the 2023–24 fiscal year (see Appendix 3 for a copy of the letter). The board has aligned its strategic approach and priorities to support these as follows:

• Ensure that a strategic focus on the financial soundness of the funds for grain producers is prioritized.
• Ensure the maintenance of an effective system of internal controls and compliance with applicable requirements to promote transparency and accountability.
• Measure and communicate to stakeholders the performance of the funds for grain producers against established targets and have an established investment policy that is reviewed annually to ensure long-term sustainability of the funds.
• Continue to investigate and adjudicate claims in a fair, equitable and timely manner.
• Continue to engage with the ministry on supporting the implementation of actions recommended through the review of the financial protection programs.
• Use the board's expertise to support government priorities to modernize program delivery and food sector innovation.

These will be measured and addressed in the board's 2023–2026 business plan as follows:

• Annually review claims adjudication guidelines as well as ensure the processing of claims is completed fairly and with minimal delays.
• Annually review the performance of the funds against established targets and annually review the board's investment policy and provide audited financials and an annual report to stakeholders following minister's approval of the annual report.
• Effective oversight, risk management and expenditure management of the funds (e.g. use tactics such as an actuarial review; annual agency attestation).
• Work with OMAFRA to support the financial protection programs review and to identify opportunities to ensure that grain producers and owners have access to stable risk management tools.
• Meet all AAD provisions and requirements (i.e. agency attestation).
• Work with OMAFRA to identify and ensure candidates with appropriate skills, knowledge and experience are appointed.

Strategic direction

The board's strategic direction is focused on the following broad priorities which are essential in keeping with the board's mandate and responsibilities:

• To ensure long-term sustainability of the funds administered by the board;
• To continue to investigate and adjudicate claims in a fair and equitable manner;
• To grant, refuse and recover claim payments under the FPPA, as appropriate; and
• To ensure appropriate agreements are reviewed, understood and in place to fulfill the mandate.

To support the priorities outlined above, the board has established five goals with corresponding objectives and activities that are used to assist with fulfilling their mandate.

The goals which the board focuses on are:

Ensure long-term sustainability of the funds — The board has hired Agricorp for the day-to-day administrative functions 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. The board will request actuarial reviews on the funds periodically or as required and will only invest the funds in instruments that are permitted by the MOU. The board has an established Statement of Investment Policy that is reviewed annually.

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 will assist the board to ensure that the adjudication process is understandable, fair and has minimal delays.

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. Legal counsel assists the board with the review of the documentation.

Ensure a high performing board — The board works with OMAFRA and stakeholder groups to seek recommendations and approvals for appointments to the board. The board also maintains an orientation manual and provides new members with orientation and training.

Consult with industry stakeholders — The board participates in a minimum of one stakeholder meeting every two to three years or more frequently, as needed.

Overview of current and future programs and activities

The following describes the Grain Financial Protection Program (GFPP) and the four funds and the role of the board in the GFPP:

Grain Financial Protection Program (GFPB)

The GFPP was introduced in the mid-1980s, following a series of grain elevator bankruptcies. Under the Grains Act, Agricorp (a provincial crown corporation), through the designation of a chief Inspector who has statutory authority on licensing, is responsible for delivering all aspects of grain dealer and elevator operator licensing and inspection components of the GFPP under the Grains Act. The following are the licensing components of the GFPP:

• Determining the financial responsibility of grain dealers and elevator operators;
• Inspection of storage sites; and
• Licensing of grain dealers and elevator operators.

Grain Financial Protection Board funds

• The board administers four funds: grain corn, soybean, canola and wheat.
• Income comes from producer check-off fees and the investment income generated from those fees.
• 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.

Grain Financial Protection Board

The board is a trust agency that operates under the legal authority as set out in FPPA and Ontario Regulation 70/12. The board manages the respective funds for Grain Corn, Soybeans, Wheat and Canola Producers under the financial protection component of the GFPP and adjudicates claims to those funds.

• The board will investigate and determine the validity of applications for potential payment from the funds.
• They decide to pay or refuse to pay on a claim based on the evidence and provisions of the FPPA and regulations.
• Payment to producers and owners is made after the board has determined that their claim is valid and the board has approved the claim for payment.
• The board's main activities are to manage the funds effectively and prepare for claims when they occur.

The board administers the funds and, as such, in addition to adjudicating claims, its focus is on the growth of the funds and on prudent management of expenditures.

The board does not administer any other program and no new programs are being considered for the 2023–2026 timeframe.

Resources needed to meet objectives of mandate and strategic directions

Human resources and staff numbers

The board does not have staff. All resources are provided through a service agreement or as agreed to in the MOU between the board and the minister.

The board currently has a multi-year service agreement with Agricorp to provide governance, secretariat and financial services to the board. Staff that provide support to the board have no role in the licensing and inspection components of the GFPP. These functions are separate to avoid any perception of a possible conflict of interest in adjudicating the claims that arise from a licensed dealer's/elevator operator's default in payment, while protecting the integrity of the GFPP.

Resources, services, and support provided to the board

Board service agreement with Agricorp

Both governance/secretariat and financial support services are provided to the board by Agricorp as agreed to in the service agreement between the two parties. A multi-year service agreement for governance, secretariat and financial service agreement was signed in 2017–18 for a three-year term, with options to extend for two separate one-year terms. Since 2019, the board has extended the service agreement for one-year terms. The current agreement is set to expire on March 31, 2024.

The board and the ministry are in discussions for a revised delivery agreement to possible include the governance secretariat services that are provided to the board into one agreement.

Additional support services to the board

The board has additional support available for legal counsel and the investigation of claims. These services are provided by the ministry to the board and effective April 1, 2020, these costs are paid for by the board.

• Investigative services are provided by the Agriculture Investigations Unit within OMAFRA's Food Safety and Environment Division; and
• Legal counsel/services are provided by OMAFRA through the Ministry of the Attorney General, Legal Services Branch.

At this time the board is not considering other service providers for these services. If other service providers are considered, the board will engage the ministry as part of these discussions if needed so that consideration can be given to the broader implications for the program and the ministry from a risk management perspective.

Environmental scan

The board is responsible through its mandate to manage the funds and to adjudicate claims presented by producers and owners of canola, grain corn, soybeans, or wheat. Producers or owners may submit a claim to the board to potentially cover a portion of their losses.

The factors that could impact the board and/or the health of the funds are outlined below.

External drivers

Interest rates

Interest rates play a significant role in the overall health of the funds. With the decrease and unpredicted low interest rates from 2020 until March 2022, the board's investments were providing a lower rate of return than expected (projected to be approximately 1.5%). While interest rates are rising in the short term (i.e. 1 to 2 years), there is an inverted investment curve at present indicating lower rates for longer term investments (i.e. 3 to 5 years) and a slight decrease expected in investment returns for 2026 fiscal year. The board's approach in the short term is to ladder investments over the next 1 to 3 years. The 2021–22 actuarial review also recognized this that shorter duration investments are being favoured over long-term investments The board will continue to review investments quarterly to ensure that the funds are invested in high quality investments that are consistent with the Trustee Act provisions referenced in the MOU and the board's investment policy, while also considering the current unprecedented low interest rates.

Commodity prices

Commodity prices have experienced great volatility that may increase cash flow challenges and increase the amount of risk to the dealer/elevator and, in turn, to the funds. This volatility has made it harder to predict the future of commodity prices. The risk to the funds is as commodity prices increase, it is expected that the claims paid from the funds would be more expensive.

Elevator operators and dealers

In recent years there has been an increase in the number of smaller businesses offering grain elevator and/or dealer services. Many of these are producers increasing their own on-farm storage capacity and using their surplus storage capacity to store grain for other producers. An awareness campaign by stakeholders has resulted in an increased knowledge of the requirement to deal with a licensed facility. Agricorp addresses unlicensed facilities and dealers as soon as they are apparent with actions under the Grains Act.

If a dealer or elevator is not licensed, a review of that organization's financial responsibility is completed. This may determine the risk that the organization will default on their obligations to a producer or owner. Agricorp occasionally receives complaints about unlicensed operators, but the number has decreased from a few years ago when many producers increased on farm storage capacity and provided custom storage to neighbours while unlicensed. In the majority of the cases, the complaint has resulted in the operator completing an application and the issuance of a license for the grain elevator.

Out of province dealers

In the past few years, there have been a few dealers based in Quebec or the United States that require a license. Producers are free to sell and transport crops to other jurisdictions. But if operations are purchasing from Ontario producers, a license is required. There are several out of province dealers that are currently licensed.

Increased demand for government accountability and transparency

Increased scrutiny of both private and public sector organizations has resulted in increasing demands for accountability. Government, including agencies, need to perform their functions effectively and efficiently in a transparent and responsible manner. They must show that government directives are complied with and outcomes are achieved through clear and regular reporting. The Management Board of Cabinet requires greater board accountability, transparency, reporting and standardized risk identification and management. In response to the need for greater transparency, the board completes and submits to the ministry a quarterly risk assessment report.

Legislative, strategic and policy changes

The board was established under the FPPA, which is administered by OMAFRA. Any change to the FPPA could have a direct and profound impact upon the board and its activities. Through the MOU, the minister and the chair have agreed to work closely together when the Ontario government is considering regulatory or legislative changes for the agency. The chair and the minister meet as required to discuss any legislative changes that may impact the board.

As part of the April 2019 provincial budget announcement there was mention of a review of the financial protection programs and changes to the FPPA through Bill 100. The FPPA was amended January 1, 2020 to enable regulations requiring the board and industry to pay for all expenses relating to the administration of both the FPPA (fund management and claims adjudication) and the Grains Act (expenses related to annually determining financial responsibility of dealers, licensing, inspections and enforcement). Also, effective April 1, 2020, the board and industry began to pay investigative and some legal costs under the FPPA. The board is not required to pay expenses related to judicial reviews of its decisions or expenses related to any subsequent appeals under the FPPA. The board is also not required to pay expenses related to appeals, judicial reviews, prosecutions and legal fees with respect to the Grains Act.

Financial Responsibility Review Committee (FRRC)

An important part of grain dealer and operator licensing involves determining the financial responsibility of dealers and elevator operators. The FRRC is established to support the determination of the financial strength of applicants. The FRRC includes an Agricorp staff member and two Chartered Accountants that review files and provide licensing recommendations to the chief inspector. The program helps to ensure that only financially viable operations are licensed to purchase from producers.

As part of the financial protection programs review, in 2021 the ministry led a review of the FRRC's mandate 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 FRRC continues to play an important role in supporting the Program.

Internal drivers

Funds

An actuarial review was conducted in 2021–22 fiscal year and the results were presented to the board in February 2022. The results indicated that the funds are highly dependent upon revenue (check-off fees and investment income). The target surplus position for the grain corn and canola funds are decreasing over time which indicates that the funding is insufficient. The board did support adopting new target surplus levels for 2022–23 fiscal year which is reflected in the GFPB performance measures and targets. The board discussed the actuarial review recommendations with stakeholders in December 2022 and will continue to monitor all the funds against the target levels to ensure they are growing or maintained at an appropriate level.

Board expertise and development

The funds have a low frequency of claims. This makes it difficult for board members to acquire “hands-on” claims adjudication experience. The board annually reviews the Claim Adjudication Guidelines and claims training is held to assist board members to adjudicate claims. board members bring a variety of skills and experience and an annual review of these guidelines promotes a consistent approach to adjudicating claims.

Board knowledge management and succession planning

Deliberate planning and consideration are given to the expiry date of members' terms to minimize the loss of experience and knowledge during member transition periods. A continuous review of existing board members' terms is conducted. Appointment tenures are staggered, in part to promote continuity.

Performance measures and targets

The following indicators define the outcomes the board is committed to achieving. These indicators are the basis for measuring and evaluating impact.

Implementation plan — Performance measures and targets for each objective are identified below. As part of its continuous improvement process, the board has set goals to ensure that objectives are achieved. The board also tracks progress against these measures and prepares an annual report.

Financial budget

The estimated revenues and expenses for the next three years are provided in Table 1 (below). The board is subject to an annual audit by the Office of the Auditor General of Ontario.

Projected board revenues

The board manages four separate funds for grain corn, soybeans, canola and wheat. Revenue is received from producer check-off fees and interest earned on the balance of the funds held. Producers contribute to the funds by paying check-offs on crop that is sold.

Check-off fees

The last adjustment to the fees was approved by the minister effective July 1, 2013. They are based on the volume of crop sold and current fees are outlined for the four commodities below:

• Corn: 1/10 of 1 cent/tonne
• Wheat: 5 cents/tonne
• Soybeans: 10 cents/tonne
• Canola: 20 cents/tonne

The 2021–22 actuarial review results recommended that the grain corn and canola check-off fee be increased in the near future to ensure these funds remain solvent. The board discussed these recommendations with stakeholders on December 16, 2022 and are seeking letters of support from stakeholders to move forward and respectfully recommend to the minister a change in the check-off fees for grain corn and canola. Any changes to the check-off fee would require minister approval.

The minister has the authority to set these check-off fees under the FPPA. The FPPA authorizes the board to withdraw amounts from the funds for specific purposes, such as to compensate producers for valid claims when a dealer has defaulted on a payment or to compensate owners when an elevator has defaulted on a storage responsibility.

Investment interest

Interest from the board's investments is a key source of revenue on the balance of the funds. The funds are invested in instruments authorized under the MOU and as per the board's investment policy.

Due to the decrease in Bank of Canada's policy rate to record lows from March 2020 to March 2022, the board's investments in Guaranteed Investment Certificates (GICs) were providing a lower rate of return than expected over the last couple of years. 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 staggers the terms and maturity dates of GICs and uses this laddering strategy to reduce the influence of interest changes and to maximize returns.

Projected board expenditures

Governance, secretariat and financial support services — The FPPA requires the board to meet all its expenses from the funds except for the remuneration of those of its employees who are public servants employed under Part III of the Public Service of Ontario Act, 2006. The board has entered into a contract with Agricorp for these administrative services to the board, which expires March 31, 2024.

Professional, technical or other assistance to the agency — An example of this type of cost would be the actuarial reviews conducted approximately every five years. An actuarial review was conducted in 2021–22 fiscal as included in the budget and the expenses came in under budget. The next actuarial review is planned for 2026–27 fiscal year and will be reflected in that budget.

Board legal services and investigation — Effective April 1, 2020 the board pays the costs for most legal services associated with the administration of the FPPA and investigative costs. Legal services also reviews any board agreements, governance documents and provides other legal advice as requested. This is a new expense reflected in the board's financials for 2020–21 onward. The board budgets for legal and investigative services with the assumption that there are claims to adjudicate that would require legal and investigative services. The budget is set to allow for this potential contingency that may occur.

For any general legal and investigative expenses that are invoiced to the board (i.e. review of agreement), these will be allocated among each of the four funds based on the board's expense allocation policy. For any legal and investigative services relating to claim adjudication that are invoiced to the board, these will be allocated to the fund based on the commodity being claimed. In the case of multiple commodities being claimed, the allocation will be prorated based on the percentage of total tonnes claimed by commodity. This is outlined in the board's expense allocation policy which is reviewed by the board annually.

Costs of determining financial responsibility — Since November of 2010 and as indicated in the 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. Agricorp is that person. Effective January 1, 2020, the board and industry have been required to pay for all expenses relating to the administration of both the FPPA (fund management, claims adjudication) and the Grains Act (annually determining financial responsibility of dealers, licensing, inspections and enforcement). Paying the full program delivery costs for licencing and enforcement under the Grains Act however has no authority for licencing and enforcement.

Claim payments — All claim payments and associated costs are paid by the four funds. The total cost depends on the number and complexity of the claims received by the board and the amount of payments on approved claims. The board's budget for claims is set with the assumption to allow for the potential contingency that claim payments may occur and be paid from the fund annually. While claims have been infrequent, the board still sets this assumption for budget purposes based on their mandate to ensure there are funds actuarial sound to pay claims.

The previous actuarial report used $263,000 as the claim payment. The 2021–22 actuarial review used a claim severity of $347,000 (that includes for potential catastrophic losses) which is higher as a result of the increased commodity prices since the last actuarial review and the assumption that the potential claim payments to be paid out would be larger.

Financial Responsibility Review Committee (FRRC) — The FRRC is an external third-party vendor (2 chartered accountants) hired by Agricorp that provide advice and recommendations to the chief inspector regarding the financial risk assessment of grain license applications. The FRRC members review approximately 265 files annually. In 2020, Agricorp signed a contract agreement with the two existing FRRC members for a period of one year, with an option for Agricorp to extend for two additional one-year periods (therefore the final date of the term is October 25, 2023). The parties all agreed and exercised the extension agreement option in 2021 and then again in 2022.

The board is responsible to pay for all program administrative costs effective January 1, 2020, including FRRC costs. The board has no role or authority in the licensing process as the licensing authority remains Agricorp's.

Board member per diems, travel and meal expenditures — A financial review determined that board remuneration (per diem and incidental costs, including travel) is paid by OMAFRA and not from the funds. This change came into effect in November of 2010.

Proposed capital expenditures

The board does not have any capital expenditures planned for 2023–2026.

Table 1. Financial table — expenditure and revenue (as of February 28, 2023)

Initiatives involving third parties

Approximately every 5 years the board conducts an actuarial review, an initiative that involves an independent third-party vendor, to determine how potential claim payments may impact the funds. As an agency of the government, the board adheres to the Ontario Public Sector (OPS) Procurement Directive when making any purchases for goods or services from a third-party vendor. The board conducted the procurement process and the successful vendor conducted an actuarial review in the 2021–22 fiscal. The cost of this expense was paid from the funds (the last actuarial review was completed in 2016–17). The next actuarial review is planned for the 2026–27 fiscal.

No other initiatives involving third parties is planned for 2023 to 2026.

Information technology

All Information technology support is provided by Agricorp through the maintenance of ready access and secure storage of documents developed and received on behalf of the board. The mandate of the board does not require electronic service delivery.

Risk assessment and management

The AAD requires a risk-based approach to be used to focus ministry and central agency resources on higher risk agencies and to ensure compliance with directive requirements. The table below provides a description of the risks identified and the plans to mitigate these risks. Aside from the actions detailed below, risk management is also supported by a strong commitment by the board and its service provider to meet or exceed the performance measures outlined in this plan.

Communication plan

Annually, the board will inform the stakeholders of the status of the funds by providing them with a copy of the board's audited financial statements and annual report when available.

Schedule C of the MOU between the board and the ministry outlines the communication plan that the board will follow.

Key messages for communication

• Clearly outlines the process and regulations that are followed in making a decision.
• Identifies section(s) of the applicable Act(s) and regulations used to arrive at a decision.

Key messages for broad based communications

• All funds are maintained on an actuarially sound basis.
• The board adjudicates claims made under the FPPA and determines the payment, if any, to be made from the fund.
• The FPPA protects the financial interests of producers who sell grain corn, soybeans, wheat and canola to licensed dealers. It also protects the financial interests of owners who store grain corn, soybeans, canola or wheat with licensed elevator operators.
• ·Agricorp is responsible under contract with OMAFRA to administer the licensing and inspection components of the GFPP including the determination of financial responsibility of licence applicants.

Vehicle used to communicate key messages

• In the event of a claim, the board will advise each claimant and the dealer/ operator via letter on the outcome of their claim.
• The minister will consult with the chair, as appropriate, when significant new directions for the board are contemplated. The deputy minister will meet with the chair, as necessary, to discuss matters of mutual importance to the board and OMAFRA.

Actuarial review report from 2021–22

• The board informed the industry stakeholders of the results from the 2021–22 actuarial review by sharing the final report by email on September 26, 2022. Also, a meeting was held with stakeholders on December 16, 2022 where analysis from the actuarial review including the revenue received through the check off fees and recommendation for changes was presented and discussed.

Appendix 1: current board appointees (as of February 28, 2023)

Appendix 2: history of claims (as of February 28, 2023)

Appendix 3: ministers mandate letter for 2023–24

Dave Buttenham
Chair, Grain Financial Protection Board
1 Stone Road West
Guelph, ON N1H 8M4

Dear Mr. Buttenham,

I am pleased to share our government's 2023–24 priorities for the Grain Financial Protection Board (GFPB). As chair, you play a vital role in helping the GFPB achieve its mandate. It is important that your agency's goals, objectives, and strategic direction continue to align with our government's priorities and direction. As part of the government of Ontario, agencies are expected to act in the best interests of the people of Ontario and ensure that they provide value for money to taxpayers. Agencies are also required to adhere to government policies and directives.

Per the requirements of the Agencies and Appointments Directive, this letter sets out my expectations for the GFPB for 2023–24. These priorities include:

Competitiveness, sustainability and expenditure management

• Identifying efficiencies and savings through innovative practices, and/or improved program sustainability.
• Operating within the agency's financial allocations.

Transparency and accountability

• Abiding by applicable government directives and policies and ensuring transparency and accountability in reporting.
• Adhering to accounting standards and practices, and responding to audit findings, where applicable.
• Identifying appropriate skills, knowledge and experience needed to effectively support the board's role in agency governance and accountability.

Risk management

• Developing and implementing an effective process for the identification, assessment, and mitigation of agency risks, including any future emergency risks.

Diversity and inclusion

• Developing and encouraging diversity and inclusion initiatives by promoting an equitable, inclusive, accessible, anti-racist and diverse work environment.
• Adopting an inclusive approach to stakeholder engagement to ensure all voices are heard to inform policies and decision-making.

Data collection

• Improving how the agency collects and uses data in decision-making, information sharing and reporting, to inform outcome-based reporting and improve service delivery.

Digital delivery and customer service

• Exploring and implementing digitization for online service delivery to ensure customer service standards are met.
• Using a variety of approaches or tools to ensure service delivery in all situations, including pursuing delivery methods that have evolved since Covid-19.

I am also sharing several priorities specific to the GFPB:

1. Ensuring that a strategic focus on the financial soundness of the fund for grain producers is prioritized including using the results of the recently completed actuarial report to guide your sustainability strategies, and providing ongoing oversight of Agricorp as it pertains to its role in managing assets GFPB is accountable for.
2. Ensuring the maintenance of an effective system of internal controls and compliance with applicable requirements to promote transparency and accountability. This includes effective oversight of expense management and controls to ensure efficiency and sustainability.
3. Measuring and communicating to stakeholders the performance of the fund for grain producers against established targets and have an established investment policy that is reviewed annually to ensure the long-term sustainability of the fund.
4. Continuing to investigate and adjudicate all claims in a fair, equitable and timely manner with a focus on reducing burden and improving the customer service experience. I expect the board to make decisions on claims based on prudent and consistent adherence to established operational procedures, as well as effective customer service in supporting Ontario farmers with the processing of claims and ensuring that the adjudication process is fair and has minimal delays.
5. Continuing to engage with the ministry, as needed, to support the implementation of recommendations made through the review of the financial protection programs to update/modernize board governance/powers and procedures, among other things.
6. Supporting government priorities to modernize program delivery and drive agrifood sector innovation and resilience by using these lenses to inform the board's operational decisions and supporting ministry policy-development, as required, by leveraging the industry knowledge/expertise of its members.

I look forward to hearing how these priorities will be reflected in the agency's upcoming business plan and in ongoing agency operations.

Thank you and your fellow board members for your continued commitment to the GFPB. Your work and ongoing support is invaluable to me and the people of Ontario.

Should you have any questions, please feel free to contact my office or David Hagarty, Assistant Deputy Minister, Policy Division.

Sincerely,

Lisa M. Thompson
Minister of Agriculture, Food and Rural Affairs

cc: David Hagarty, Assistant Deputy Minister, Policy Division