2024–2027 Agricultural Research Institute of Ontario business plan

Executive summary

The Agricultural Research Institute of Ontario’s (ARIO) 2024–2027 business plan outlines the agency’s commitments as they relate to the Ministry of Agriculture, Food and Rural Affairs’ (OMAFRA) priorities, the agency’s duties, and rights as outlined in the ARIO Act, the Memorandum of Understanding (MOU) between ARIO and OMAFRA, ARIO’s vision, and the 2024–2025 Annual Letter of Direction.

To deliver on ARIO’s commitments, duties, responsibilities and direction the agency will concentrate its efforts in these 5 ways:

• provide strategic advice to the minister on agri-food research and innovation
• implement the ARIO strategic plan 2023–2032 with the vision of enabling high impact and transformational research for Ontario’s agri-food sector, which includes the ARIO’s infrastructure strategy (IS) to modernize the province’s agri-food research and innovation infrastructure
• promote the Ontario agri-food research and innovation system
• provide oversight of open research programs, and the 14 ARIO-owned research properties
• modernize the ARIO’s governance, procedures and processes to strengthen the foundation of the ARIO as a modern, effective agency focused on research and innovation

OMAFRA’s priorities

OMAFRA works to strengthen and increase competitiveness and productivity in Ontario’s agri-food sector and rural communities to create a stronger economy for the province and ensure sustainability of agriculture through research and innovation. OMAFRA directly supports and advances the Grow Ontario strategy, which is the government’s plan to strengthen the agri-food sector, fuel economic growth, ensure an efficient, reliable and responsive food supply and address ongoing agri-food sector vulnerabilities through new innovations. OMAFRA strives to unlock the potential of Ontario’s rural, agriculture and food systems through several key priorities.

These keys to achieving success include robust protection, contribution and assurance of the agri-food system in the agri-food sector (enforce and improve food safety and animal, plant, and human health), providing stewardship of Ontario’s capacity to produce food (soil and water quality, climate change), expanding agriculture in the north, and fostering economic development in the agri-food sector (food processing, bioproducts) while building a high quality of life for both rural and urban Ontario communities alike.

ARIO Act

ARIO was created in 1962 by the Agricultural Research Institute of Ontario Act (ARIO Act). ARIO is an agency of OMAFRA and is classified under the Agencies and Appointments Directive (AAD) as a Board Governed Operational Service Agency reporting to the Minister of Agriculture, Food and Rural Affairs.

Through the ARIO Act, ARIO has the authority to own real property. This authority helps the ARIO to fulfill the agency’s duties and responsibilities to stimulate research and innovation in the agriculture and food sector.

OMAFRA is proposing to modernize the ARIO Act. The proposed revisions to the legislation would help strengthen the agriculture and food industry through research and innovation and continue to position the agri-food sector on the cutting-edge of the best production and productivity techniques, practices, technologies and tools.

Through the proposed modernization of the ARIO Act, this would further Ontario’s status as a world leader in agriculture and agri-food research and innovation. Increasing competitiveness and productivity as well as the development and adoption of new technologies in the agriculture and food industry are key goals set out in the Grow Ontario strategy. The proposed updates to the ARIO Act are one way the Ontario government is strengthening the agriculture and food industry, supporting economic growth, and ensuring an efficient, reliable and responsive food supply for Ontarians.

A discussion paper was released on March 15, 2023, to seek feedback on the proposed changes to the ARIO Act. The first reading of the proposed ARIO Amendment Act occurred on November 27, 2023, and second reading of the proposed legislation passed on February 20, 2024.

MOU Between ARIO and OMAFRA

As a board-governed operational service agency, ARIO has a MOU with OMAFRA. The purpose of the MOU between ARIO and OMAFRA is to:

• establish the accountability relationships between the Minister of Agriculture, Food and Rural Affairs, the ARIO director of research and the chair of ARIO on behalf of the agency
• clarify the roles and responsibilities of the minister, the director of research, the chair, the deputy minister, the comptroller and the agency’s members
• clarify the operational, administrative, financial, staffing, auditing and reporting arrangements between ARIO and OMAFRA

The current MOU between OMAFRA and ARIO was last revised in June 2019 and affirmed in 2021, to ensure alignment with the ARIO’s 2016 mandate review and the requirements of the AAD.

ARIO’s vision

Vision

Enabling high impact and transformational research for Ontario’s agri-food sector.

Mission

ARIO is a trusted, authoritative, credible organization reporting to the minister on:

• research and infrastructure priorities, strategic relationships and programs
• optimizing and leveraging the research infrastructure owned by ARIO
• driving research into action, evaluating and communicating the value of research
• fostering, a prosperous, sustainable and resilient agri-food sector

Strategic pillars

Infrastructure: Ontario’s research and innovation infrastructure and assets are leveraged to maximize benefits for the agri-food sector.

Advice: Provide bold, informed strategic advice to the Minister on transformative, high-impact agri-food research and innovation.

Strategic relationships: Establish strategic relationships that enhance the research ecosystem and align with the priorities and objectives of the ministry, the agency and sector.

Communications: Communicate the value of Ontario’s agri-food research, including opportunities and successes in research and innovation.

ARIO’s 2024–2025 annual letter of direction

In the fall of 2023, Ontario’s Minister of Agriculture, Food and Rural Affairs, the Honorable Lisa M. Thompson, issued the annual letter of direction to the ARIO chair, outlining the government’s 2024–2025 priorities and expectations for all agencies including priorities specific to the ARIO.

2024–2025 OMAFRA agency priorities

Competitiveness, sustainability and expenditure management

• Operating within the agency’s financial allocations.
• Identifying and pursuing opportunities for revenue generation, efficiencies, and savings through innovative practices, and/or improved program sustainability.
• Complying with applicable direction related to accounting practices and supply chain centralization, including leveraging Supply Ontario’s bulk purchasing arrangement and working with Supply Ontario on strategic procurement initiatives.
• Complying with realty interim measures for agency office space.
• Leverage and meet benchmarked outcomes for compensation strategies and directives.

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, and providing the minister with annual skills matrices to ensure boards have qualified appointees.
• Reviewing and updating agency key performance indicators (KPIs) annually to ensure efficiency, effectiveness and sustainability.

Risk management

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

Workforce/labour management

• Optimizing your organizational capacity to support the best possible public service delivery, including redeploying resources to priority areas, where needed.
• Supporting the implementation of the Community Jobs Initiative by identifying opportunities to relocate new or existing agencies to lower cost communities across Ontario (as per MBC Realty Directive, s. 5.4), as applicable.
• Aligning Human Resource and Accommodations strategies with Ontario Public Service directives and policy.
• Adhering to TB/MBC labour and bargaining mandates.
• Prudently and efficiently managing operational funding and workforce size.

Diversity and inclusion

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

Data collection, sharing and use

• Improving how the agency uses data in decision-making, information sharing and reporting, to inform outcome-based reporting and improve service delivery.
• Increasing data sharing with Supply Ontario when applicable regarding procurement spending and planning, contract arrangements and vendor relations to support data-driven decision-making.

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.

Priorities specific to ARIO

Property ownership and management

• Continue to provide value for money in efficiently owning and managing the Province of Ontario’s agri-food research facilities and infrastructure.
• Continue to provide effective long-term oversight and management of ARIO’s physical assets through advancing the development of ARIO’s asset management policy and comprehensive asset management plan.
• Continue to provide advice on the long-term strategic plan and recommendations for the province’s agri-food research infrastructure and strategies to continue investments in research infrastructure within the current fiscal limitations.
• Engage with the agriculture and food industry, academia and innovation experts to evaluate future research infrastructure needs.
• Continue to pursue the revitalization of the province’s agri-food research infrastructure necessary to support innovative research and the long-term sustainability and growth of the agri-food sector by developing state of the art, integrated research infrastructure capacity supported by shared funding models and partnerships between industry and government.
• Increase the pursuit of strategic relationships in support of industry-government research and innovation priorities and modernizing research infrastructure.
• Continue to engage with the poultry industry boards and the University of Guelph to enable the planning, design and construction of new poultry research facilities at Elora.

Strategic planning and advice

• Continue to provide strategic advice to the minister and the ministry on current research priorities and programs that contribute to prosperous, competitive, and sustainable agricultural and food sectors and rural communities in Ontario.
• Continue to develop and implement ARIO’s vision and strategic plan to enable high impact transformational research and innovation.
• Continue to evaluate opportunities for research and innovation in agriculture and food, including, but not limited to, northern agriculture, genomics, robotics and automation, technology development and food processing.
• Continue to enable adoption of innovation by supporting the objectives of the Grow Ontario strategy.
• Implement strategies that will improve the strategic management of ARIO’s interests in intellectual property (IP) and commercialization, including the expansion of programming that supports plant and animal breeding research in Ontario.
• To continue to work in close coordination with OMAFRA, industry and academia, to proactively identify and prepare for future trends that may impact the Ontario agri-food and agriproducts sectors and position ARIO facilities to meet the needs of emerging research priorities and deliver “Ontario made” solutions, technology and best practices to the sector.

ARIO Act modernization

• If passed, work on the implementation of the new legislative changes to the ARIO Act.
• Continue to evaluate non-legislative options to modernize the agency.

Enhance collaborations, global expertise and partnerships

• Increase collaboration with universities/colleges/research institutions, industry organizations including Indigenous peoples, communities and organizations to enhance strategic relationships and to leverage ARIO’s assets and expertise for the benefit of the province and agri-food sector.
• Directly engage with the sector for the purpose of expanding innovation demonstrations and technology deployment through strategic relationships at the ARIO research centres.
• Seek opportunities to leverage expertise and knowledge to address emerging issues and enable the sector to compete in the global market.

Communications

• Continue to develop and initiate a process to implement an optimized communications plan for the agency with a key goal to increase awareness both internally in OMAFRA and externally.
• Actively promote the research activities and network of research centres within the agri-food sector.
• Work with University of Guelph, Vineland Research and Innovation Centre (VRIC) and other partners to ensure that research is communicated to farmers in a format that is useable and accessible.
• Explore options to brand ARIO to increase the prominence and awareness of the agency within the agri-food sector provincially, nationally and globally to help attract research talent, collaborative partners and investment.

AAD: ensuring transparency and accountability

As per the AAD, ARIO continues to abide by applicable government directives and policies and ensuring transparency and accountability in corporate and other reporting.

Good, effective and efficient governance is foundational to the success of ARIO. This is a most critical element to enable both the ARIO strategic plan, and the broader operational and corporate efforts of ARIO.

Environmental scan

The environmental scan describes the parameters in which ARIO operates. It identifies key trends, events and issues that present risks and opportunities for the agency, which allows ARIO to be proactive in assessing and responding to changes in both the external and internal environment that may have an impact on the operation, strategies and tactics undertaken by the agency.

Both external and internal factors have been identified and described in detail, along with, where applicable, the responses to how the factor is being addressed, mitigated or capitalized on by ARIO planning and initiatives for the upcoming year.

External factors

Economic outlook and fiscal and funding pressures

While anticipated to somewhat improve, the economic outlook and expectations for the Canadian economy into 2024 remain subdued^{footnote 1[1]}. The questioning continues as to whether the higher interest rates can effectively cool the economy enough in this climate to avoid a full recession, keep an imminent recession to as short as possible, or if, in fact, Canada is already amid a recession^{footnote 2[2]}. The consensus is that less uncertainty concerning interest rates will be present in 2024, with a unanimous prediction that the Bank of Canada will begin to drop rates back down. How far down towards the considered 2-2.5% neutral level remains to be seen, with some saying the Bank of Canada could be aggressive and meet that benchmark by the end of 2024, while the majority leans that the goal will not be reached until mid-2025^{footnote 3[3]}.

The predicted severity of a potential recession and the overall economic outlook for Ontario in 2024 will undoubtedly shape government responses, particularly in terms of funding and spending measures. As economic conditions worsen, governments are likely to face continued fiscal challenges, impacting their ability to allocate resources to various sectors, including agriculture.

In the face of a recession, governments often reassess their spending priorities to address the economic downturn. Agriculture, being a critical sector for food security and rural livelihoods, may be a focal point for government intervention. However, the severity of a recession will play a crucial role in determining the extent of financial support allocated to agricultural initiatives, in particular research. If the economic downturn is mild, governments may maintain or slightly increase funding for agricultural research to ensure the sector’s resilience and sustainability. Conversely, in a more severe recession, there might be increased pressure to cut spending across the board, potentially impacting agricultural research budgets. Agricultural research, while critical for long-term sustainability, may face competition for limited resources against more immediate needs, such as healthcare, infrastructure and social services.

The hope is that policymakers will attempt to strike a delicate balance between addressing immediate economic needs and ensuring the continued progress towards long-term sustainability and resilience of the key sector that is agriculture research. Collaborative efforts between the government, research institutions, and the agricultural industry will be essential in crafting effective policies that support innovation and enhance the sector’s capacity to adapt to changing economic conditions.

ARIO opportunities, risks and responses

ARIO funding strategy development with targets, measures and KPIs

Stable and continued sources of funding will be important to address fiscal/inflationary pressures. An ARIO funding strategy will look to explore options and consider the risks to increase and diversify the agency’s cash inflows, expand ARIO’s sources of funding, and integrate research infrastructure capacity which could be supported by shared funding models and partnerships between industry and government that may enable increased sector collaboration and foster research and innovation across the agri-food industry.

This strategy will look to mitigate economic, fiscal, and funding pressures while continuing to ensure alignment with the agency’s mission to enhance the sustainability and profitability of Ontario’s agri-food sector. This involves continuing to align with the Grow Ontario strategy but ultimately making sure projects (major and minor) to move forward are funded in a sustainable manner. Continued reductions to the ARIO capital budget over the last 5 years, alongside the current economic factors, continue to put strong pressure on ARIO’s IS and has resulted in the deferral of key capital projects.

The continued evolution of the ARIO strategic plan will see the adoption key performance indicators which can enable opportunities and mitigation of risks, while providing current state feedback on what strategies are working and which should be modified. To better frame working results as well as communicate them, it will be impactful for ARIO to have these data points to fully illustrate the resounding impact that ARIO-led research and activities has on the greater agri-food sector.

Asset management plan development

The ongoing reinvestment, and modernization of ARIO’s network of capital research infrastructure is crucial for the agency to meet the province’s Grow Ontario strategy goals and the agency’s mandate.

Implementing an asset management plan can help capitalize on ARIO to maximize its impact on the agri-food sector within this constrained fiscal environment. Optimizing resource utilization, concentrating efforts in areas of high impact while maintaining cost-effectiveness and sustainability. This plan will outline strategies for maintaining, upgrading and optimizing these facilities, considering both immediate needs and long-term sustainability goals for minor and major capital projects. This may also lead to better asset optimization, timely and consistent capital improvements/ repairs, timely decommissioning and modernization of ARIO’s infrastructure assets.

ARIO stakeholder engagement strategy and communications/branding plan

ARIO’s role and strength in providing strategic advice, and active engagement with agri-food stakeholders, industry partners, and the ministry enables the ARIO to recommend innovative research for the agri-food industry to boost productivity and improve the competitive advantage while creating stronger industry support for and adoption of, research and innovation initiatives.

This will be accomplished through the development of the ARIO communications and branding plan. Providing regular updates on research outcomes, demonstrating the agency’s impact on the agricultural sector, and raising the profile of ARIO while showcasing success stories may increase ARIO’s presence in the industry and enhance the feedback members receive in tailoring their ongoing research advice to the minister. Through this ARIO can work at fostering collaborations and aligning with the Grow Ontario strategy by connecting and coordinating emerging and immediate agricultural needs that are being heard from around the agri-food industry.

Changes in the operating environment: interest rates, inflation and cost of goods

Entering 2024, the Bank of Canada has indicated that interest rate adjustments to achieve their target 1-3% neutral stance are being contemplated^{footnote 4[4]}. The Bank of Canada’s success thus far in starting to drive inflation down towards their often stated 2% goal is attributed to increased interest rates that have cooled the resilient Canadian economy^{footnote 3[3]}. Despite this, Canadians have been cautioned not to expect a return to sub 3% pre-pandemic interest rates at all for 2024, and even into the near future^{footnote 5[5]}.

There is a delicate balance to the rate adjustments and the Bank of Canada has identified the need to be cautious about leaving interest rates too high for an extended period. Potential changes in interest rates carry implications for various sectors, including agriculture and food, as they can influence borrowing costs, investment decisions and overall economic activity. The agri-food sector will need to closely monitor the evolving interest rate landscape throughout 2024.

In addition to agriculture and food, other consumer goods and housing are expected to experience ongoing price increases. Food price inflation is projected to linger around 4-5% over the coming year, influenced by global market dynamics and the weakness of the Canadian dollar^{footnote 6[6]}. Housing-related expenses, including rent and mortgage interest costs, are also expected to rise faster than the Bank of Canada’s 2% inflation target. As inflation eases, there might be a shift from 4-5% to 2-3%, but the general trend is upward, indicating that consumers are likely to pay more in 2024 than in the previous year^{footnote 4[4]}. For the agriculture and food sectors, these inflationary pressures highlight the importance of effective cost management strategies and resilience to price fluctuations in the market.

ARIO opportunities, risks and responses

Erosion of buying power

The erosion of buying power that ARIO contends with for capital build projects continues through the unexpected and sustained rising interest rates, compounding rising or sustained high inflation for materials and labour costs.

Unanticipated property management issues and costs

As a property owner, at any one time, ARIO is coordinating and managing the maintenance, dispositions, disposals and other factors activities on any number of the properties and assets in ARIO’s portfolio. A certain number of these activities have caused the agency undue issue or cost, be that delays in property disposal, or unanticipated maintenance and assessments required for properties. The expenses incurred because of these unanticipated issues cause significant budgetary pressures for the agency.

Deferral or pausing of planned projects

These challenges have caused the deferral of some core projects that will persist until an increased allocation of funding from the province and/or other sources can be acquired to address the rapid rate of inflation with respect to materials, equipment and labour costs to effectively implement core projects, at or near the originally planned scope. The development of a comprehensive funding strategy is a key facet for mitigating the challenge of these financial risks.

Research projects aimed at the pressing agri-food issues

With the rising costs of consumer food and groceries, research aimed at food sovereignty, with the risk-mitigation for climate change, presents opportunity for support from several different parties. Research aimed at producing more food with less inputs or managing that production to produce the highest successful return on investment in food production, would go far in aiding the improvement of domestic food production in the province and help in reducing the rising consumer food costs.

New and unique strategic relationship building with a focus on funding

As part of the commitment to new and innovative ways to strategically fund projects, ARIO may continue to work collaboratively with the ministry and industry stakeholders in refining current and exploring new strategic relationships for future infrastructure projects, both minor and major in scope. The issues of inflation and costs of goods affects all participants along the agri-food value chain, providing ample opportunity for ARIO to collaborate with parties dealing with the same pressures to produce mutually beneficial outcomes.

Ensuring maximal asset utilization

Simultaneous and jointly with refining current strategic relationships and forging new ones, a managed and controlled approach to maximizing asset utilization is imperative at all the ARIO’s 14 research centres. Realizing the greatest return on investment out of ARIO assets will be required to navigate an inflationary environment that naturally diminishes buying power and erodes profit margins. The implementation of the asset management plan can optimize utilization of assets to enhance efficiency and further reduce or at least compensate for increased operational costs. This plan will contribute to long-term resilience against cost pressures associated with inflation.

Changes in the operating environment: demographic, labour market, employment and population growth

Demographics play a crucial role in shaping the landscape of agricultural research. Historically, the aging population in Canada would have implications for the agricultural workforce. An aging workforce could lead to a shortage of skilled researchers and scientists, emphasizing the need for targeted efforts to attract and retain talent in agricultural research^{footnote 7[7]}.

However, what’s continuing to occur in Canada is that current population growth is outpacing previous estimates and benchmarks for both domestic growth and immigration. With another 1.5 million new arrival immigrants expected over the next 2 years alone, there will likely be no shortage to the labour supply growth, but given that fact, any driver of true economic growth will be slow to realize. This is primarily due to the job market needing to keep up with supply of new available labourers, but it will inevitably be outpaced which will cause an anticipated rise in unemployment nearing Q4 of 2024 to levels not seen since the onset of the COVID pandemic in early 2020^{footnote 2[2]}.

ARIO opportunities, risks and responses

Attraction of elite researchers

Funding and support for research initiatives are closely tied to labor market conditions. A robust labor market can attract top-tier researchers, while a scarcity of skilled workers may pose challenges for the implementation of research projects. Given the landscape of labour surplus, there should be an opportunity for ARIO to be optimistic about being able to, with the support of academic institutions and collaborations, drive ARIO’s research and innovation goals.

Research support for food sovereignty and production efficiency

Like the pressures of rising cost and inputs into food production, a growing population places increased demands on the agricultural sector to produce more food sustainably. This pressure produces opportunity for ARIO to play a pivotal role through research in developing technologies and practices to enhance productivity in food production while minimizing environmental impacts.

Designing and adapting scalability to projects and infrastructure

Understanding population growth trends and consumer preferences is essential for tailoring research advice to meet the evolving needs of a growing and diverse population. Using an asset management plan that reflects demographic and population growth considerations will contribute to long-term sustainability and relevance. This is by ensuring that the necessary quantitative importance is placed on the scale of projects, as well as the future proofing of anticipated major builds and upgrades so that appropriate size and scale allows for a forward-thinking solution to a population that is growing much faster than was anticipated.

Communications and stakeholder engagement on trending research requirements

In the decision making for considerations on demographics, labour market, employment and population shifts, a strong communication and branding plan will allow ARIO to have a higher profile in the agri-food sector, to secure stronger industry support and for leveraging higher adoption of research and innovation initiatives. ARIO’s stakeholder engagement, and collaborating closely with industry, policymakers and local communities will foster input and feedback to help form and align ARIO’s strategic decision-making and advice on research with demographic trends, enhancing the impact on the agri-food sector.

Changes in the operating environment: geopolitical

Geopolitical risks relating to conflicts or tensions arising out of interactions between countries can include potential for commercial impact, national security impact or impact domestic or international political interests. It also includes potential foreign interference in research. Current energy costs have been sitting at relatively flat and sustainable levels, but as seen in recent years and with recent conflicts (Russian/Ukraine, Middle East, US/Iran), any sort of geopolitical instability will cause at least short-term volatility to the energy market, through to longer lengths of increased pricing uncertainty^{footnote 8[8]}.

Geopolitical instabilities distorting energy markets could directly affect the ability of the Bank of Canada to achieve its stated goal to return the inflation rate to a range of 2-3%. This would lead to further rate hikes by central banks^{footnote 4[4]}. While conflicts, both continuing and new, are a common cause of recessions, the spontaneity and severity in which they have arisen in recent years have dramatically impacted markets. Tensions across the globe put strains on not only energy costs but introduce volatility into international shipping costs, which in turn can have adverse effects on inflation and thereby force the Bank of Canada to maintain higher interest rates for longer to compensate^{footnote 9[9]}.

These conflicts may also disrupt the global supply chain, impacting the availability and prices of key agricultural inputs such as fertilizers, pesticides and machinery. These disruptions can pose challenges to agricultural research by limiting access to essential resources and technologies. Researchers may face difficulties in obtaining crucial materials for experiments, potentially slowing down progress and innovation^{footnote 10[10]}.

ARIO opportunities, risks and responses

Sustainability and adoption of energy-efficient practices

ARIO can best adapt to these factors and capitalize on the opportunity of exploring long-term sustainability-related solutions that address the problem both in the immediate and for the future. Investing in energy-efficient practices while also seeking cost-effective alternatives for essential inputs will help mitigate the impact of volatile energy costs caused by geopolitical instability, on the ongoing costs of research initiatives and operating expenses. ARIO has forecasted these risks and has planned initiatives in the minor capital program to work towards energy resilience and reduction or recapturing of energy usage, through solar panel installation at multiple centres, to the potential implementation of biogas digesters and water recycling/recirculation installations at others.

Extreme weather, environmental impact, and aging and inefficient assets and infrastructure in the face of climate change

Climate change poses significant risks to Ontario’s agri-food sector, impacting everything from food production to infrastructure and businesses. Ontario’s agri-food industry which contributes $48.8 billion in gross domestic product (GDP) to the provincial economy (6.4% of total Ontario GDP)^{footnote 11[11]}, faces specific risks like declining productivity, crop failure and issues and challenges raising livestock due to climate change.

Climate-induced impacts directly affect agricultural practices and productivity. Extreme weather, including heavy rains, intense heat and humidity, flooding and more, disrupt traditional growing seasons, leading to concerns about declining yields, livestock health and indirect threats to water and soil quality. As an example, a most pressing issue is extreme heat. It’s predicted that incrementally Ontario will see increases in maximum daily temperatures of between 3°C and 5°C, along with the overall number of days over 30°C, increasing by factors, as we approach 2050 and beyond^{footnote 12[12]}.

Ontario’s agriculture naturally relies heavily on water access and quality for irrigation, livestock hydration and crop production. However, factors such as changing precipitation patterns, increased demand from urban areas and pollution can affect this availability and quality. Growers may face difficulties in accessing sufficient water for irrigation, and/or rising costs to purchase water from outside sources.

Biodiversity loss is a concern for the agri-food sector since it can disrupt ecosystem services, such as pollination and natural pest control, which are essential for effective crop production. Another key concern is soil health and quality degradation due to erosion, compaction, nutrient depletion and contamination poses significant challenges for farmers. These factors are often compounded in impact by aspects of climate change and extreme weather. Each growing season presents variables of these new or continuing challenges.

The state and age of assets, infrastructure and research centres facilities are particularly vulnerable to the impacts of climate change. Outdated facilities will struggle to adapt to changing climate conditions, hindering their functionality and efficiency in being able to conduct meaningful and relevant studies, or be at the cutting-edge of innovation. Aging infrastructure lacks energy-efficient technologies and sustainable design principles, contributing to higher emissions and resource consumption. As the global community intensifies efforts to mitigate climate change, research institutions, including national and provincial ones, must address the carbon and environmental footprints of their operations.

ARIO opportunities, risks and responses

Developing and supporting research that supports climate change risk solutions

ARIO, using its research centres, can play a pivotal role in aiding climate change mitigation for the provincial agri-food sector. Championing research into climate change risk mitigation offers valuable insights and solutions for sustainable agriculture and food production.

Resilient crop species development

The opportunity arose from climate change for the ARIO breeding program. Developing crops that can withstand changing environmental conditions, including extreme weather events, is essential for the future of agri-food. Novel research initiatives focusing on the development of new varieties that thrive in changing climates, such as the breeding program, can contribute significantly to ensuring food security and stability in the face of climate uncertainties.

Wider-sector reach, cooperation and collaborative efforts towards sustainable projects

Continued engagements and thematic discussions, particularly those related to climate change and sustainability, provide a platform for ARIO members to contribute strategic advice. The implementation of an engagement strategy/workplan can ensure further targeted discussions with agri-food stakeholders and experts on how to mitigate these climatic pressures and will enhance the agency’s ability to provide informed research advice to the Minister.

Engagements will also include a broad range of organizations, stakeholders and institutions. Engaging in dialogues, with specific goals for knowledge sharing, with sector organizations facilitates collaborative efforts toward climate change and environmental sustainability projects. This can involve engagement from sectors that may be tangential to agri-food without being agri-food (such as engineering). By embedding sustainable approaches into centre operations, ARIO can lead by example and contribute to broader sectoral transformations by exemplifying this at the research centres themselves.

Minor capital upgrades and management of aging assets and infrastructure

The examples that ARIO wants the research centres to embody speaks directly to the opportunity to retrofit or replace aging infrastructure that prioritizes energy efficiency, resilience to extreme weather events and low carbon emissions. The refinement and implementation of the asset management plan will be at the forefront, involving a comprehensive assessment of the existing infrastructure portfolio. This includes evaluating energy efficiency, planning to upgrade facilities for sustainability and planning for the integration of renewable energy sources.

Commitment to reducing environmental footprint associated with research operations

Through the incorporation of net zero or reduced energy consumption technologies at the centres, the agency becomes operationally more sustainable through reduced carbon footprints and operating costs, while also illustrating the benefits for adoption across the agri-food sector. These include the further investment in water re-use, waste transformative technologies such as biogas digesters and renewable energy sources such as photovoltaic arrays.

Research security

The growing potential and frequency of data security breaches, originating both domestically and internationally, poses a rising challenge to Canadian research community^{footnote 13[13]}. Addressing these evolving challenges has prompted federal and provincial suggestions to place renewed and focused emphasis to researchers on the creation and reinforcement of policies aimed at safeguarding research and to adopt additional precautions. This emerging data security threat has the potential to jeopardize the integrity of the country’s research, as well as pose risks to national security and long-term economic viability.

Recognizing the multifaceted nature of research security risks, which span, geopolitical, institutional, biosecurity and economic risks, there is an urgent call to identify and manage risks across these categories during the initial stages of project development. This proactive approach is essential for preserving the integrity of the research ecosystem and ensuring sustained economic competitiveness.

Key aspects of how research security has economic, geopolitical, institutional and biosecurity elements to it include:

• Economic risks relating to loss of IP and related revenue, loss of funding partnerships, legal or administrative reprisals, export licence controls.
• Geopolitical risks relating to conflicts or tensions arising out of interactions between countries, potentially because of differing national ethical standards. This can include potential for commercial loss, national security impact or the dual-use or weaponization of research, or potential to impact domestic or international political interests.
• Institutional risks relating to reputational risk, unwanted access to data or potential interference, theft of data, loss of trust between individuals or organizations/institutions, and reduction or elimination of funding opportunities.
• Biosecurity risks relating to the theft, misuse, diversion, intentional unauthorized release and accidental loss of regulated pathogens, toxins, other regulated infectious material and related assets, or the witnessing of the misuse of research or materials in weaponized viral or genomic forms^{footnote 14[14]footnote 15[15]}.

In Ontario, as part of the broader research security framework, academia, institutions and agencies alike are aligning their policies with national directives^{footnote 13[13]}. The consensus by all parties and policymakers is that research security risks need to be addressed during the project application and development stage, with the formulation of comprehensive policies and procedures to allow for careful selection of academic and non-academic partners.

ARIO opportunities, risks and responses

Enhanced research screening processes

The OMAFRA–University of Guelph agreement, branded the Ontario Agri-Food Innovation Alliance Agreement (alliance agreement) included new provisions to specifically address research security concerns. The alliance agreement commits the University of Guelph to have policies and procedures in place by January 1, 2024, to assist researchers in identifying, mitigating and managing economic, geopolitical, institutional and biosecurity research security risks. This commitment stipulates the performing of research security assessments prior to seeing research and innovation funds awarded or agreeing to allow activities to be carried out at an ARIO property. The new provisions in the alliance agreement also include notifying the ministry of material risks and allowing the ministry the ability and right to seek out additional, outside risk assessments.

Development of ARIO research security policies and procedures

There is now the opportunity for ARIO to develop its own research security and assessment framework which could be modelled on and certainly aligned with the policy developed by the University of Guelph for the alliance agreement. By doing so, ARIO can proactively address potential security risks associated with research collaborations for which it has oversight, ensuring the integrity of agricultural research initiatives.

These new policies and procedures would direct ARIO on how it safeguards ARIO-led activities and research occurring at the research centres including, as an example, the new Innovative Breeding Research Program. This project has a 1-year commitment to the University of Guelph, but after that, the program will be opened for to other parties to participate, and there will need to be consistent safeguarding best practices in place in anticipation of this.

Utilization of the research management system (RMS)

This is one of these pivotal tools that ARIO will use to aid in facilitating the capture and review of research security information. Through the RMS, ARIO can systematically integrate research security considerations into project application and development stages. The RMS is continually updated and there is appropriate information and resources for it that support researcher awareness and training since the onus is on the researcher as the first implementer of safeguarding responsibility. To mitigate research security risk, ARIO and/or OMAFRA also has the right to refuse a project based on material research security risks that cannot be mitigated.

Internal factors

The Ontario Agri-Food Innovation Alliance Agreement 2023–2028

The alliance agreement supports agri-food and rural research, laboratory services, veterinary capacity, research centre management and regulatory training for the agri-food sector. The ministry has had comprehensive agreements with the University of Guelph since 1997. The 2023-2028 agreement provides critical programming for the province that:

• supports public confidence in, and competitiveness and productivity of, the agri-food sector through activities that provide assurance in food safety and quality, protect plant, animal and related public health, and that support environmental sustainability
• ensures that Ontario has the tools and ability to respond to emergencies quickly and effectively within its agri-food sector, including disease outbreaks and extreme or sudden unpredictable events that threaten the viability and security of the agri-food sector
• supports an effective agri-food research and innovation system that: sustains core capacity and that may generate new capacity to undertake world-class research, maximizes the use of research infrastructure in a manner that provides benefits to all of Ontario’s regions, informs evidence-based public policy, increases public awareness and dialogue, supports the commercialization of new technologies and fosters frequent and quality collaboration among the agri-food and rural research community, the university, the agri-food sector and rural Ontario
• supports the development of a skilled workforce that is ready for employment opportunities offered by the agri-food sector and rural Ontario, including development of highly qualified veterinary capacity to meet Ontario’s needs
• grows third-party investment in research, innovation and data initiatives, which are focused on the agri-food sector and rural economic development
• improves access to and sharing of data to facilitate new agri-food and rural research and the application of research funded under the agreement

The alliance agreement also continues to create new opportunities to collaborate with key stakeholders on the delivery of the alliance agreement’s common goals and objectives throughout the province by attracting private and public sector investment and collaborations in support of agri-food research and innovation. With respect to ARIO’s research centres, the alliance agreement helps to address:

• facilitation of the use of the ARIO research centres as platforms for research and innovation, including the promotion and formation of collaborations among the agri-food and rural research community, the University, the agri-food sector and rural Ontario
• operation, maintenance and repairs of the ARIO properties in a manner that is cost effective, environmentally responsible, demonstrates economic value for the province of Ontario and is consistent with and in furtherance of the agricultural and rural research and innovation
• maximization of the use of research infrastructure available at the ARIO research centres in a manner that provides benefits to Ontario’s agri-food sector and rural communities

The alliance agreement is a significant economic driver in Ontario, returning an estimated $1.44 billion to Ontario’s GDP, well beyond the province’s investment. The ministry and the University of Guelph worked together throughout summer and fall 2022 to negotiate an agreement that reflects their joint vision that supports the success of Ontario’s agriculture, food processing and bioproducts sectors, the vibrancy of its rural communities and the health and well-being of the province’s citizens and the environment.

The alliance agreement enables and aligns with ARIO’s strategic plan including:

• increased Government of Ontario and ARIO visibility at research centres
• encouraging greater access to the research centres by third parties
• strengthened commitment to IEDI
• continued management of certain ARIO research centres by the University of Guelph

The Sustainable Canadian Agricultural Partnership (Sustainable CAP) 2023–2028

The Sustainable CAP began on April 1, 2023, and is a five-year commitment by Canada’s federal, provincial and territorial governments to fund a breadth of projects, including agriculture research projects. The Sustainable CAP program has entered year 2 of a five-year program. Currently there are Sustainable CAP transfer payment agreements (TPAs) executed between ARIO and academic institutions/organizations.

The 5 ongoing projects include:

• VRIC Infrastructure Delivery Agreement
• Poultry Design (University of Guelph)
• Swine Multi-Purpose Flex Research Space (University of Guelph)
• Research Station Platform Upgrades (University of Guelph)
• Lakehead University Agricultural Research Station (Lakehead University)

The Sustainable CAP is the next iteration of a federal, provincial and territorial framework that funds a breadth of projects, including agriculture research projects. Ontario’s Sustainable CAP program areas include:

• science, research and innovation
• productivity and growth
• protection and risk resilience
• and stewardship, with a goal of a sustainable, resilient, trusted and thriving Ontario agri-food sector that innovates to drive integrated economic growth and one-health solutions

This program may create opportunities for additional capital investments for ARIO; deploying Sustainable CAP in a methodical and strategic way to address high priority and critical infrastructure needs. The program could also enable increased opportunities for innovation demonstrations and technology deployment at ARIO’s research centres.

Grow Ontario: a provincial agri-food strategy 2023–2032

The agri-food sector’s vulnerabilities include labour shortages, outdated supply chain infrastructure and declining processing capacity. Vulnerabilities to Ontario’s food supply have been evidenced by temporary shortages, creating consumer concerns around food security.

Innovation and technology have been identified as key to a secure, safe and resilient agri-food supply chain. However, technology adoption is one of the most prevalent barriers limiting the global competitiveness and productivity of Canada’s agri-food sector. COVID-19 exposed critical deficits (such as low automation with modern equipment) in processing capacity that put the food security of Ontarians at risk.

In response to the sector’s vulnerabilities, the Government of Ontario announced in November 2022 the plan to build a strong, secure food supply chain and securing the province’s position as a food leader in Canada through new innovations with the release of Grow Ontario.

The Grow Ontario strategy focuses on 3 key priorities:

• strengthen agri-food supply chain stability
• increase agri-food technology adoption
• attract and grow Ontario’s agri-food talent

Under the strategy’s 3 priorities there are several goals the province aims to achieve which are to increase:

• the consumption of food grown and prepared in Ontario by 30%
• the production of food grown and prepared in Ontario by 30%
• Ontario’s food and beverage manufacturing GDP by 10%
• Ontario’s agri-food exports 8% annually
• the number of patents (over 250) and licenses granted through OMAFRA by 2030

Grow Ontario has emphasized ARIO’s role in support of enabling the province’s Grow Ontario strategy and the activities the agency may pursue under priority 2: increase agri-food innovation and adoption. These include:

• continuing the proposed ARIO Act modernization and review and bringing forward proposed legislative amendments to meet the future needs of the sector, including innovation and technology as a key area of focus
• expanding the agency’s engagement and work with sector partners to strengthen the agri-food research ecosystem and increase opportunities for innovation demonstrations and technology deployment at ARIO’s research centres to address industry opportunities
• continued investments in research infrastructure to encourage the use of innovation and enhance the sustainability and profitability of the agri-food sectors. This includes making great progress on projects such as the completion of the new Swine Research Centre at Elora and the proposed new Poultry Research Centre

IP management and retention

In the rapidly evolving knowledge-based economy, Ontario and Canada face the pressures to enhance IP performance across the nation. IP has been identified as a main economic opportunity as the lack of commercialization of domestic innovations continues to occur in Canada. Government reports continue to highlight that most patents, trademarks and designs (IP in general), are continually being developed in Canada but only fractions of these commercialized in the country, instead being sold or transferred outside the nation^{footnote 16[16]}. This stems from a lack of education and subsequent due diligence by domestic companies on how to properly manage and capitalize on their IP and their IP rights^{footnote 17[17]}.

Both federal and provincial measures were instituted and continue to evolve to help respond to the issue of better management of IP and overall IP retention for the province and country^{footnote 18[18]}. Provincial and federal reports and initiatives aligned many of their recommendations and strategies, including key items such as:

• development of standardized, online IP education, awareness and advice
• implementation of a centralized provincial resource hub to provide legal and IP expertise
• support for and/or development of strategic IP tools and legislation
• development of a governance framework for organizations supporting entrepreneurial and innovation activities

Localizing IP commercialization hubs within academic and research institutions is also an overarching goal for the provincial IP strategy. Centering education and awareness, along with the necessary resources, to centres where innovation and research are at the forefront allows for capitalization on IP retention at the source of its development. This embedding of IP guidance within these centres in several ways allows for better IP literacy and thereby allow for proper IP retention and exploration or execution of IP commercialization where and when appropriate^{footnote 18[18]}.

ARIO opportunities, risks and responses

Development of an IP strategy in collaboration with the Intellectual Property Ontario (IPON) agency

ARIO recognizes the pivotal role that IP plays in the agri-food sector. This initiative is particularly framed by the influence and guidance of IPON, an organization dedicated to enhancing economic growth in Ontario by leveraging the value of intellectual property. IPON collaborates with innovators, businesses and researchers at various stages of their IP journey, providing expert education, financial support and mentorship to help clients maximize the value of their intellectual assets.

Capitalizing on commercializing outcomes from research

A significant opportunity for ARIO exists, one which helps to meet several goals, including the potential contribution to capital and funding resources. To retain the financial interest on IP opportunities that ARIO has from research and activity from projects taking place at ARIO research centres, the agency will need to work collaboratively with the University of Guelph to ensure the appropriate resources, including those for staffing, are dedicated to that focus. ARIO’s new Innovative Breeding Research Program will foster economic growth and competitiveness of the sector by strengthening export market opportunities, enhancing research and innovation capacity, creating new made-in-Ontario intellectual property, while generating reinvestment funds for ARIO.

Actively increase sector IP generation

The opportunity equally exists while working with IP experts to not only develop a strategy to commercialize existing research outcomes, but for ARIO to further tailor and strengthen the management of ongoing research programs and actively foster more IP generation for the agency overall.

ARIO Act modernization

The act by which ARIO is accountable to the province was written over 60 years ago (1962). It governs the powers and responsibilities of the agency through the members on how they inquire, endorse and ultimately recommend areas of research to Minister of Agriculture, Food and Rural Affairs. It also outlines corporate reporting requirements, in conjunction with the MOU, and dictates how ARIO enters property ownership and management, among other parameters.

ARIO opportunities, risks and responses

Re-alignment with larger provincial guiding strategies

ARIO is committed to newer and larger provincial initiatives (such as the Grow Ontario strategy) and helps towards producing the maximal positive output for the agri-food industry in the province and country. Proposed changes to the ARIO Act could help towards these goals.

Overall update on definitions, focus and relevancy for the agri-food sector in the current climate

Given the age of the ARIO Act, it is proposed to amend the Act to include basic updates such as language, definitions, as well as the areas of focus and emphasis on certain priorities. This proposed refreshing would allow for the ARIO Act to maintain its position as a leader in research and innovation in the province.

Emergency preparedness and digital delivery

During the early phases of COVID-19, ARIO in consultation with OMAFRA and the University of Guelph put in place additional policies and procedures to support essential research operations. The plan helped minimize the impact of an emergency or incident at research centres and to allow operations to return to normal as soon as possible. Overall, ARIO research centres have maintained substantial research activities with research productivity returning to near normal levels in 2022–2023.

To ensure business continuity, ARIO research centres maintain an emergency response plan and a business continuity plan that outlines how the ARIO research centres will continue operating during an unplanned disruption in services. These plans are updated annually based on feedback from the emergency simulation exercises at the ARIO research centres.

Since COVID-19, ARIO has adopted a hybrid approach to ARIO member meetings. This cost-effective approach offers ARIO members the flexibility to engage virtually from any region. ARIO continues to strengthen its digital approach in relation to its operations.

ARIO’s strategic direction

Implementing the annual letter of direction, and overview of the current and future programs and activities

ARIO has turned its focus on the continued implementation of the strategic plan 2023–2032 and the refinement of its adopted KPIs to track and measure the effectiveness and impact of ongoing projects and initiatives. These KPIs and measurement methods will be key in deepening the analytics and inputs used to support strategic decision making, advice and direction provided by ARIO members to ensure the efforts of the agency are in alignment with, and achieving the objectives set out in the strategic plan and Grow Ontario.

ARIO members continue to be consulted on ARIO’s strategic plan to provide advice and ensure alignment with the annual letter of direction, the innovation and technology elements of Grow Ontario strategy and the province’s broader research priorities.

The ARIO strategic plan’s long-term objectives focus on the main pillars and workstreams of infrastructure, advice, strategic relationships and communications.

Infrastructure pillar: Ontario’s research and innovation infrastructure and assets are leveraged to maximize benefits for the agri-food sector

ARIO will continue to provide operational and managerial oversight of the province’s 14 agri-food research properties, comprised of 200+ buildings and 5,600 acres, to help ensure effective and efficient management of the research infrastructure portfolio.

ARIO will continue to oversee and implement strategic infrastructure renewal activities which modernize the research infrastructure and platforms across the province’s portfolio. This includes, overseeing the management of financial operations/programs related to the agri-food research properties and the financial reporting, and administration of related transfer payment agreements.

The core investments in the renewal of research infrastructure will maintain the sustainability and competitive advantage of Ontario’s agri-food sector.

Property management: University of Guelph and VRIC

The University of Guelph, as well as VRIC independently, provide program delivery, manage, maintain and modernize infrastructure at ARIO’s research centres to address research needs. Additionally, University of Guelph and VRIC implement the minor capital program across all ARIO’s properties.

Annual minor capital plans are submitted to ARIO by the University of Guelph and VRIC and approved at the beginning of every fiscal year outlining the priority projects for each research centre. These projects can be completed throughout the fiscal year or can cover multiple fiscal years depending on the size and scope of the project. The University of Guelph and VRIC submit an updated priority list in the third quarter of each year for approval and implementation in the subsequent fiscal year.

Funding for this program is received on an annual basis by way of a TPA between OMAFRA to ARIO.

University of Guelph and VRIC are continuing to work on several minor capital projects entering 2024. Current projects span across all 14 research properties, with projects ranging from life-cycle replacement and code compliance, to improving research program capacity.

University of Guelph

The Property Management Program supports the day-to-day operations and maintenance, repair and the use of the 13 ARIO Ontario agri-food research centres. ARIO, University of Guelph and OMAFRA have the shared goal of maximizing the utilization of assets available for research at the centres that are owned by ARIO and currently managed by the University of Guelph and VRIC in a way that that provides benefits across the entire province.

In the OMAFRA-University of Guelph Agreement consolidated annual business plan for 2024–2025, the University of Guelph has identified several activities to advance the objectives of the property management program in 2024–2025. Working in conjunction with ARIO, the University of Guelph will continue to support ARIO through many initiatives, including the continuing the planning, design and proposed construction of the major infrastructure developments occurring under ARIO IS, managing the projects in the ARIO minor capital program, and continuing to support ARIO in the development of an asset management policy and plan, among others.

VRIC

The ARIO-owned Vineland Research Centre is currently managed by VRIC an independent, not-for-profit, horticultural research and innovation organization established in 2007. VRIC is led by an independent board comprised of leading industry representatives. VRIC’s vision is to be recognized as Canada’s leader in horticulture research and innovation. Their resulting value proposition to Canada and the horticultural sector is to strengthen Canadian companies by making them globally competitive through the application of Vineland supported innovation.

OMAFRA, ARIO and VRIC staff frequently collaborate on research projects and industry initiatives including collaborating with staff from the Agriculture Development Branch on specific projects related to their specialty commodities, such as sweet potatoes, pest management, greenhouse tomatoes, hazelnuts, tender fruit and most recently on long-cane raspberries.

Strategic oversight and policy development: business priorities

IS

In support of the ministry’s mandate to support growth of the agri-food and agri-products sector, ARIO plays an important role in renewing the research capacity of the research centre portfolio. ARIO’s IS serves as a roadmap for renewing and revitalizing agri-food research infrastructure and strengthening innovation in Ontario by providing state-of-the-art, research platforms.

Under the first phase of the IS from 2008 to present, the agency made considerable progress in revitalizing the research system through targeted investments in new field crops, livestock and greenhouse facilities. In the early phase of the IS, it was recognized that livestock and greenhouse research facilities across the system were operating well past their planned life cycles, expensive to operate and prohibitive to retrofit given the complex nature of their operations and with some of the highest rates of overall research utilization. Investments in new facilities with support from industry improved the capacity and types of research that could be performed to support the competitiveness and sustainability of the sector.

It was also recognized in 2008 that some assets were in such poor shape that a consolidation and disposition strategy was also required as there were many assets no longer fit for research and/or could no longer be meaningfully brought back into service.

ARIO’s planned development of a hub and spoke model and a strategic asset management plan will provide key analysis and insights that will further assess and prioritize future infrastructure projects. The IS will strive to continue to invest in building new state-of-the-art infrastructure pending available funding, and advocate for continued and stable funding which addresses the ongoing research infrastructure needs of the sector, that lead to a competitive and sustainable industry that is a global leader in multiple disciplines of applied agri-food research.

Asset management policy and plan

ARIO now has an approved asset management policy in place. ARIO will now focus on developing a strategic asset management plan. The strategic asset management plan will help provide the framework for developing asset management plans for each station. The asset management policy includes policies and principles that drive improved asset management. This approach aligns with broader government policy for managing provincial assets.

The strategic asset management plan will enable ARIO to manage its assets optimally and sustainably, and asset systems, their associated performance, risks and expenditures over their lifecycle for the purpose of achieving ARIO’s IS (major capital and minor capital programs). This approach will help enable ARIO to make informed decisions on the maintenance, retrofitting and replacement of core research assets now and in the future. Further development of decision metrics focused on investments with the highest return on investment related to public good, sustainability and competitiveness outcomes for the sector.

ARIO infrastructure “hub-and-spoke”

The agency will look to develop the principles and framework of an ARIO hub-and-spoke model for ARIO’s network of research centres. The development of an ARIO hub-and-spoke model may enable the agency to enhance research focus and impact, centralize research strengths and ensure assets are maximized. The model may enable improved financial and infrastructure data linkages across research platforms to inform business decisions that enable opportunities and ensures ARIO’s infrastructure assets are deployed and enabled to maximize investments as efficiently as possible.

ARIO funding strategy

The ARIO funding strategy is captured under ARIO’s strategic plan 2023–2032 as a key activity. Funding for ARIO’s major capital program concluded at the end of fiscal 2022–2023. Faced with the previously noted fiscal challenges such as inflation, supply chain issues and increased labour costs. ARIO is seeking to develop a comprehensive funding strategy. A key objective of ARIO’s funding strategy is to identify and secure sufficient and stable funding to enable continued critical capital infrastructure projects that will continue to maintain and modernize the research platforms. Another key objective is to capitalize on approaches and opportunities that allow investment into research programming that will serve the long-term research and innovation objectives of the Grow Ontario strategy and of the agri-food sector. This strategy will be informed by the development of the ARIO asset management plan as well as the ARIO’s hub-and-spoke model — both plan and model are still to be developed.

A primary objective of this funding strategy is to identify approaches and opportunities for ARIO to secure long-term funding to enable continued capital research infrastructure and programming investments to achieve the objectives of the Grow Ontario strategy and the sustainability of the research assets. The funding strategy is critical to ensuring ARIO can continue to assist Ontario’s agri-food sectors to meet the challenges of the future through continued investment while also preventing a return to the era of obsolete and aging assets pre-2008.

Capital infrastructure: business priorities

ARIO will continue to implement and complete the construction of new major research infrastructure projects across the research centre portfolio in the upcoming years in line with available funding.

Major capital projects

Ontario Swine Research Centre, completion: Elora

In early fall 2021, ARIO and Ontario Pork commenced construction of a new swine research centre at the Elora Research Centre. Project construction was completed in August 2023 with the new centre being fully populated and commencing research projects by October 2023.

This new first-class research centre at Elora replaced the former Arkell Swine Unit which was constructed in the early 1980s. The new centre resembled the current state of industry production taking place in Ontario, leading to better applied research outcomes for the sector and a home for cutting edge swine research benefiting Ontario producers for decades to come.

Ontario Poultry Research and Innovation Centre, renewal – Elora

In April 2023, ARIO signed a MOU with the poultry industry boards and the University of Guelph to enable the planning, design and construction of new poultry research facilities at Elora.

These proposed new poultry research facilities will support cutting edge research for the sector for decades to come in the areas of nutrition, genetics, sustainability, economic, animal health and welfare and housing. The proposed build is meant to support research that will benefit Ontario poultry producers for decades to come.

The proposed new centre to be built at Elora would replace the current poultry research facilities at Arkell Research Station which were constructed in the early 1980s and are well past their useful lifecycle, costly to operate and difficult to retrofit due to age. Completion of the project is anticipated in 2026.

Minor capital program

The ARIO minor capital program is an ongoing multi-year program that allocates funds across the ARIO property portfolio to support significant investments in addressing maintenance, upgrades, program related systems, equipment and building/site infrastructure. The minor capital program is in line with ARIO’s broader IS to target development and renewal of ARIO’s core research infrastructure, and to support the move away from aging infrastructure by creating operational efficiencies.

Criteria for determining minor capital program needs on an annual basis is guided by priority areas such as human health and safety, animal health and welfare, code compliance, building integrity, life cycle replacement, efficiency, conservation and program capacity (maintain or improve) that affect building and program operations across the network of ARIO properties.

Minor capital priorities

Based on the previous year’s approval, priority projects and continued highlights for consideration in 2024 onward include:

• purchase of field research equipment for several Ontario Crops Research Centre sites
• planning for sustainability-related projects including a water recycling system for the Ontario Livestock Research Centres located in Elora to process manure streams
• installation of photovoltaic solar energy generation at various facilities at the Elora Research Station
  • sustainable and renewable utility supply is required to manage the increasing station operating costs
  • the facilities at Elora are ready for installation of 170,000 square feet of solar array
  • Phase 1: Swine building and Dairy, Phase 2: Beef and Feed Centre
  • Phase 1 construction to begin late spring 2024
  • $2 million over 5 years (project commenced 2023)
• purchase and installation of new centre and station signage at ARIO locations
• HVAC lifecycle replacements and operational upgrades at the Ontario Crops Research Centres (Bradford and Simcoe)
• planning for the renewal of research greenhouse facilities at the Ontario Crops Research Centre (Simcoe)
• calf research facilities at the Ponsonby General Animal Facility
• livestock environment chambers for emissions and metabolic work at the Ponsonby General Animal Facility
• completion of the quarantine, isolation and recirculation (Ontario Aquaculture Research Centre, Alma)

Additionally, University of Guelph and VRIC’s minor capital programs include the continuation of building condition reports and analyses. These will enable ARIO and property managers’ assessment of facilities and infrastructure across ARIO locations to inform planning, funding and decision making. These analyses continue to support ARIO’s asset management plan and are integral to the anticipation of large costs over the coming years.

It’s worth noting the forecasted funding shortfall for the minor capital program. Currently the program is oversubscribed and underfunded, with estimations over a five-year window detailing over 100 projects to be undertaken with an estimated budget of approximately $40 million, double the allocated budget of $20 million.

Advice pillar: provide bold, informed strategic advice to the Minister on transformative and high-impact agri-food research and innovation

ARIO is committed to providing bold, informed and strategic advice to the minister on agricultural research priorities that are in line with government strategic priorities such as Grow Ontario. The ARIO chair has continued with the practice of providing research-related recommendations to the Minister following ARIO meetings. This practice creates a direct and frequent means for the provision of research advice from ARIO to the minister and will continue in future years.

The agency will also continue work in close coordination with OMAFRA, industry and academia, to proactively identify and prepare for future trends that may impact the Ontario agri-food and agri- products sectors and position ARIO facilities to meet the needs of future research priorities and deliver “Ontario made” solutions, technology and best practices to the sector.

The business priorities in this section provide detail on how ARIO will enhance its research systems intelligence and advice for the long-term success of the agri-food research ecosystem and competitive and sustainable agri-food sector.

Grow Ontario: a provincial agri-food strategy

Innovation and technology adoption have been identified as being key to a secure, safe and resilient supply chain. Grow Ontario outlines a plan to strengthen the agri-food supply chain through the adoption of innovation and new technologies that strengthen the sector and enhance the competitiveness and create new growth opportunities.

In Grow Ontario, ARIO has been identified as a key enabler for the deployment and adoption of new technologies. In line with Grow Ontario, ARIO will work with OMAFRA and engage with industry to:

• Continue to bring forward and implement the proposed legislative modernization to the ARIO Act to meet the needs of today’s farmer, including proposing innovation and technology as a key area of focus.
• Build and maintain world-class research infrastructure to encourage the use of innovation and enhance the sustainability and profitability of the agri-food sectors. This includes work with the sector to maintain the modern research corridor in Elora including the new Ontario Swine Research Centre and the continued proposed progression on the design and build of the new Poultry Research Centre of Ontario.
• Increase research strategic relationships and joint investments with the private sector. Develop programming to support commercialization, piloting and demonstrations of new technologies and to apply new innovations on farm, in processing facilities and throughout the broader supply chain.
• Strengthen the ongoing research program management and, working with IPON, increase agricultural intellectual property generation and retention.
• Harness data form research centres including publishing data, when possible, to grow the use of data to support business decisions and increase efficiencies within the agri-food sector and value chain.

ARIO’s role in OMAFRA’s ministry research priority setting

ARIO is engaged by OMAFRA and provides advice to inform OMAFRA’s research agenda which provides consolidated documentation of current research and science needs. ARIO supports the ministry to communicate, explore and jointly invest in research activities to yield new knowledge, skills and solutions for key areas of impact within Ontario agriculture and agri-food sector and rural communities.

Throughout 2024–2027, ARIO will have a greater role in providing strategic advice to the ministry on research priorities and will be an enabler of collaboration on research priorities between academia, government and the industry in the following ways:

• provide insights across agriculture and agri-food sectors by enabling and providing advice on the OMAFRA research agenda that aligns with industry and government research priorities
• provide advice on knowledge translation and transfer activities such as the communication of research findings for a wide variety of audiences to ensure relevancy and applicability for on-farm or in-plant daily practices

ARIO Act modernization

Created in 1962, ARIO is a board-governed agency of the province accountable to the Minister of Agriculture, Food and Rural Affairs. The ARIO Act as written, gives the ARIO broad powers and responsibilities, including to:

• inquire into programs of research in respect of agriculture, veterinary medicine and household science
• select and recommend areas of research for the betterment of agriculture, veterinary medicine and household science
• stimulate interest in research as a means of developing in Ontario a high degree of efficiency in the production and marketing of agricultural products
• enter into agreements as it relates to property ownership, and the management of property

The ARIO Act would benefit from updated language to reflect the current research environment of the Ontario agri-food sector. For example, the ARIO Act currently limits the areas of research to agriculture, veterinary medicine and household science.

This focus is narrow and does not clearly address the current research and innovation initiatives occurring in the agri-food sector in Ontario.

Aligns with ministry and government initiatives related to innovation:

• OMAFRA’s Grow Ontario strategy, which focuses on strengthening the agri-food sector, ensuring an efficient, reliable and responsive food supply, and addressing ongoing vulnerabilities through innovations.
• ARIO will play a key role in enabling the Ontario government to achieve the objectives set out in this strategy.

In 2021–2022, the minister issued a mandate letter to the chair of ARIO, with direction to initiate a review of the ARIO Act and provide recommendations for modernization. In 2022, ARIO initiated the process to propose the modernization of the ARIO Act to help ensure the agency remains relevant in the context of today’s modern agri-food innovation and research environment and be on the cutting edge of research and innovation for the future.

In 2022–2023 the agency held agri-food stakeholder consultations from which recommendations on proposed legislative changes were discussed.

OMAFRA followed with additional consultation by posting a discussion paper on the Regulatory Registry for 30 days (March 15 to April 14, 2023) to collect input on proposed changes to the ARIO Act. The discussion paper was also directly sent to agri-food stakeholders, academic institutions, industry partners and Indigenous communities, including First Nations communities and associations as well as the Métis Nation of Ontario, for comment. Indigenous Affairs Ontario was engaged through the creation of a list of Indigenous communities to whom the discussion document was sent.

On November 16, 2022, as part of Fall 2022 Red Tape Reduction, Cabinet directed OMAFRA to continue consultations and other work required to support the proposed modernization of the Act, and to report back in Spring 2023 on the proposed amendments. The proposed amendments to the Act received first reading in the legislature on November 27, 2023, and second reading on February 20, 2024.

If the proposed amendments were to be approved, OMAFRA and ARIO would amend the existing MOU in 2024 to align with the proposed new legislation and to reflect its enhanced operational structure. As well, it is proposed that OMAFRA undertake a mandatory mandate review by 2025–2026, or earlier, which would include a full governance assessment, to confirm that the governance structure aligns with agency governance best-practice.

The act is an enabling piece of legislation, and the proposed amendments would enable the corporation to be more responsive to current and future agri-food sector needs. The benefits to stakeholders include a greater focus on innovation and would help to ensure Ontario remains a leader in innovative agri-food best practices while increasing the sector’s competitiveness and sustainability.

ARIO’s IP strategy

Part of ARIO’s role includes the management and administration of ARIO IP interests. ARIO and OMAFRA are looking to better understand and optimize the management of their IP interests.

In July 2020, the Ontario government launched the IP action plan – a comprehensive strategy to maximize the value of Ontario-grown research and innovation. The action plan consists of a series of initiatives focused on generating, protecting, managing and commercializing IP. From the IP action plan, IPON was created. IPON is Canada’s first provincial IP focused agency. The agency operates closely with government, our province’s postsecondary institutions and the innovation community, from which its clients will be drawn to increase access to IP strategy advice, legal expertise and educational resources across the province.

In 2021, the ARIO secretariat completed an IP strategy review which included an analysis and recommendation for improved strategic management of ARIO’s IP and commercialization processes and activities.

The strategy review informed ARIO’s IP and commercialization processes in the following ways:

• recommended best practices for ARIO’s future model of administration and management IP
• identify future or emerging IP, commercialization and innovation needs and broader impacts to the agri-food sector and rural communities
• inform ministry policy decisions on commercialization and innovation programming. Identify opportunities to increase government non-tax revenue streams
• ensure effective and efficient use of government funds supporting the commercialization system

In alignment with the direction of the Ontario government’s 2020 IP action plan, the 2021 OMAFRA IP strategy review, and the Grow Ontario strategy, the agency in collaboration with OMAFRA will continue to develop an IP strategy that will align with IPON. By doing so, the agency will enhance the strategic alignment, management and administration of IP and related commercialization support activities.

ARIO Innovative Breeding Research Program

ARIO receives a proportionate share (⅓) of IP revenues arising from research investments through the Ontario Agri-Food Innovation Alliance agreement, with the remaining funds retained by the University of Guelph.

Revenues received by ARIO from the licensing of successful plant breeding research were previously reinvested back into breeding activities at the University of Guelph though the Plant Germplasm Revenue Reinvestment Program (PGRRP) held and administered by ARIO. The PGRRP was paused in 2020–2021 while the ministry/ARIO contemplated a more strategic program with enhanced program oversight, accountability and clearer outcomes.

The first intake (Phase 1) of the new Innovative Breeding Research Program was launched to University of Guelph researchers in January 2024 to respond to stakeholder interests and address an existing gap in breeding research funding. The objectives of the program are:

• to address the sustainability and productivity of Ontario’s agri-food sector by developing new tailored plant varieties, livestock and aquaculture traits that support Ontario’s domestic food supply, promote biodiversity and plant and animal health and help to build resiliency to climate change
• to foster economic growth and competitiveness of the sector by strengthening export market opportunities, enhancing research and innovation capacity, creating new made-in-Ontario intellectual property and generating reinvestment funds for ARIO

Phase 2 will see the program open more broadly to research institutions beyond the University of Guelph. ARIO will work to build out new programming supports in the RMS – system designed to house records and information pertaining to research projects funded by OMAFRA – and apply lessons learned from Phase 1. Ongoing administration of Phase 1 projects will occur over this time.

Safeguarding research and IP

OMAFRA, ARIO, and the Ministry of the Solicitor General (SOLGEN) are taking steps to safeguard IP and ensure research security. OMAFRA and ARIO have worked with SOLGEN to develop a risk-based assessment process within the Ontario Agri-Food Innovation Alliance to evaluate potential economic and/or geopolitical risks associated with research proposals submitted for government funding and/or support in order to close any security gaps and mitigate risk.

IEDI

In line with the ministry’s commitment to equity, diversity and inclusion under its Anti-Racism Action Plan (2021), ARIO aims to strengthen IEDI in both the 2023 alliance agreement and within the agency.

ARIO continues to deepen its collective understanding of the legacy of the Indian residential school system in Canada and its continued impacts on the lives of Indigenous peoples across the country. ARIO remains committed to supporting Ontario’s work as it relates to the National Truth and Reconciliation Commission of Canada’s calls to action.

ARIO works closely with many Indigenous peoples, communities and organizations, as ARIO properties are located across numerous traditional territories and treaty lands. ARIO has open, active and ongoing dialogues with several Indigenous organizations, as the agency works with discussing land claims involving some agency properties. ARIO continues to engage with Indigenous peoples, communities and organizations to strengthen meaningful relationships.

In the upcoming year, ARIO will build, strengthen and advance IEDI professional development, values and priorities within the agency in order to inform ARIO’s function and operations. The agency’s business priorities regarding IEDI are as follows:

• Advance the agency’s knowledge capacity and awareness of both historical and present-day challenges and will strengthen meaningful and respectful relations with Indigenous peoples, communities and organizations. As an ongoing standing item at ARIO member meetings, the agency will commit to learning and discussing opportunities for the agency and its members on government-Indigenous relations.
• Recognize Indigenous leadership and contributions as essential for realizing meaningful Indigenous inclusion and equity. ARIO will take steps to canvas for a new member appointment that serves as ambassador at large for agri-food research and is recognized as a leader within Indigenous communities and organizations.
• Demonstrate ARIO’s ongoing support and leadership to advance IEDI principles in the 2023 alliance agreement between OMAFRA, University of Guelph and ARIO, particularly as they relate to research infrastructure.
• The agency’s IEDI leadership and work will also serve to advance the ministry’s commitments made under the Anti-Racism Action Plan.

Strategic relationships pillar: establish strategic relationships that enhance the research ecosystem and align with the priorities and objectives of the ministry, the agency and sector

The agency continues to advance its work on ARIO strategic relationships to increase collaborations with universities/colleges/research institutions, industry organizations and leverage ARIO’s assets in support of industry-government research and innovation priorities (such as the Grow Ontario strategy) for the benefit of the province and agri-food sector.

ARIO relationships: business profiles

ARIO use and access policy and plan

The agency will look to develop an ARIO access policy to inform the development of an ARIO use and access plan. As stipulated under the Alliance Agreement, ARIO and University of Guelph are developing a use and access plan for the ARIO research centres to:

• enable increase third-party access to ARIO research centres and enhance research and innovation activities
• clarify use and access provisions, including but not limited to the prioritization, decision making and activities at the research centres by different users

ARIO strategic relationship evaluation framework (SREF)

The initial ARIO SREF has been developed and used to evaluate the feasibility and risk of unsolicited proposals with a current focus of enhancements to research infrastructure. Strategic relationship activities can include those that are high impact in advancing ARIO’s vision and enable innovative and transformational research activities, including enhancing or maximizing resources in a way that ARIO could not accomplish alone.

ARIO secretariat is still in the reactive phase of strategic relationships pillar, with a view of one day moving to a more proactive state of pursuing strategic relationships with the appropriate resources and funding to support.

In the coming year, the SREF will continue to be refined and matured as more proposals are evaluated. ARIO secretariat will continue using the SREF and the established process of bringing potentially viable proposals to members as they emerge.

Lakehead University Agricultural Research Stations (LUARS)

The Sustainable CAP TPA between ARIO and Lakehead came into effect on April 1, 2023. The province and the agency are investing up to $1.65 million over 5 years for research programming, knowledge transfer and the operations and management of LUARS.

This multi-year investment will help improve the viability and yield of crops in Northern Ontario, develop and diversify the agricultural industry, and position it for continued growth. It also builds on many actions to support the resiliency of Ontario’s agri-food supply to help reach the ambitious goals for its expansion set out in the government’s Grow Ontario strategy.

The research will focus on areas such as best management practices for Northern Ontario agriculture, soil health, northern environmental sustainability, greenhouse gas emissions, climate change and the circular economy, and research and knowledge co-developed with Indigenous researchers and communities.

In the coming year, the agency will continue to provide oversight of the TPA’s activities and monitor the progress of the TPA’s objectives.

Communications pillar: communicate the value of Ontario’s agri-food research, including opportunities and successes in research and innovation

ARIO will initiate a process to implement an optimized communications plan for the agency with a key goal to increase awareness both internally in OMAFRA and externally. Sharing ARIO’s key mandate and how the agency works to ensure a competitive agri-food sector through investments in capital intensive research platforms.

Refreshed and permanent centre signage

ARIO will continue to work with the University of Guelph and VRIC to manufacture and install permanent signage at each of the 14 properties to raise the profile of the agency and champion ARIO’s infrastructure investments in research and innovation across the province. This communications initiative will spotlight the province’s ongoing investment in Ontario’s agri-food sector.

Communications and branding strategy development

ARIO is undertaking the development of a communications and brand strategy. The communications strategy is a minister’s priority, as noted in the most recent agency letter of direction.

The first stage includes facilitated discussions. The services of Synthesis Agri-Food Network have been procured to lead these discussions to gather intelligence on the agency’s current communications efforts, stakeholder perspectives on what should be communicated and best methods for communications. These facilitated sessions will help to inform the priorities and approach for the development of a communications and brand strategy for ARIO. In January and February 2024, 4 sessions have taken place, including:

• ARIO secretariat
• ARIO board members
• minister’s office
• key stakeholders

The second stage of the strategy will build on the facilitated discussions and will include the development of a fulsome communications and brand strategy for ARIO.

As part of the broader initiative to develop a communications strategy for ARIO, the agency will continue to engage stakeholders. For example, in 2023 ARIO engaged in piloting a successful half-day dialogue session with a small group of agri-food stakeholders from across the sector including expertise and professional experience in agri-business, agri-tech/innovation, food processing and academic researchers. In the fall of 2024, further engagement with stakeholders is planned that looks to position the agency as a connector and aggregator of agri-food research priorities across the industry.

Resource requirements to meet objectives, mandate and strategic directions

Resources to meet ARIO’s goals and objectives are provided through the following:

• Ministry staff provide secretariat support to ARIO to effectively operate the agency. The ARIO secretariat is comprised of OMAFRA employees within OMAFRA’s Research and Innovation Branch (RIB).
• ARIO receives annual transfer payment funding from OMAFRA for the minor capital program and payment in lieu of taxes (PILs).
• ARIO receives revenue from leasing land and buildings within its infrastructure portfolio. This revenue is used to offset and cover the full cost of the rising cost of PILs.
• ARIO receives IP revenues realized over time from research projects funded under the Alliance Agreement.
• ARIO also leverages the Sustainable CAP wherever possible to support infrastructure projects across the agency’s research centre portfolio.
• ARIO major capital funding concluded on March 31, 2023, and the agency has highlighted the need for stable sources of funding to support the continued implementation of the IS. Without some form of continued major capital funding, core infrastructure and renewal projects planned within the strategy will be deferred indefinitely pending the provision of available funding and end of life assets will be wound down without replacement.
• The ARIO minor capital program has not received a budget increase since its inception in 2008 and coupled with the conclusion of ARIO major capital funding in 2023 and rising costs due to inflation, ARIO is prioritizing a funding strategy in 2024–2025.
• For infrastructure projects, ARIO will continue to seek government funding sources, but may also continue to explore non-government sources. This may include possible funding levers such as increasing industry contribution to capital projects, and further developing ARIO’s strategic relationships for co-funding opportunities to support infrastructure, research and innovation and technology deployment.

Resource requirements

ARIO is in line with the human resource and accommodations strategies that align with Ontario Public Service policies.

Anticipated spending incurred by OMAFRA on behalf of ARIO

*Include expenses incurred with or on behalf of ARIO, such as transfer payments to the government organization and administrative expenses incurred by the ministry on behalf of ARIO.

Transfer payments: interim and outlook

ARIO governance

ARIO members play a key role in providing advice on the agency’s objectives, mandate and strategic directions.

ARIO’s membership is comprised of a minimum of 7 members and a maximum of 15 members appointed by the Minister of Agriculture, Food and Rural Affairs. Members have been appointed from a broad cross section of commodity groups, business interests, knowledge and geographic areas. Members do not represent any organization but hold their position in their own right. At present there are 10 members. A director from Agriculture and Agri-Food Canada attends certain ARIO meetings and discussions to contribute a federal perspective on research activities across Canada. In fiscal year 2023–2024, 5 members have been reappointed for another 3–year term and there is an opportunity to seek up to 5 additional members.

ARIO governance priorities

Diversifying ARIO membership

In the coming year, the agency will look to diversify the membership to include representation from Indigenous communities and include additional women in agri-food.

ARIO will prioritize canvassing for prospective members in public appointments management system to address the memberships’ skill/knowledge gaps.

ARIO chair succession plan

The ARIO chair’s appointment term expires on January 17, 2025. In the coming year, the agency will initiate a chair succession plan.

Strong agency leadership will be required to reflect ARIO’s elevated role and profile in the agri-food research and innovation environment. With the proposed ARIO Act modernization, the agency will look to broaden the scope of research in Ontario to include the cutting edge of best production practices and implementing new technologies and innovative techniques.

Subject matter experts/guest speakers at ARIO member meetings

To enhance members’ strategic advance, the agency will look to leverage industry knowledge by engaging with and/or inviting subject matter experts from across the sector to attend and/or present at ARIO member meetings (such as sector guests and speakers).

Governance structure

The ARIO director of research is appointed by the Minister under the ARIO Act and has responsibilities related to ARIO’s business affairs. The ARIO director of research is OMAFRA’s chief administrative officer (CAO)/assistant deputy minister for the Research and Corporate Services Division. Operational decision-making and approvals are made by the ARIO director of research, or their authorized delegate(s), such as the director of the OMAFRA’s RIB, who serves as ARIO’s general manager, or RIB management and staff who serve as ARIO secretariat support.

The duties and authority of the ARIO director of research are detailed in the ARIO Act, as well as in the MOU between ARIO and OMAFRA.

ARIO governance structure

• Minister
  • ARIO chair
    • ARIO members
      • Deputy minister
        • Director of Research
          (currently the assistant deputy minister of Research and Corporate Services Division OMAFRA)
          • Comptroller
          • ARIO Secretariat
            Research and Innovation Branch (RIB) OMAFRA
            • Director RIB
              • Manager (Research and Knowledge Management Unit)
                • ARIO support
                  • Research analysts
                  • Open research programs
                  • OMAFRA/University of Guelph Agreement
                  • Knowledge and technology transfer
              • Manager (Research Accountability, Management, and Administration Unit)
                • ARIO support
                  • Research analysts
                  • Agency liaison
                  • Research infrastructure
                  • Programs administrator

Risk identification, assessment and mitigation strategies

Implementation of the ARIO IS will require significant funding over the next several years to ensure the renewal of core research platforms can be completed and operated in a manner that maintains the sustainability and competitiveness of the Ontario agri-food sector.

ARIO faces significant budget constraints which present a high level of risk that the agency will not be able to meet its core mandate commitment to modernize Ontario’s agri-food research infrastructure. The agency experienced a significant reduction to its capital budget of $20 million over 5 years starting in fiscal 2019–2020.

This has greatly reduced the ability of the agency to complete or undertake capital projects approved within the ARIO IS and key objectives under ARIO’s strategic plan.

As a result of financial limitations, current capital projects under construction have been scaled back, deferred indefinitely or their scope reduced significantly to help ensure ARIO can maintain affordability. Furthermore, ARIO is also experiencing the erosion of buying power related to capital build projects through rising inflation for materials and labour costs. This inflationary period will continue to erode capital budgets as the economy recovers from COVID-19 and higher material costs are expected to continue as the construction sector begins to ramp up in the province. The ARIO secretariat will continue to work with the ministry, as well as central agencies, in submission of annual updates and refinements to the strategy captured in the ministry’s multi-year planning budget process.

The ability to maintain financial commitments for the multi-year nature of capital infrastructure construction projects could be greatly impacted by changes in government priorities and changes in government funding, neither of which can be predicted with complete confidence.

Without restored levels of investment in the coming years post pandemic, Ontario’s agri-food research system risks falling into obsolescence resulting in the possible departure of specific sub-sectors of agri-food research capacity from the province and could impact the province’s ability to attract leading researchers to conduct their work and develop or advance research, technology and other forms of IP for the sector.

ARIO will seek to mitigate these significant risks on the horizon by seeking commitments from industry to support capital build projects which benefit their sector while also seeking to coordinate closely with central agencies regarding innovative ways to fund infrastructure.

Full details of ARIO’s risk management plan can be found in Appendix C.

Financial information

Overview of funding

Under the ARIO Act, ARIO may accept gifts, grants, donations or bequest money for use in research or the conservation, protection or preservation of agricultural lands and the director of research holds and administers these funds in accordance with the terms, if any, on which it was given.

Refer to Appendix A for ARIO’s statement of investment policy.

Operational costs (excluding operation and management costs of the research centres)

The cost to administer the programs within ARIO (including the proportionate cost of salaries and benefits for OMAFRA staff that provide secretariat services) are paid from OMAFRA’s budget. The current estimated cost to provide the secretariat functions to ARIO is approximately $1.67 million annually.

Per diem rates and travel expenses for appointed ARIO members are paid to ARIO members for their attendance at scheduled meetings. These per diems follow treasury board guidelines for agencies, board and commissions and are paid out of ministry funds. Details are provided to members in the ARIO member’s handbook.

Financial projections (3-year outlook)

ARIO is required to submit its annual report including audited financial statements to the Minister within 120 days of its year-end (by July 29 annually). The annual report is prepared by the secretariat and includes financial statements that are prepared and audited by an external auditor contracted by OMAFRA.

ARIO is consolidated for financial reporting purposes with OMAFRA and has a current book value of $107 million as of March 31, 2023.

A forecasted statement of operations showing projected revenue and expenses is included in Appendix B.

Performance measures

The performance measures and achievements outlined in this section are in accordance with the current performance measures framework outlined in the ARIO MOU and includes the focus of the ARIO’s IS and the development of the endorsed plan for targets, measures and key performance indicators for the ARIO strategic plan.

ARIO strategic measures and KPIs

The establishment of KPIs for the ARIO strategic plan may enable the agency to garner insights on how initiatives and ARIO activities are moving the agency towards its stated objectives and long-term goals. These KPIs may evolve based on resource allocations and resource requirements (staffing or fiscal) and will be instituted in a phased approach.

In 2024–2025 these KPIs can deliver the state of ongoing initiatives such as:

• the development of the ARIO funding strategy
• the further development of the asset management plan
• the continued work on the ARIO infrastructure and its key pieces like the development of the hub and spoke model

These KPIs will consider external and internal environmental factors to keep the agency agile to respond to new, evolving factors. For example, these may include evolving factors from the alliance agreement roles and responsibilities to fiscal and economic pressures, to climate change.

The draft ARIO strategic KPIs include the 3 buckets:

• operational (short-term 0-2 years)
  • maximizing assets
  • securing short-term funding to address critical needs to maintain viability of ARIO’s assets and operations
• transformational (medium-term 2-5+ years)
  • development of several strategic relationships with universities/colleges/research institutions, the wider-sector and with Indigenous-led organizations
  • purposed relationship building for supporting the enhancing of research infrastructure/platforms, expanding innovation demonstrations and technology deployment and supporting Indigenous knowledge and research
• strategic (long-term 5-8 years)
  • securing stable and consistent long-term funding for both infrastructure and research programming, along with a key number of impactful, highly transformative innovative projects

Alliance property management schedule and KPIs

The ARIO properties have been used as a platform for conducting research programming to address the ministry’s mandate. The University of Guelph helps ARIO fully realize the potential of most properties owned by the Agency. In addition, the University of Guelph also has unique expertise to manage and maintain properties and research facilities. The following KPIs may demonstrate the University of Guelph’s achievement of the property management program outcomes and objectives.

Program objectives

• Facilitate the use of the ARIO properties and University of Guelph facilities as platforms for research and innovation, including the promotion and formation of collaborations among the agri-food and rural research community, the University of Guelph, the agri-food sector, to the benefit of all of Ontario’s regions.
• Carry out operations, maintenance, repairs and improvements for each of the ARIO properties in a manner that is cost effective, environmentally responsible, demonstrates economic value for the Province of Ontario and in a manner consistent with and in furtherance of the contemplated use.
• Carry out operations for each of the University of Guelph facilities in a manner that is cost effective, environmentally responsible, demonstrates economic value for the Province of Ontario, and in furtherance of the University of Guelph facilities being fit for the use of research^{footnote 19[19]}.

ARIO property capacity and utilization is measured through the calculation of a utilization rate for each research centre. The utilization rate is calculated by adding research utilization to the research preparation requirements and dividing the total by the capacity of the research centre. The research preparation requirement accounts for the need for crop rotation, replacement animals, or cycle time in space-based animal facilities. In general, the utilization rates for the crops research centres are higher than those of the livestock research centres. Crop trials, to some extent, can better expand to utilize available research plot area by increasing replications or increasing the number of varieties being tested or evaluated for breeding or performance determination. Livestock trials, on the other hand, are more limited to the nature of the resident herd or available housing spaces or types, and therefore cannot be easily scaled to increase usage^{footnote 20[20]}.

Appendices

Appendix A: statement of investment policy

General

This statement of investment policy expresses the investment objectives and constraints of ARIO. In addition to providing a framework for general direction of the portfolio, it provides a basis upon which to periodically review and evaluate portfolio performance relative to appropriate asset class benchmarks.

Investment objectives

The portfolio shall be managed to meet the following objectives (in priority order listed):

• Ensure safety of capital over a one-to-three-year time horizon by investing in high quality fixed income securities, including government bonds and/or professionally managed pension level bond portfolios.
• Provide liquidity, with a significant portion of the portfolio available to adequately meet short-term (up to 1 year) individual program and capital reinvestment cash flow requirements. Investments may include treasury bills, Government of Canada/Provincial bonds or coupons, and bankers’ acceptance paper maturing within 1 year.
• Maximize the rate of return on the portfolio recognizing the constraints imposed by the previous objectives.

Investment constraints

Consistent with both the Trustee Act and the Financial Administration Act, the following securities are examples of eligible investments for the ARIO portfolio:

• federal government treasury bills and bonds
• provincial government treasury bills and bonds
• instruments offered by the 5 major chartered banks, namely, Royal Bank, TD Canada Trust, Bank of Montreal, Canadian Imperial Bank of Commerce and Bank of Nova Scotia including GICs, term deposits and bankers acceptances (investments can be greater than the $60,000 canada deposit limit)

Diversification

The portfolio should be diversified, within constraints of ARIO investment policy, to reduce risk to capital.

Performance objectives

The performance objectives of each element of the portfolio is to equal the appropriate market benchmark index over a full market cycle, namely, 1 to 3 years. This goal is ambitious given that the ARIO portfolio(s) are constrained. For example, Canadian corporate bonds are not eligible investments but are included in the benchmark index, and due to high cash flow demand. Cash maturities may average less than 90 days.

Investment advisor

ARIO shall engage the services of a professional investment firm for investment advice through a competitive process.

ARIO comptroller

The ARIO comptroller shall have responsibility to ensure the statement of investment policy is adhered to.

Reporting

The investment advisor shall prepare and provide detailed monthly statements showing the composition of the portfolio at month end and shall report all transactions during the month.

A comprehensive portfolio review and performance evaluation shall occur annually including performance of the portfolio, as well as updates on the current and future economic outlook and investment strategy.

All fees billed shall be fully disclosed, transparent and included in the monthly/quarterly report as they occur.

Review of investment policy

This ARIO statement of investment policy shall be reviewed as required.

Appendix B: financial position

Pro forma statement of operations: ARIO 2024–2025 strategic processing plan — forecast

Revenue

Expenditures

Appendix C: risk management

The risk rating has been calculated using an index combining individual scores for likelihood, strategic impact, reputational impact, financial impact, speed of onset and risk tolerance.

Appendix D: 2024–2025 annual letter of direction

Dear Dr. Hepworth,

I am pleased to share our government’s 2024–2025 priorities for ARIO.

As chair, you play a vital role in helping ARIO 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 AAD, this letter sets out my expectations for ARIO for 2024–2025. These priorities include:

1. Competitiveness, sustainability and expenditure management

• Operating within the agency’s financial allocations.
• Identifying and pursuing opportunities for revenue generation, efficiencies and savings through innovative practices and/or improved program sustainability.
• Complying with applicable direction related to accounting practices and supply chain centralization, including leveraging Supply Ontario’s bulk purchasing arrangement and working with Supply Ontario on strategic procurement initiatives.
• Complying with realty interim measures for agency office space.
• Leverage and meet benchmarked outcomes for compensation strategies and directives.

2. 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, and providing the minister with annual skills matrices to ensure boards have qualified appointees.
• Reviewing and updating agency KPIs annually to ensure efficiency, effectiveness and sustainability.

3. Risk management

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

4. Workforce/labour management

• Optimizing your organizational capacity to support the best possible public service delivery, including redeploying resources to priority areas, where needed.
• Supporting the implementation of the Community Jobs Initiative by identifying opportunities to relocate new or existing agencies to lower cost communities across Ontario (as per MBC Realty Directive, s. 5.4), as applicable.
• Aligning human resource and accommodations strategies with Ontario Public Service directives and policy.
• Adhering to TB/MBC labour and bargaining mandates.
• Prudently and efficiently managing operational funding and workforce size.

5. Diversity and inclusion

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

6. Data collection, sharing and use

• Improving how the agency uses data in decision-making, information sharing and reporting, to inform outcome-based reporting and improve service delivery.
• Increasing data sharing with Supply Ontario when applicable regarding procurement spending and planning, contract arrangements and vendor relations to support data-driven decision-making.

7. 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.

These are the government-wide commitments for board-governed provincial agencies. Please refer to OMAFRA’s priorities for further details of each priority.

I am also sharing several priorities specific to ARIO:

Property ownership and management

• Continue to provide value for money in efficiently owning and managing the Province of Ontario’s agri-food research facilities and infrastructure.
• Continue to provide effective long-term oversight and management of ARIO’s physical assets through advancing the development of ARIO’s asset management policy and comprehensive asset management plan.
• Continue to provide advice on the long-term strategic plan and recommendations for the province’s agri-food research infrastructure and strategies to continue investments in research infrastructure within the current fiscal limitations.
• Engage with the agriculture and food industry, academia and innovation experts to evaluate future research infrastructure needs.
• Continue to pursue the revitalization of the province’s agri-food research infrastructure necessary to support innovative research and the long-term sustainability and growth of the agri-food sector by developing state of the art, integrated research infrastructure capacity supported by shared funding models and partnerships between industry and government.
• Increase the pursuit of strategic relationships in support of industry-government research and innovation priorities and modernizing research infrastructure.
• Continue to engage with the poultry industry boards and the University of Guelph to enable the planning, design and construction of new poultry research facilities at Elora.

Strategic planning and advice

• Continue to provide strategic advice to the minister and the ministry on current research priorities and programs that contribute to prosperous, competitive and sustainable agricultural and food sectors and rural communities in Ontario.
• Continue to develop and implement ARIO’s vision and strategic plan to enable high impact transformational research and innovation.
• Continue to evaluate opportunities for research and innovation in agriculture and food, including but not limited to northern agriculture, genomics, robotics and automation, technology development and food processing.
• Continue to enable adoption of innovation by supporting the objectives of the Grow Ontario strategy.
• Implement strategies that will improve the strategic management of ARIO’s interests in intellectual property and commercialization, including the expansion of programming that supports plant and animal breeding research in Ontario.
• To continue to work in close coordination with OMAFRA, industry and academia, to proactively identify and prepare for future trends that may impact the Ontario agri-food and agriproducts sectors and position ARIO facilities to meet the needs of emerging research priorities and deliver Ontario-made solutions, technology and best practices to the sector.

ARIO Act modernization

• If passed, work on the implementation of the new legislative changes to the ARIO Act.
• Continue to evaluate non-legislative options to modernize the agency.

Enhance collaborations, global expertise and partnerships

• Increase collaboration with universities/colleges/research institutions, industry organizations including Indigenous peoples, communities and organizations to enhance strategic relationships and to leverage ARIO’s assets and expertise for the benefit of the province and agri-food sector.
• Directly engage with the sector for the purpose of expanding innovation demonstrations and technology deployment through strategic relationships at ARIO research stations.
• Seek opportunities to leverage expertise and knowledge to address emerging issues and enable the sector to compete in the global market.

Communications

• Continue to develop and initiate a process to implement an optimized communications plan for the agency with a key goal to increase awareness both internally in OMAFRA and externally.
• Actively promote the research activities and network of research stations within the agri-food sector.
• Work with University of Guelph, VRIC and other partners to ensure that research is communicated to farmers in a format that is useable and accessible.
• Explore options to brand ARIO to increase the prominence and awareness of the agency within the agri-food sector.

I would be pleased to discuss these priorities during our next meeting and I look forward to hearing how they 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 ARIO. 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 Gregory Wootton, assistant deputy minister, Research and Corporate Services Division.

Sincerely,

Hon. Lisa M. Thompson

Minister of Agriculture, Food and Rural Affairs

cc: Gregory Wootton, assistant deputy minister, Research and Corporate Services Division