Livestock Financial Protection Board business plan for the fiscal years 2014–2017

Executive summary

The Livestock Financial Protection Board (board) is pleased to present its business plan for the period of 2014/17. As a board, we continue to focus on administering the Fund for livestock producers (fund); adjudicating claims; granting or refusing the payment of all claims and recovering any money to which the board is entitled. The following are the main areas of focus for the board in the upcoming planning horizon:

• protecting the long term viability of the fund
• strengthening board governance and accountability
• ensuring that there is an adjudication process in place that is simple, fair, and accessible, with minimal delays

As fund administrator, our ultimate goal is to ensure long-term sustainability of the fund. We are pleased that our investment strategies have helped the fund weather the last five years with very minimal impact on our investment income. An actuarial study completed in July 2010 determined that the fund is actuarially sound. Financial markets have improved and this upward trend will continue, however we continue to be in a low interest rate environment and it is projected that rates will remain low for the planning horizon. As the global economic situation continues to evolve, the board will continue to assess the potential impact of different financial market scenarios and make adjustments to its investment strategy as required.

The board's key achievements for the 2013/14 fiscal year were:

• Timely adjudication of claims. The board continues to fulfill its mandate and contribute directly to its strategic outcome by rendering decisions in a timely manner. In 2013/14 the board received 1 claim for compensation from livestock sellers as a result of the failure of one livestock dealer. One claim was paid in the amount of $883.62.
• Actuarially sound fund. The fund balance at the end of the 2013/14 fiscal year is $7.35M, this was $1.55M above the actuarially sound minimum balance of $5.8M.
• Rate of return 3.90%. Despite the continued turmoil in the financial market, the fund had investment return of 3.90%. Once again, this was due mainly to the strategic investment decisions made by the board which partially shielded the fund from the impacts of events in the financial market. The boards strategy provides the fund with a lower exposure to investments in risky assets such as equity and much higher investment in fixed income investments. This investment strategy has provided investment returns of just above 3.90% since 2010/11. Table 1 outlines total revenues and expenditures for the previous year as well as expectations for the planning horizons. The total revenue for the 2013/14 fiscal year was $650,000. This included $112,000 in fees; $245,792 in interest income and $291,809 in recoveries. Total expense was $179,347. Revenue and expenses were in line with projections, with the exception of claim payments which are hard to predict. In the 2013/14 fiscal year, the board budgeted $250,000 for claims but actual net expenditures on claims were $883.62.

Revenue and expenditures and expectations for the planning horizon

Total revenue for this planning horizon (2014/15 to 2016/17) is expected to average 1.0% annual growth. This reflects strengthening economic conditions and recovery of previous money owed to the board. Total expenses over the same period will increase by 1.0% in the second year of the planning horizon due to the contract with the delivery agent.

For the 2014/15 fiscal year, the board has estimated revenues of $391,000. This includes approximately $106,000 in fees and $250,000 in interest income. The board has estimated expenditures of $433,650. This includes payment of $152,700 to determine financial responsibility of livestock dealers; $25,450 for Fund administration and governance support; and $5,500 for secretariat support and $250,000 in claims.

Program overview/mandate

The Ontario Beef Cattle Financial Protection Program (program) was established in 1982 to provide compensation to sellers in the event that a buyer (including packing plant operators, abattoir operators, auction market operators, country dealers and cooperatives) defaults on a payment.

The program has two components: the annual licensing of dealers under the Livestock and Livestock Products Act, R.S.O. 1990, c. L.20 (LLPA) and the administration of the compensation fund established under the Farm Products Payments Act, R.S.O. 1990, c. F.10, as amended (FPPA). The Ministry of Agriculture and Food (OMAF) is responsible for the licensing of dealers while the board is primarily responsible for the administration of the fund.

The board is a body corporate without share capital constituted under the authority of the FPPA and Ontario Regulation 560/93 — Fund for Livestock Producers, as amended (O. Reg. 560/93), made under the FPPA. It is also classified as a "trust agency" under the Agency Establishment and Accountability Directive. The board operates in accordance with the Memorandum of Understanding (MOU) between the former Minister of Agriculture, Food and Rural Affairs (minister) and the board dated April 11, 2011. The MOU provides that if a new minister or chair takes office before this MOU expires, the new person must affirm by letter that the MOU will continue in force without a review within 90 days of the change.

As a trust agency, the board's primary function is to administer funds and/or other assets for beneficiaries named under statute. The board's mandate is, as set out in section 4 of the FPPA:

• to administer the fund
• to investigate all claims made under the FPPA and to determine the extent of their validity
• to grant or refuse the payment of claims or any part thereof and determine the amounts and manner of payment
• to recover any monies to which it is entitled under the FPPA by suit in a court of competent jurisdiction or otherwise

Vision and mission statement

The board's vision is to protect the financial interests of producers and licensed dealers who have sold livestock to licensed dealers, as defined in the program. The board's vision supports the OMAF priority of a thriving agriculture and food sector and strong rural communities by ensuring that the fund is effectively managed and able to meet its financial obligations. The fund is an important component of a seller's overall risk management strategy.

The board's mission is to ensure the long term sustainability of the fund by promoting sound investment practices and good governance for the benefit of Ontario's livestock sellers who sell to licensed dealers.

The board's guiding principle is accountability in its management, administration and operation. As an agency of the government, the board conducts itself according to the management principles of the government. These principles include ethical behavior; prudent, efficient and lawful use of public resources; fairness; high quality service to the public and openness and transparency to the extent allowed under law.

Accountability

The board operates at "arm's-length" from the government but is accountable to the government in exercising its mandate. The agency is accountable to the minister, through the chair, for its internal governance; setting its goals, objectives and strategic direction within its mandate; and for carrying out the roles and responsibilities assigned to it by the FPPA, all other applicable legislation, this MOU and applicable Treasury Board/Management Board of Cabinet as well as Ministry of Finance directives. Specifically, the board is held accountable through:

• an annual report tabled in the provincial legislature
• an annual business plan with performance measures submitted annually to OMAF
• annual audits of the board's financial statements by the Office of the Auditor General of Ontario

Board structure

The FPPA and O. Reg. 560/93 require that the board be composed of not fewer than five members appointed by the minister. There are currently six members on the board's board of directors, including the chair and vice chair. The minister appoints a chair and vice chair of the board from among its members.

O. Reg. 560/93 requires that membership on the board includes one member representing each of the Beef Farmers of Ontario (BFO), the Canadian Meat Council (CMC), and the operators of community sales under the Livestock Community Sales Act, R.S.O. 1990, c. L.22. By convention, there has also been one member from the Ontario Livestock Dealers Association (OLDA), one member from the Ontario Independent Meat Processors (OIMP), one member from the dairy industry and one member from the veal industry. By convention, there has also been one additional member from the BFO.

See appendix 1: list of board members & terms.

Overview of current and future programs and activities

The following is an overview of the board's principal activities (current and future) linked to its mandate and the government priorities. The board's mandate is set out in legislation and as such the board cannot conduct any activity that is inconsistent with its mandate.

Fund administration

The board is responsible for the overall governance of the fund. The primary purpose of the fund is to compensate qualified sellers in the event that licenced buyers default on payment.

All money to which the board is entitled is paid into the fund. Contribution to the fund is mandatory and is based on a fixed rate per head of livestock in a transaction. UnderO. Reg. 321/11 — Fees Payable to Boards, as amended, made under the FPPA, sellers are required to pay the board a fee of 5 cents per head of livestock on a direct sale of livestock. When the sale is by private treaty transaction with a country dealer or an auction market, a consignor fee is also payable by the auction market or country dealer. The consignor fee has also been set at 5 cents per head of livestock. The buyer/consignor is required to deduct the fee and forward it to the board on behalf of a producer seller. A consignee is required to pay their own fee as well as to deduct and remit the consignor's fee. Fees are due on or before the fifteenth day of each month along with a statement of the livestock sold, unless the total yearly sales are less than 1,000 head, in which case the fee is to be submitted semi-annually.

The board's main objective when managing investment capital is to safeguard its ability to remain as a going concern so that it can continue to deliver financial protection to livestock sellers in Ontario. As such, the board's investment policy focuses on ensuring security, liquidity and maximization of investment income. Additionally, the MOU has restrictions in place so that only authorized investments are undertaken. The fund can only be invested in instruments as set out in the MOU, which includes certain now-repealed provisions of the Trustee Act, R.S.O. 1990, c. T.23. A decision has been made to not amend the MOU and to keep the repealed provision in place under the MOU as a risk mitigation strategy.

The board is the administrator of the fund and is ultimately responsible for the management and administration of the fund. In 1998, the board delegated the day to day management of the fund to Beef Cattle Financial Protection Program Inc. (BCFPPI) — a not-for-profit corporation governed by its own board of directors. In order to be compliant with the Procurement Directive, in December 2012, the board and OMAF jointly conducted an open competitive procurement process to find a delivery agent to assist with the delivery of the program (licensing and fund administration). BCFPPI was the successful bidder. Key aspects of this role continue to be receiving and depositing fees; preparing monthly, quarterly and annual financial statements; preparing documentation for annual audits; and investment of the fund.

The board's responsibility/activities as fund administrator includes:

• participation in the selection of the delivery agent for day to day administration of the fund
• establishing or approving and reviewing all policies as required
• reviewing, at least annually, the policies and procedures in place for carrying out its responsibilities as administrator of the fund
• on a periodic basis, as determined by the board, obtain reasonable assurances from BCFPPI that the control systems in place are adhered to and that there is not any material non-compliance
• obtain reasonable assurances that the fund is administered and invested in material compliance with the MOU
• approving payments from the fund
• reviewing, adopting and monitoring the strategic planning process (this includes meeting with BCFPPI to identify and discuss environmental factors and risks that can impact the fund, and approving goals and objectives for the fund)
• reviewing and approving the annual audited financial statements of the fund
• reviewing and approving the board's operating budget
• on a periodic basis, obtaining and reviewing a report on the fund investment performance
• ensuring policies and processes are in place for the identification of risks and reviewing and approving risk management strategies
• ensuring that an actuarial review of the fund is conducted as required.

The fund's asset mix is made up of:

Cash, short and medium term investments

• The fund's short term investment is one GIC issued by a domestic financial institution that matures on February 2014 and that earns 1.65% per annum. Cash and short term investments holdings at year end were $1,082,410 (16.82% of total investments, down from 25.53% the previous year). The decline occurred primarily because of claims paid.
• Guaranteed Investment Certificate: There is one GIC in the amount of $1,700,000 issued by a domestic financial institution with maturity date of February 2015 that earns 1.9% annually.

Long term investment

The fund's long term investment consist of real estate in the form of a $4 million first mortgage on development lands in the city of Kitchener bearing interest at 5% payable semiannually. The $4 million is approximately 58% of the fund's total investment.

Since 2004, when the board made its initial investment in real estate, the portfolio has generated an average annual return of 4.06%. The year prior the portfolio's yield was 3.22%. This represents an increase of $55,000 per year during a low interest environment. Interest income on these investments totaled $244,642 for 2012/13. In 2011/12 investment income was $269,320 and in 2010/11 it was $264,454. The small decrease between 2012/13 and 2011/12 was due to a decrease in total fund investment, caused by several large claim payouts, even though there was minimal increase in short term rates.

The board's strategic investment mix was instrumental in minimizing the impact of the economic downturn on its investment. The board considers its investment in real estate to be a relatively safe investment that has generated great returns with little to no risk. Diversification among different assets, such as the mortgage, is the board's key strategy to reduce risk.

Claims investigation and adjudication

The board adjudicates claims made under the FPPA and determines the payment, if any, to be made from the fund. A claim for compensation will be considered if it involves: a producer selling to a licensed dealer, a licensed dealer selling to a producer or a licensed dealer selling to another licensed dealer. If an application for payment from the fund is made in respect of a sale of livestock to a dealer, the application must be made to the board not later than thirty (30) days after the day on which the earliest of the following events occurs:

1. The dealer's payment becomes due.
2. All or part of the dealer's assets are placed in the hands of a receiver or of a trustee for distribution under the Bankruptcy and Insolvency Act (Canada) or the Bulk Sales Act.
3. The dealer ceases to carry on business.

For claims made in respect of a default by a producer, the claim must be made within 30 days of the date of sale.

In 2010, the board entered into arrangements with a third party for the provision of adjudication support. Prior to 2010, this service was provided by BCFPPI.

The adjudication process begins when the seller files a claim with the board. Once a claim is received, an application form is sent to the seller. Once the application is returned, it is investigated by the Regulatory Compliance Unit in OMAF's Animal Health and Welfare Branch. When the investigation is complete, a report is made to the board.

The board conducts an in-depth analysis, which may involve legal services, and either makes a final decision or offers an opportunity for the parties to make submissions or attend a hearing before making its final decision. If the board offers an opportunity for a hearing, and a hearing is requested by one of the parties, a notice of hearing is mailed to the parties stating the time, date and location of the hearing. The board works to adjudicate cases within 60 days of receiving the report from the investigators. Hearings require more time because it requires additional meetings and in some cases the cases tend to be more complex.

The board determines the payment, if any, to be made from the fund. The board has discretion to refuse payment from the fund based on grounds set out in O. Reg. 560/93. The rules governing payment from the fund are also set out in O. Reg. 560/93.

Recovery of money owed

The regulation requires the board to attempt to recover any money to which it is entitled. The board, through legal counsel and the administrator, work to recover money owed to the board. In 2011, the board approved and adopted a "recovery policy". The policy formalizes and documents current debt recovery practices. A debt recovery policy is a requirement under the MOU between the minister and the board. The objective of the policy is to ensure that money owed to the board is collected as soon as possible using legal, efficient and effective debt recovery procedures. Recovery of debt owed to the board is an important part of ensuring that the fund remains viable.

Strategic directions

The following are the main areas of focus for the board:

• protecting the long term viability of the fund
• strengthening board governance and accountability
• ensuring that there is an adjudication process in place that is simple, fair, and accessible, with minimal delays

The table below identifies the key strategies that will be used to achieve these goals.

Environmental scan

The environmental scan seeks to provide a complete picture of the full environment in which the board is operating and the key issues that may need to be addressed through the upcoming planning and budgeting cycles. The challenges and risks faced by the board have remained similar from year to year over the last couple of years.

The board is cognizant of its broader responsibilities in ensuring that key risks are identified and that effective processes are in place and implemented to manage these risks. The following are the main issues that emerged from the environmental scan:

External drivers

Investment risks

Investment income is one important source of revenue. Investing income has inherent risks. Although long term return expectations and trends are generally predictable, there can be considerable volatility in short and medium term results. Currently, the fund is invested in short and long term fixed interest income type securities. Investment risk is a challenge that could adversely affect the achievements of one of the board's goals, which is to ensure long term sustainability of the fund. Appropriate mechanisms are therefore required for controlling investment risk. The board's key mechanism for identifying and managing the investment risk is a written investment policy. Diversification among asset classes is a key strategy of this policy. Interest rates are at a historic low and are expected to remain low for most of the planning horizon. It is predicted that we may see a slow rise in rates in the last year of the current plan.

Packers rationalization/exit

There are a number of factors currently in play that could potentially lead to increased packer rationalization and exit from the market place. The primary factors affecting packers in Ontario is excess plant capacity. The volume of cattle available has dropped and plant capacity has stayed the same. If exit from the marketplace is due to insolvency, claims for payment from the fund could potentially result. Because the fund is actuarially sound, this will not likely impact the board's ability to conduct business.

Policy/legislative change by the Ontario government

The minister has responsibility for the legislation governing the program. The board is subject to the risk of a policy change by the government. In 1997, OMAF put forward two options to industry on the future of the program: (1) a government-run program with full cost recovery paid for by industry and (2) the devolution of the program to industry. The various sectors within the industry agreed that devolution was their choice. A business plan was developed and approved by all sectors and a not-for-profit corporation (BCFPPI) was established with a board of directors from all sectors. To date, however, devolution has not occurred. The impact on the board would be dependent on the changes made to the FPPA and its regulation which govern the operations of the board. There has been no recent discussion and any amendments would be outside of the board's control.

Fund balance and unpredictability of claims

The fund dropping below the actuarially sound level or depleted because of a large claim is another external driver identified by the board. This risk could negatively impact the board's ability to deliver financial protection to livestock sellers in Ontario.

An on-going challenge for the board is the unpredictability of claims, i.e. the number of claims to the board from year to year is difficult to predict and can fluctuate greatly. Because claims paid are variable, any estimate of future claims can be unreliable.

Higher livestock values

Canadian cattle prices have been at record highs due to lower cattle inventories. Cattle inventories continue to shrink in Canada and the U.S. and the market is functioning to encourage expansion which has also contributed to the higher price structure. The market dynamics can change within a short period of time and the financial risk has certainly increased. Higher dollar value for livestock could impact fund solvency.

Internal drivers

Institutional continuity and succession planning 

Improvements have been brought to succession planning and creating continuity on the board. Experienced members increase its ability to issue decisions in a timely, fair and legally supportable manner. Too few or inexperienced members could negatively impact the board's ability to adjudicate claims fairly and efficiently. To minimize the loss of experienced board members, the board has asked that appointments be staggered. A vice chair is now in place which improves board's function and continuity.

Governance and accountability requirements 

There is an increasing focus on strategic planning as it relates to board governance and accountability. Good governance is an integral component of effective fund management and board performance. Expectations concerning accountability and the fiduciary duty of boards continue to evolve.

Resources needed to meet goals and objectives

A new three year contract was entered into with OBCFPPI beginning January 1, 2013. The new contract required substantial changes from practices under the previous contract. One key change was that the board became responsible for overhead costs which include office space and equipment associated with all board activities, which were previously provided by the OMAF as an indirect support. The total yearly board cost for the new contract is $178,150. Of this total, determining financial responsibility costs are $152,700 and $25,450 is for fund and board administration.

OMAF funds legal and investigative services. Investigative services are provided through the cooperative agreement between the MNR and OMAF. The board also receives legal services provided by the Ministry of the Attorney General and, on occasion, uses outside legal assistance as directed by the office of the Attorney General.

The affairs of the board are subject to an annual audit by the Office of the Auditor General of Ontario.

Financials: proposed operating expenditures, projected revenues & funding requirements

The following are the three sources of income into the fund:

• check-off fees
• income from investments
• monies recovered after payment of claims

The FPPA provides that the board is responsible for all its expenses except for those of persons employed under Part III of the Public Service of Ontario Act, 2006, S.O. 2006, c. 35. In addition to claims and its secretarial support, the board uses the fund to offset costs associated with determining financial responsibility and administrative support.

Since 1982, investment income has been greater than total costs and claims, resulting in zero use of check-off fees. To date, all net claims and board expenses have been paid from interest on the fund.

The board's operating expenses are based on the number of meetings and will vary from year to year. Because claims paid are variable, budgeted estimates on claims can be unreliable. Meetings are held at least annually or when there is a claim on the fund. Other board business can usually be handled by a conference call. As of April 2010, OMAF began paying the remuneration of the members of the board, as required under the FPPA.

The fund is actuarially sound. An actuarial study was completed by Ernst & Young in July 2010 as a result of industry proposed regulatory changes (the changes were approved by the Ontario government and implemented in July 2011). Several conclusions were indicated in the report:

1. The fund has a strong financial position given its claims experience and current fund balance.
2. A fund balance of approximately $4.5M would cover net claims with 99% confidence if the largest livestock sale or exposure by any one player was limited to $5.0M. As of March 31, 2014, the fund had a balance of $7.3M.
3. Even if all of the regulation changes are implemented and the fund faces an adverse trends scenario as described in the report, the fund balance would still be positive, ending at $5.8M on 31 March 2015. Under this scenario, the current funding and fees would be sufficient.

The contingency plan, if there are claims that would exceed the board's ability to pay, would be to work with the OMAF to determine the best strategy. Some possible options are:

1. Seek the assistance of the minister to obtain a loan. The authority for this is found under:
   • Section 5(3)(b) of the FPPA (allows the lieutenant governor in council to authorize the minister of finance to interest free loans from the consolidated revenue fund to the board in an amount that does not exceed $250,000.00 in the aggregate); and
   • Sections 15(2), (3) and (4) of the LLPA (collectively operate to allow the board to borrow an aggregate of principal sum(s) not to exceed $1,000,000.00 outstanding at any one time as well as to authorize the lieutenant governor in council to guarantee the payment and interest on the loan).
2. Request that the minister increase the existing check-off fee (which is now at 5 cents per head of cattle sold) to rebuild the fund and repay the loan. An amendment to the FPPA was approved under the Open for Business Act, 2010. This amendment allows the minister to set the check-off fee, instead of the lieutenant governor in counsel having such authority.
3. Arrange for a standby line of credit with a chartered bank to use in the event that there are claims that exceed the board's ability to pay.

Financial budget

Fund for Livestock Producers Pro Forma Balance Sheet as at March 31, 2014/2015/2016

The table below shows the budget to actual and the variance for 2012/13 fiscal and the 2013/14 fiscal.

Financial assumptions

• Interest Rate 2013/14 – 3.90 %
• Interest Rate 2014/15 – 4.05 %
• Interest Rate 2015/16 – 4.15 %
• Interest Rate 2016/17 – 4.15%
• Claims based on a 10 Yr. Average

An on-going challenge for the board is the unpredictability of claims, i.e. the number of claims to the board from year to year is difficult to predict and can fluctuate greatly. Because claims paid are variable, any estimate of future claims can be unreliable. Prior to the 2013/14 fiscal the board did not include a budget for claims paid. This amount is an estimate for budgeting purposes only. Actual payments on claims may be higher or lower than the budgeted amount.

Risk identification, assessment and management

The AEAD strengthened emphasis on agency risk management. Agencies must assess risks in each of the OPS corporate risk categories described in the guide to the risk-based approach in the AEAD which supports this directive. A risk management plan was developed by the board in 2010 and is updated as part of the board's strategic planning process. See appendix 2 for the board's risk management plan. A summary is shown below.

Agencies are now expected to report on the status of the evaluation of their risks on a quarterly basis, except for high risks, which must be reported immediately. This reporting requirement will require the board to review the risk management plan and identify quarterly whether or not there are changes.

Human resource/staff numbers

The board has no staff. However, the board has entered into third party agreements for the provision of administrative/secretariat, fund management and adjudication support.

The Ministry of the Attorney General provides legal services to the board. Legal services staff provides the board with advice, opinions, legal assistance in judicial reviews and in recovering of monies owed to the board and contributes to the continuing education of board members.

OMAF's Regulatory Compliance Unit provides investigative support.

Initiatives involving third parties

The MOU specifies that the board is responsible for its own administrative/secretariat and adjudication support. This support was previously paid for by OMAF. The MOU also specifies that the person providing the adjudication support cannot be involved in licensing.

In 2012, BCFPPI was the successful bidder in a competitive procurement to assist with the delivery of the program. One of the deliverables is to provide administrative and fund management support. The board of BCFPPI has representatives from the BFO, Ontario Livestock Dealers Association and Ontario Livestock Auction Markets Association.

See appendix 3: description of deliverables.

A BCFPPI employee currently acts as the board's administrator and is responsible for assisting the board in preparing its annual report, business plan and other documentation required for compliance with the MOU and the Agency Establishment and Accountability Directive. Day to day management of the fund includes receiving and depositing fees; preparing monthly, quarterly and annual financial statements; preparing documentation for annual audits; and, investment of the fund. The fund is invested according to the MOU.

In 2009/10, the board entered into an arrangement with a third party for the provision of secretariat and adjudication support. This support included but was not limited to:

• overseeing the effective processing and scheduling of claims
• recording minutes of meetings and distributing same
• preparing documentation relating to the adjudication of cases
• scheduling hearings and drafting decision letters as directed by the board

Information Technology (IT)/Electronic Services Delivery (ESD) plan

The board has no IT and ESD plan for the coming year.

Proposed capital expenditures

The board has no capital expenditure planned.

Implementation plan

Performance measures and targets for each objective are developed below. As part of its continuous improvement process, the board will develop the oversight responsibility required to ensure that objectives are achieved. The board will also track progress against these measures and prepare an annual report. Day to day activities of the board will continue to be implemented by BCFPPI.

Performance measures and targets

Communication plan

All external communication of the board to the public, stakeholders and others shall be approved by the board.

The board's target audiences are producers and licensed dealers. The main interface the board has with their target audience is when they come before the board with a claim. The final outcome of that process will dictate the response by the board and the stakeholder. In most cases, if a claim is approved, the stakeholder will react very positively; if it is denied, the reaction will be negative.

Board communication occurs at two levels:

• Communication to parties to a claim against the fund directed by board-approved protocol.
• Broad-based communication to all stakeholders as an education piece.
• Key messages for directed communication
• Clearly outlines the regulations that were followed in making a decision.
• Identifies section or sections of the FPPA and O. Reg. 560/93 relied on in arriving at a decision.
• States that a decision is never made without granting a hearing in the event that the board sees potential grounds for refusal.

Key messages for broad-based communication

• Importance of dealing with licensed dealers.
• Importance of following the rules and regulations when selling livestock.
• The risk of having a claim denied if rules are not followed.

Vehicles to communicate key messages

• A brochure titled "Ontario Beef Cattle Financial Protection Program" outlining the program and function of the board will be distributed yearly as an insert through the Beef Magazine and Dairy Magazine.
• Semi-annually, the Beef Magazine carries the list of licensed dealers and the outline of the program. This publication goes to every producer in Ontario.
• A list of all licensed dealers on the website, updated daily or whenever any changes are made. This is a function of the licensing side of the program but also supports the board's communication strategy.
• Direct communication by letter to specific stakeholders.

The minister will consult with the chair as appropriate when significant new directions for the board are contemplated. The deputy minister will meet with chair, as necessary, to discuss matters of mutual importance to the board and OMAF. The chair will keep the minister advised, in a timely manner, of all planned events and issues that concern or can be reasonably expected to concern the minister in the exercise of his/her responsibilities.

Respectfully submitted,

Robert Brander
Chair, Livestock Financial Protection Board

Appendix 1: board members and terms

Appendix 2: risk assessment template for the board

Appendix 3: description of deliverables of Beef Cattle Financial Protection Inc.

Supplier deliverables

Ministry

The supplier shall be responsible for:

1. Co-ordinating and oversee the processing of livestock dealer licensing applications (including renewal applications) under the LLPA and Reg. 725, in such a manner as to ensure the effective and timely administration of the licensing program, under the direction of the Director appointed under the LLPA.
2. Assessing financial responsibility and security requirements of each livestock dealer licence applicant.
3. Enforcing the LLPA and Reg. 725.

The specific duties includes:

1. Hiring, training and managing the staff required to administer the licensing component requirements in accordance with accepted principles of human resource management.
2. Ensuring staff comply with all relevant/applicable and any future additions or modification to legislation as they become enacted to accessibility standards and regulations.
3. Proactively communicating with Ontario's francophone applicants.
4. Gathering all relevant information regarding the financial and business structure and activities of each applicant, including but not limited to, corporate searches and relevant information pertaining to the owners, principal shareholders, partners, affiliates and major creditors of applicant.
5. Ensuring the financial statements and declarations submitted in support of a licence application are complete and accurately reflect the financial position and business activity and inventory positions of the applicant.
6. Validating financial data for input and calculation of a financial ratio score for each applicant.
7. Assessing qualitative factors relating to financial responsibility of applicants according to criteria approved by the director (if any).
8. Reviewing difficult cases with the director.
9. Formulating and delivering to the director written recommendations concerning financial responsibility and security requirements, including amount and form of security (if any), of licence applicants.
10. Monitoring dealer compliance with requirements under the LLPA and Reg. 725 or any successor legislation, including monitoring of dealers' commercial activities and recording and assessment of all late payment reports or complaints made by the community sale operators, or any industry participants.
11. Taking appropriate, timely and effective action in cases where there is reported or suspected non-compliance with dealer requirements, including referring matters to investigation and reporting potentially significant matters and matters that cannot be resolved to the director on a timely basis.
12. Recommending that the director call a licensing hearing in appropriate cases.
13. Attending licensing hearings and presenting evidence and expert opinion on behalf of the ministry.
14. Corresponding with applicants and others on licensing related matters and providing applicants with relevant information concerning licence and program requirements.
15. Collecting licence fees and remit those fees the consolidated revenue fund.
16. Advising ministry staff in respect of licensing and security requirements of applicants.
17. Preparing information and material for the purpose of responding to inquires from industry stakeholders or to brief ministry officials in respect of media inquiries and issues.
18. Performing such other duties and work relating to the licensing and regulation of dealers under the LLPA, and the administration of the licensing program as is required by the director.

Livestock Financial Protection Board (LFPB)

The supplier shall be responsible for:

1. Attending an initial project meeting with the LFPB at 1 Stone Road West in Guelph to discuss the assignment.
2. Facilitating the preparation of the LFPB business plan, annual report and other documentation as outlined in the MOU between the LFPB and the ministry.
3. Sending monthly notices to all licensed livestock dealers in respect of fees that are owing to the LFPB under the FPPA.
4. Collecting fees and any other monies owing to the LFPB and depositing them to the appropriate bank accounts of the LFPB for the credit of the fund.
5. Sending notices to licensed livestock dealers in respect of overdue fees owing to the LFPB under the FPPA.
6. Preparing monthly, quarterly and annual financial statements for the fund, along with all attendant reports.
7. Keeping proper records of LFPB income and expenditure.
8. Arranging investments of the fund as the LFPB directs and within the parameters set out in the MOU between the LFPB and the minister.
9. Keeping all securities of the LFPB and fund in safe custody.
10. Preparing documentation for annual audits.
11. Tracking, identifying and recommending appointments to the LFPB on behalf of the LFPB.
12. Liaising with legal counsel regarding LFPB matters.
13. Preparing information and material for the purposes of responding to inquires from industry stakeholders or to brief ministry officials in respect of media inquiries and issues.
14. Procure goods and/or services on behalf of the LFPB.
15. Ensuring LFPB is compliant with all relevant legislation and government directives.