Response to 17-06 - Feeder Finance Alignment with the Financial Protection Program
BFO has raised this issue with OMAFRA on several occasions over the last few years and they recognize the gap in financial protection coverage for producers selling financed cattle. In 2013, OMAFRA staff and BFO representatives agreed on draft wording for an amendment to the Farm Products Payments Act, Ontario Reg 560/93 that would help resolve this issue. Despite an agreement in principle, a regulatory amendment was never prioritized or pursued given the perception, in our opinion, that the proposed change was too inconsequential.
In an attempt to address the issue BFO committed to engaging the Minister on this topic, based on the recommendations that the Board of Directors received from the Feeder Executive Committee and the direction provided by your resolution.
We are pleased to report that the Minister’s office responded favourably to our request and has initiated the regulatory amendment process. On August 25th the Province released a regulatory proposal for public comment that, if approved, would:
1. Allow sales by Co-operatives to be designated as sales by individual Co-operative members for the purposes of the Beef Cattle Financial Protection Program (BCFPP). The Co-operatives would maintain ownership. This would mean that individual members of the Co-operatives, as opposed to the Co-operative itself, would be responsible for following the rules of the BCFPP, such as prompt notification of late payment, submitting claims within prescribed timeframes, and to not extend credit. The amendment would also reduce the risk of a Co-operative being in a default situation because a Co-operative claim is denied by the Board for not following the BCFPP rules.
2. Provide the same rights of the Feeder Cattle Co-operatives for Breeder Co-operatives to make claims for compensation from the Fund for Livestock Producers in the case of a default by a licensed dealer. Beef Breeder Co-operatives mirror the operations of the Feeder Co-operatives, and currently pay the ten cent per head check-off fee to the Fund. The proposed amendment would ensure consistency between how Breeder Co-operatives and Feeder Co-operatives are treated under the BCFPP.
BFO’s comments on the proposal
were submitted in August. So long as there is no major opposition to the proposed amendments, which we don’t foresee, we anticipate the regulatory amendments will come into force early in the new year.
Although the proposed amendments will provide added clarity regarding the eligibility of cattle financed through breeder and feeder co-operatives, the onus to comply with all Financial Protection Program rules will rest with the individual producers and not the co-operatives themselves. Co-op members will be responsible for ensuring the co-op has received payment from the sale of their cattle, and for promptly notifying the Financial Protection Program in the case of any late payment, not the other way around.
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