What You Need to Know and What You Need to Do

The Ontario Beef Cattle Financial Protection Program is established through provincial legislation and regulation to provide protection to cattle sellers against default in payment when cattle are sold to a licensed dealer. The program is administered by the Ontario Ministry of Agriculture, Food and Rural Affairs.

The program consists of the licensing of livestock abattoirs, associations, auction markets, country dealers and packing plants. A fund is established from a compulsory 5 cent per head deduction when cattle are sold. A claim can be made against the fund if an eligible cattle seller has suffered a default in payment. Claims are adjudicated by an industry board appointed by the Minister according to a set of program criteria.

Any producer who sells cattle to an unlicensed livestock abattoir, auction market, country dealer, or packing plant is not covered under the program; therefore it is important to sell cattle to a licensed livestock abattoir, auction market, country dealer, or packing plant. If a seller is in any doubt whatsoever regarding the current status of a prospective purchaser, he/she should contact the Program Manager or visit the Ministry website for a current listing of licensed dealers.

The program can compensate Ontario producers at 90% of their losses when a licensed dealer has defaulted on a payment. Under the program, dealers must be licensed and producers must use licensed dealers to be protected. Dealers pay an annual fee to renew their license. Protection for producers comes from a compensation fund which is financed by fees from both sellers and auction markets.

The onus is on producers (sellers) to act to limit their risk of non-payment. The program is not intended as a replacement for good financial risk management practices. To ensure their sales are covered under the program, sellers of beef cattle must:

• Always deal with a licensed dealer
• Payment is to be issued within 2 business days of the date of sale and put on its way to the seller*
• Payment is to be issued within 2 business days of grading on carcass grade sales and put on its way to the seller
• Deposit the cheque within five banking days of receiving it
• Never extend credit to a dealer**
• The Act requires the seller to notify the director promptly if payment has not been received on time***
  When payment has not been received or a cheque "bounces", a producer must:
• Apply for a claim within 30 days of the sale date.

If all these steps are not followed, a claim may be refused.

* Date of sale can mean the following:
 - Day of purchase, where price is determined on a per head basis
 - Day of grading, where price is determined on a carcass grade basis
 - Day of weighing, where price is determined on a live-weight basis

** Sellers of beef cattle are deemed to extend credit when they make a sale to a dealer prior to receiving payment for their previous sale which is past due . In other words never sell a second load of cattle once the payment for the first load is overdue.

*** Seller’s are required under the Act to notify the director if they have not received payment on time. If the payment is coming by mail the seller would wait two business days after the sale date and then an additional 5 business days for the mail. If it is not received in that time then they must report by fax, phone or email. If it is by courier then the seller waits two business days after the sale date and then an additional 2 business days for the courier. If it is not received in that time then they must report. If it is by electronic transfer the seller would wait two business days after the sale date, if it is not in their account that day or the following morning then they must report.

Producers should be wary of any offers to buy cattle that seem "too good to be true" - they very well may be. Contracts that offer terms that appear to place a producer outside of the coverage of the Financial Protection Program should be discussed with the Program Manager or a lawyer prior to signing.

Never be afraid to ask to see their dealer licence.

If you have any questions please contact

Jim Wideman, Program Manager
Ministry of Agriculture, Food and Rural Affairs
Food Inspection Branch
Ontario Beef Cattle Financial Protection Program
1 Stone Road West, 5th North West
Guelph, Ontario
N1G 4Y2
1-888-466-2372 Extension: 63886
Direct: (519) 826-3886
Fax: (519) 826-4333
Email: jim.wideman@ontario.ca