Facing down uncertainty

By Clare Stanfield

There are all manner of idioms about staying calm in turbulent times: “Keep your head”, “stick to your knitting”, “keep calm and carry on”, “stay the course” and so on. They have a new weightiness these days, what with the frenetic news headlines about tariffs and trade wars. Farmers are understandably worried.

“My take, in terms of agriculture, is the U.S. tariff threats appear to be a negotiating position that is mostly aimed at Canada’s industrial policy,” says Bruce Burnett, director of markets and weather information with Glacier FarmMedia. “Tariffs will have a significant impact, particularly with livestock because it’s a very integrated sector.”

Which isn’t to say that the crop sector is immune; it’s not. Indeed, tariffs levied by China in mid-March have had a real impact on canola markets. But there may be more options here, more room to manoeuvre, and Burnett’s advice to farmers is to keep their heads and plan ahead as best they can.

U.S. tariffs: Canola and oats reveal a story

What Canada has going for it is that we have multiple customers for our grain commodities and most of what we sell is shipped in an unprocessed state. “There are very few cases where the U.S. is our only market,” says Burnett. “So even if they impose tariffs, offshore markets would provide some cushion on products we ship raw.”

In terms of the U.S. situation, while Canada does have some U.S. wheat and durum markets, Burnett says they’re not essential to our success, and most of our pulses are already sold offshore, so not in America’s firing line. Canola and oats, however, reveal an interesting picture.

“Oats is one of the few commodities where the U.S. is pretty much our only customer,” says Burnett. “But cereal and granola bar makers will absorb any tariff and pass it on to the consumer.”

He explains that American food companies buying Canadian oats aren’t likely to find the supply they need anywhere else, least of all from American farmers since the value proposition for growing oats compared to say, corn or soybeans, just isn’t there for them. Plus, this one ingredient contributes relatively little to final retail price so, tariff or not, U.S. companies will likely keep buying from Canada. “The dollar value of oats in your cereal box is relatively small, so passing a 25 per cent tariff on to consumers doesn’t really change things much,” he says.

The key here is that U.S. oat buyers don’t have easy substitutes or alternate suppliers. The same is not true of canola. “A tariff on raw canola isn’t so devastating,” says Burnett. “But a tariff on canola products — that will hurt.” Indeed, China’s recent trade action has shown just how much it can hurt, but more on this later.

The massive growth of Canada’s domestic crush industry means we are selling more processed canola products than before, and a lot of that goes into the U.S. “Crushers on the Prairies set prices for canola based on their margins,” says Burnett. “They sell oil and meal mostly to the U.S. But if that market becomes inaccessible due to tariffs, they will lower their demand for raw canola and prices will be affected.”

Unlike with oats, U.S. canola buyers do have options because vegetable oils are fairly interchangeable. Burnett isn’t saying that making a switch would be easy, but it is doable over time. “They could use soybean oil, but a lot of that U.S. crop is committed to biofuel,” he says. There’s also sunflower, safflower and corn oils — the point is, there are a lot of alternatives to canola oil if push comes to shove. “Canola oil is very affordable, so the immediate problem for U.S. canola buyers is finding an alternate source,” says Burnett. “Eventually the tariffs will reduce their demand for canola oil as they replace it with something else.”

Burnett is clear that this is a concern, but nowhere near a death knell. He says that U.S. makers of high-end canola oil products, those where the oil is integral to the character and quality of the finished item, will likely try to absorb any tariff. And offshore canola markets are still active and viable, if more focused on raw commodity than processed products. “The export market will remain, but prices will be affected,” he says.

China tariffs: When threats become reality

This is where attention must turn to China’s 100 per cent tariff on canola products levied in early March. “The irony here is that China imports virtually no oil from us, and only some canola meal,” says Burnett. And while China did not levy a tariff on canola seed, which by far is its biggest canola import from Canada, markets still reacted.

And herein lies a tale of actual tariffs versus threats of tariffs. So far, the U.S. tariff talk has been more bark than bite. At the time of writing (mid-March), there had already been a chaotic flurry of on-again-off-again tariff warnings, but the markets remained strangely stoic. “Commodity markets were not really reacting,” says Burnett. “Markets in general were taking the approach that this is a negotiating tactic and will do something only when tariffs happen and are real.”

Which is exactly what happened when China acted. “Canola markets crashed,” says Burnett. “The canola price had been eroding before the March 10 announcement, but then it dropped about $100 a tonne from February when that announcement came.” Why, given canola seed was not in the mix? “It’s an anticipatory thing,” he says. “The market expects China will drop that hammer on seed sooner than later and it reacted to that.”

With U.S. tariffs still a question mark and Chinese tariffs a reality, it can feel pretty bleak for farmers, but Burnett says there is hope.

Canada has survived through previous trade issues with China, we are major producers of key global crops, the global vegetable oil markets still need to be filled and so on. “We may have to reduce canola production for a while, but treat it as a short-term thing,” he says.

Do what you do

While uncertainty around tariffs and trade are likely to be a factor in 2026 cropping plans, Burnett thinks they may have already had some impact this year. “The latest Statistics Canada report on crop area shows canola is projected to be down by 1.7 per cent from 2024,” he says. “That’s less than 500,000 acres, but this is data collected before any tariff discussion and shows farmers were already indicating they were thinking about it.”

When so many things feel out of your control, what can you do? “Focus less on the day-to-day news and focus more on minimizing risk next year,” says Burnett. “Look at what crops you produce and do an assessment of various scenarios. Know where your products are going — international markets are more stable. In terms of your operation and the longevity of it, do what you can to grow a good crop. Don’t get caught up in the headlines, continue to market your crop as you always have.”

In other words, control the controllable and don’t fixate on what you can’t. Take a breath. Focus on growing the best crop you can.