Food & Climate
Canadian canola is facing a crisis after US President Donald Trump activated a 25% tariff on imports from its neighbor on Tuesday, sending its price up about 9% in early trading on Wednesday.
Canola prices rose the most among grains, such as wheat, which rose 5%, and corn, which rose 4%, due to Canada’s control over its cultivation, according to market data which was seen by “Food & Climate” platform.
Canola is a crop with plants from three to five feet tall that produce pods from which seeds are harvested and crushed to create canola oil and meal. These plants also produce small, yellow flowers, which beautify the environment.
Canola seeds contain about 45 percent oil. This large percentage of oil comes in a small package; canola seeds are similar in size to poppy seeds, though brownish-black in color.
Canola belongs to the Brassica plant family as does mustard, broccoli, Brussels sprouts and cauliflower. Besides the United States, canola is grown in Canada and Australia as well as in Europe and China (but the crop is called “double low rapeseed,” referring to its low levels of erucic acid and glucosinolates, in the latter two countries). In America, the ratio of supply versus demand of canola oil is about 1:4, which presents a huge opportunity for U.S. producers to grow more canola. The healthy oil from this crop is consumed all over the world and number three by volume among edible oils.
About 2 million acres of canola are currently grown in the United States, predominantly in North Dakota, but also in Minnesota, Oklahoma, Kansas, Texas, Montana, Idaho, Oregon, Washington, Kentucky and several other states, according to “U.S. Canada Association” website.
The Canadian canola pains
The Canadian canola sector says U.S. tariffs will levy considerable economic pain throughout that value chain.
“The U.S. decision to go forward with 25% tariffs on Canadian-grown canola and canola products will be felt across the canola value chain, with devastating impacts on farmers, input providers, canola crushing activities, and exports of canola seed, oil, and meal,” said Chris Davison, Canola Council of Canada (CCC) president and CEO, in a media release, yesterday.
The U.S. is Canada’s number one market for canola exports and also a market that is highly integrated with the Canadian canola industry. Total export value in 2023 was $8.6 billion and in 2024 reached $7.7 billion, with record high volumes including 3.3 million tonnes of canola oil and 3.8 million tonnes of canola meal.
“The uncertainty created by this situation continues to impact farmers as they inch closer to planting the 2025 crop,” said Rick White, Canadian Canola Growers Association (CCGA) president and CEO. “The damaging blow caused by tariffs will be felt by every canola farmer, starting with the price they receive at delivery and will extend to the full range of their operations, ultimately reducing farm profitability.”
A recent analysis completed by the CCC on the impact Canadian-grown canola has on the U.S. economy also draws attention to the economic benefits the U.S. derives from the Canadian canola industry, which averages US$11.2 billion per year and includes US$1.2 billion in wages.
There is U.S.-based processing and refining, transportation, bottling and packing, and it is also widely used in food products, restaurants, and the livestock sector on that side of the border, according to “The Western Producer”.
Thousands of growers
Alberta Canola executive director Karla Bergstrom said the tariffs will be “devastating” for the industry she represents.
Roughly 40,000 producers in Canada primarily grow canola, she said, including more than 12,000 in Alberta.
“Canola is their No. 1 farm cash receipt, so, the biggest contributor to profitability on farms,” Bergstrom said.
“The reason this is so impactful with the U.S., is because it is our top [export] market for both canola oil and canola meal.”
Bergstrom said Alberta canola producers have always had a “good relationship” with Americans and there’s “a lot of integration on both sides of the border” when it comes to both raw and processed products such as canola oil and canola meal, used for feeding dairy cows.
“The companies that the farmers sell to, they’re global companies and they’ve got assets on both sides of the border,” she said.
The timing of the tariffs is especially difficult, she added, because of the uncertainty it creates for producers just as seeding season approaches.
“Spring’s just around the corner,” she said. “Will it strain cash flow on farms? Will it impact seeding intentions? What’s it going to do to the cost of inputs to seed the crop? Are there going to be the supply chain constraints because of this? There’s a lot of unknowns at this point and a lot of speculation is that it will not be good”, according to “CBC”.