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Understanding trade issues: Implications for the farm

Trade statistics, international trade agreements and non-tariff trade barriers are not always top-of-mind for farm families. Since most producers sell to intermediaries and don’t export their products directly to other nations, trade issues can seem one step removed from the farm gate.
 
However, for many commodities, product demand and prices are directly affected by trade factors. Understanding and following trade dynamics can help with decisions on the farm. Market analysts provide information on supply, demand and prices and trade figures prominently into their projections. A lot of market analysis is available at little or no charge to producers, but there are also specialized services to which producers can subscribe.
 
Consider processing
Canola is Canada’s highest value crop, and about half of the canola is crushed into vegetable oil and meal rather than being exported as whole seed. The oil is exported to many locations, including the U.S., China and Chile, who use it primarily for food applications. Most of the canola meal is exported to the U.S. for feeding dairy cattle.
 
Sometimes crush margins are high - meaning crushing plants are profitable, and they can afford to outbid buyers that export raw seed. And other times, the reverse may be true. It all depends on international demand.
 
In the Prairie region, several field pea processing plants have been established to isolate protein for the growing plant protein market. The demand and trade of pea protein is becoming a factor in the marketplace.
 
Proximity to processing plants can influence the returns farmers receive and, therefore, the crops they produce.
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