Small Trader only applies when you play a Minor Improvement card from your hand when taking a Major/Minor improvement action.
To give some context here: there are many ways to play minor improvements from your hand:
1) When you take the Meeting Place action, you become the start player for next round and also get to play a minor improvement.
2) When you take the Family Growth With Room action space, you can also play a minor improvement.
3) When you use the House Redevelopment action space, you can renovate your house and play a minor or major improvement.
4) When using the Major/Minor Improvement action space.
5) Some cards give you special abilities to play minor improvements in other ways (Angler, Scholar, Task Artisan, Tree Farm Joiner, Equipper etc)
Small Trader says you get three food when you play a minor improvement specifically using a Major/Minor Improvement action. That applies to (3), (4) and only some of (5) above - check whether the card is giving you a Major or Minor Improvement action specifically.
Small Trader has nothing to do with what you do with improvements after you have played them, so cooking sheep in a fireplace does not affect it in any way.
EDIT: I have rewritten this response because cranesflyhigh correctly pointed out that I had misread the card!!
