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I'm Roger Heering, and on this edition, a plan for a Black Sea ceasefire.
But Russia's now tied it to relief on sanctions for some of its banks and rejoining a money transfer system.
So how's that going to work?
Also, how Canadians are onshoring to counter the new world of US tariffs and why orange juice futures are getting, well, a bit fizzy.
But let's start with Ukraine.
We do now know what so far come out of the talks that the Russians, Americans and Ukrainians have been having in Saudi Arabia.
It's an agreement to stop attacks on shipping in the Black Sea.
A White House statement said both sides had committed to giving safe passage to vessels and find ways to pause strikes on energy facilities as well but a Kremlin statement added a rider safe navigation would only be enforced once sanctions were lifted from Russian banks involved in international trade in food and fertilisers and they are fully reconnected to the swift money transfer system.
President Trump was asked about those conditions they will be looking at them and we're thinking about all of them right now there are about five or six conditions.
We're looking at all of them.
Ukraine's president Zelensky said Russia was lying about what was decided at the talks.
And he said it was untrue that the Black Sea ceasefire depended on sanctions.
But will the agreement, if it sticks, help those trying to use the Black Sea for commerce?
Konstantin Timoshenko is the general manager of Fomag Group, a shipping agency management firm in Odessa.
The reason, response, to be honest, and if there is one, it is a frustration, because the official statement of the White House says that Ukraine and Russia, there are two statements which say that both sides eliminate the use of force in the Black Sea, but Ukraine hasn't been using any force against commercial ships, whereas Russia has been doing that.
And we all know that any treatment or any agreement with Russia science is worth nothing.
So in a nutshell, we don't think anything, myself, my colleagues, my family, no one I know, we don't believe anything will change.
So Russia will wait until the United States leaves some sanctions, and then we'll violate this agreement.
Probably, that's what is going to end up happening.
So you won't be able to go back to doing more shipping in the idea that you're not going to get attacked, but commercial shipping can operate?
Well, as a matter of fact, it can operate now.
So, ships come and go from Odessa every single day, yes.
You may have heard that roughly two weeks ago, Russia attacked two ships while they were in Odessa board. Four crew members on board of one of the ships have died as a result of that attack.
And as my personal opinion, which I don't have any proof, and, of course, I cannot predict future, well I can predict, I cannot say for sure.
My prediction is that Russia will violate this agreement and then will say that they target that it wasn't a commercial ship, but was some military target, as they usually say, they do it all the time and they have been doing this for a very long time.
I don't think this agreement changes anything.
Well, I suppose the piece of something people might say, well, if Russia agrees to it and their shipping is protected, they'd have a reason to stick to the agreement, wouldn't they?
Well, I kind of see what you mean, but Ukraine has not hit any single commercial ship coming and going from Russian ports, only the naval ships were hit by Ukraine.
So why would Russia be frightened of Ukrainian attacks?
There is no point of them being afraid of that.
So Russia uses this agreement to get their sanctions lifted, and at the same time, they can continue hitting any target they want while claiming that this target is military.
So, if you want to find some positive signs, I cannot offer you any, I'm sorry.
But what about the situation at the moment?
Konstantin, are you able, or are your colleagues able, to run effectively shipping, exporting what you need to through the Black Sea?
Well, to answer this question, we need to put some timeframe on that question.
Because comparing to the outbreak of the full scale war in 2022, of course the situation is now much better than—back then, all our tipsy ports were completely blocked, and nowadays they're not, so as I said, ships come and go with full—loads of grain and other agricultural products, so the situation is much better.
But of course, regular Russian attacks, they make ship owners not really willing to send their ships, and sometimes they, before making the decisions, they make long pauses and they increase freight rates and stuff.
So it's a complicated question it's difficult to answer with a simple one sentence or yes or no it's so yeah it's it's difficult is complicated.
I can understand that I guess one of the key concerns must be insurance because if ships are at risk of being hit, which you say they are, I guess it's very hard to get insurance for them.
Well it is actually possible and we have to thank London for that in London, insurance companies and the which in cooperation with the Ukrainian government, develop some special programs for ships insurance which the so this product is in fact available and has been available for some time, but of course, it's price is significant for for shipping.
So if Russia stick to their word, and do not hit Ukrainian ports and commercial ships, I suppose insurance will go price will go down.
So it's it's going to have some effect.
But this only if Russia keep their word, which we in Ukraine don't believe is going to happen.
Konstantin Timoshenko, there, of the Formag shipping agency management company in Odessa.
But how would the conditions the Russians are talking about now actually work?
Can sanctions be lifted in the way they seem to want?
Let's talk to Alexander Kolyanda, who's with the Democratic Resilience Program at the Center for European Policy Analysis.
Alexander, thanks for being with us.
I mean, let me just quote to you what the Russians say.
They say that sanctions restrictions on the Russian Agricultural Bank and other financial institutions involved in the international trade of food would have to be lifted.
Is it possible, Alexander, to do that separately to move sanctions in a different way than they have been at the moment?
Yes. Thank you very much for having me.
I suppose it is possible to remove Russian agriculture bank from the sanctions list or at least partially remove it from the list and enable it to open corresponding accounts because you can do it through exemption of the current sanctions regime no problem with that and honestly I suppose that that was the main reason for the Russian demands on their sanctions list Because if you look at this list, there is much more than the Russian agriculture bank there.
The Russians want sanctions to be removed from fertilizer export, and it wants its export of food also to be removed from the sanctions list. The problem is Russia does not export a lot of food.
The main Russian food export is grain.
It is not under sanctions.
Another major item is frozen fish, but it amounts only for about 6 to 7 billion dollars a year.
It's not too much. So, why have put that in then?
Why have they put that in, Alexander, if it's of no significance?
I suppose to score some points with the Global South, simply to show the countries in the Global South that Russia wants to feed them and Russia wants to feed them cheaply.
And for that, it needs sanctions to be removed from its agriculture bank.
But the main purpose is to have a clean bank, a large preferably state -owned bank, which is not sanctioned and which can operate through the export and import operations throughout the world.
And presumably that would allow if you had a big bank, as you say, in that position that bank could then be used to basically undermine pretty much all the sanctions on the financial industry, couldn't it?
Theoretically, Russia says that it would only use it for agriculture expert, But technically yes, you can use it for whatever you like.
And at the same time, they're also talking about the SWIFT banking system.
Now, perhaps just for people who don't know, just explain what the SWIFT banking system is.
Yeah, the SWIFT banking system is a kind of way of communication between the global banks and it facilitates trade and or financial operations between the banks.
So, basically, if your bank is sanctioned, then it's more or less out of this system.
But I suppose what is more important is to allow this Russian State Agriculture Bank to have corresponding accounts in the United States, so that it can operate inside the US dollar economy.
In other words, it would be possible to trade in goods and services with US dollars and not with renminbi or other non -convertible currencies.
So that sounds like if they get that being back inside the SWIFT system for this big bank, again, it kind of undermines a major plank of the sanctions that have been put on.
I mean, someone perhaps might say, well, if all this is happening, what are the sanctions worth anymore?
Well, I totally agree.
I supposed to have at least one clean bank means that your system is not isolated.
If you are a teatotal and suddenly you have a drink, it means you are no longer an abstinent.
So all this, if it goes through and it's a very big if, of course, at this stage, would blow a major hole really in the sanctions structure.
Now, are these sanctions we're talking about are the U .S. sanctions are they European sanctions are they all sanctions well it will be a huge blow to the global regime of sanctions obviously Donald Trump would not be able to remove European sanctions so the sanctions if as you said it's a big if Russian Agriculture Bank is removed from the sanctions regime then it would be whole in the American sanctions and the structure.
But it is still possible to limit the operations of this bank like it was a case with Gazprom Bank which was allowed to receive payments for energy export but not for anything else.
I strongly believe that Moscow wants Russian Agriculture Bank to be completely out of the sanctions but whether it will be removed from the sanctions list or only allowed to deal in food, fertilizers and agriculture goods remains to be seen.
Is this, do you think, a kind of opening demand?
We're used to the way that these things operate, Alexander, the way that the deal, if you like, works, both from the Washington point of view, and from Moscow and from Kiev, that there are big demands to start with, and then they can be whittled down.
Do you think this is what this amounts to?
Roger, I suppose it's not the starting point?
It's exactly what the Russians want.
And obviously, they don't want to present a demand which the American side does not want to fulfill.
So I strongly believe that there is at least a preliminary understanding that the removal of the sanctions on the Russia's menu is possible.
And if that does go through, and I keep saying it is a big if, are we then in a position where Russia has got a major, major concession and that Donald Trump has, if it goes through, put them in a position where they don't need to worry as much about their economy as they clearly have been doing up to now.
Well, no, no, it's not that big.
Because a lot of sanctions would remain in place.
The overall banking system will remain a bit paralyzed.
And all the restrictions on technological export to Russia will remain in place.
And I suppose that worries Moscow a lot.
Just an opening shot.
Yeah, okay, an opening shot.
And Alexander, I suppose the question then is actually, how much damage have these sanctions been doing to Russia, because it seems we've got to a stage where clearly this is their big opening announcement of what they really want.
But if, as you say, it makes not perhaps that much difference, or, you know, it won't change things dramatically, are all these sanctions actually not that effective anyway?
No. They, uh, I wouldn't, I would not agree.
They are effective.
The sanctions definitely failed in their purpose of stopping off, firstly to preventing the war and then, uh, stopping it.
But the sanctions in all their unity, they do put a bit of sand in Russia's economic engine.
Yes Russian economy grew by 4 % last year and by almost 4 % in 2023, but in my view, it's growth on a mortgaged future.
Russia's economic and industrial problems are huge, and the Kremlin does understand it.
Alexander, thank you so much for being with us.
Alexander Kolyanda there of the Center for European Policy Analysis, and let me leave you with a report on what Sege Lavrov, the Russian Foreign Minister has spoken on Russian state television in the last few moments, saying we want the grain and fertilizer market to be predictable so that no one tries to ward us off from it, not only because we want to make a legitimate profit in fair competition, but also because we're concerned about the food security situation in Africa and other countries of the global south, very much bearing out.
In fact, what Alexander was telling us earlier on.
Now let's turn our thoughts to the market.
Sayako Yoshioka, consulting director at Wealth Enhancement Group in Los Angeles, joins me now.
Ayako, thanks very much for being with this.
Just on that point, I suppose, about these sanctions and possibly they're coming off.
Is it the kind of thing that could change the markets in some way?
Would it perhaps lead to interest in what this might produce, for example, in grain imports and affect the grain price?
Sure. I think any changes that happen can definitely impact markets and future prices going forward. I think it's really just a matter of what the magnitude is and whether or not we're really getting clarity on some of these changes.
Let's talk about some of the data that's coming out now about the U .S. economy, because obviously that's a huge concern.
It's interesting, Moody's, the firm that sort of measures confidence really I suppose in nations and economies, is saying the U .S. fiscal strength is on track for a continued multiyear decline because of budget deficits.
That's not going to go down well.
No, it's not, and I think that's the reason why we are so focused on spending cuts and reforms to the overall government spending, as well as the overall national debt.
And finally, dip in US consumer confidence at the moment.
That's also not a good sign, particularly for Donald Trump, I guess.
No. The consumer confidence number was the lowest that we saw since January of 2021.
So a lot of the issues regarding slower economic growth and higher inflation is really hitting consumers.
Ayako, thanks for being with us.
Ayako Oshyoka there, consulting director at Wealth Enhancement Group in Los Angeles.
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You're with World Business Report from the BBC World Service.
Now Made in Canada there's three words which are now a common presence on Canadian shelves after US President Trump's 25 % import tariffs sparked a trade war with its northern neighbour.
It's left some Canadian firms who do business in the US facing a choice, ride out the uncertainty or bring their operations back home which is of course known as Reshoring.
From Toronto Sam Gruett has been looking at whether reshoring can work for Canada.
In the Toronto store of bedding retailer Only Fine Linnens, owner Joanna Goodman is weighing up what's best for the business as US -Canada trade tensions mount.
The products that we do bring in from the US, I would say like let's say it's about 20 % of our entire offering.
You see how much inventory we have on the shelf.
So, even 20 % of our offerings it's quite a lot.
Her giant warehouse is home to elegantly made up beds and mannequins in silk pajamas.
Nearly all of it is made in Canada.
But I have a lot of inventory here of American brands that I've had relationships with for 20 years.
I'm not just going to box them up and put them aside.
So, yeah, the question is will I reorder?
Despite talk of re -shoring, so far, it's hard to tell if there's been any action.
Just over 4 % of Canadian businesses surveyed in 2023 said they intend to relocate supply chain activities to Canada, a statistics Canada survey suggested.
Economist Randall Bartlett thinks whatever we do see will be focused on key industries.
Maybe in processing steel and aluminum, you may see more upstream manufacturing to support sectors like mining, that need highly specialized equipment that uses certain types of steel that's generally imported from the United States, maybe we'll have more of that production here in Canada.
A lot of that, I think, will come back to Canada's comparative advantages, which are very much tied historically to the natural resource sector in Canada.
In Southwest Ontario, one of those is soybeans, of which Canada is among the largest producers in the world.
What we don't do enough of is processing those value -added ingredients, such as, in into more valuable ingredients here at home in Canada.
Graham Markham's firm, New Protein International, is constructing Canada's first soybean protein manufacturing plant just miles from the US border.
We had envisaged that being a larger part of our future customer mix than what it may end up being.
The opportunity to stop exporting the job creation and the value creation and innovation and the export base that can all be gained by processing things further domestically there is a case for that.
And I would say Canadian patriotism is at the highest level.
I have seen it in a long time.
Despite the potential benefits of reshoring from lower carbon emissions to a boost to small businesses, building up production and supply chains has major hurdles.
The highly integrated auto industry, for example, would take years to establish, says Randall Bartlett.
It's going to be very difficult for Canada to start building cars which are 100 % Canadian content.
Some countries are better at producing some things than other countries are, and it makes more sense to focus on those things that you're good at instead of spreading the productive capacity around to areas where you're not very good at producing things.
So this is the warehouse?
Back at Only Fine Linens in Toronto, hanging over all of this, the US government's rapidly changing policies on tariffs.
These tariffs could be gone every day, you look at the news and it's like, tomorrow, today, they're gone.
Let's see how it all unfolds, and then we'll start making decisions.
Where do we want to be buying?
Like many Canadian businesses, Joanna Goodman is waiting for the dust to settle before deciding where to buy, where to sell, and what made in Canada really means for the future.
Sam Groot, reporting there from Toronto.
Now, Orange Juice, nice to drink, and in it's frozen, concentrated form.
It's also been a staple of futures trading on Wall Street.
But now the traders are having to puzzle out a strange turn in events.
Orange juice futures have plunged amid waning demand.
It appears consumers are turning their backs on it.
Concentrated orange juice futures on the international exchange in New York, have halved since the start of the year.
And that's strange because last year, they soared over fears of drought and crop disease in Brazil.
Brazil is the world's top orange juice exporter.
But Florida isn't far behind.
So I asked Dr. Marisa Zansler of the Citrus Commission in Florida.
What's going on? What we see now in the futures market, with frozen concentrated orange juice is quite a bit of market speculation and price volatility.
That can be associated with several factors.
I think it's really important to note that these are speculators looking at the futures market, anything from the intercontinental exchange, imposing price limits, to speculation in terms of the quantity, or even just sellers that are looking for trade profits.
markets. And so we're seeing that plunge that happened in the futures market.
But in the market here present when we're looking at retail sales, when we're looking at orange juice, 100 % orange juice at retail, we see that the average price is still up.
In fact, it is up compared to the same period a year ago in February.
And particularly when we look at more premium quality orange juice, like not from concentrate 100 % orange juice where most of Florida's production will reach consumers.
We see that average prices are up and that consumers are willing to pay that price right now for that high value premium product.
But I suppose the point is that the futures market clearly is sensing something.
Is it to do with perhaps potential from the way the trees are disease, perhaps affecting the trees that's certainly made a difference in the past. Well, certainly, I think that production and supply constraints have had an impact on the futures market.
In fact, we've seen that real steep increase over the last year and a half in which you've seen futures prices increase dramatically in response to global shortages.
And so, sometimes when you have such a dramatic increase, you'll see that the market is correcting itself.
And so, that's one idea of what we see happening right now.
But there's something behind this.
It's not just happening because it's happening.
And certainly, some people have talked about disease hit trees that produce bitter tasting fruit and a shortage in some cases.
I mean, that's not made up.
No, sir, not at all.
I mean, what we're seeing is that we are experiencing a global shortage of 100 % orange juice stocks because there is that global shortage worldwide, whether it's Brazil, Mexico, Florida, and just that general decline in the quality fruit that consumers are able to buy, we're seeing that that's having its impact on the futures market.
That distinction with frozen concentrated orange juice, and looking here to Florida and Florida processors producing that, not from concentrate juice, it's a little bit of a different product.
And I suppose you've also got the basis that there are stocks of frozen orange juice around there as well.
So, if the production is down for any reason those can be brought on mine.
I mean those kind of things make a difference.
Absolutely, but also what we've really been seeing is year over year a decline in overall inventories in order for processors to meet that global market demand, whether it's in Europe or the United States or elsewhere.
And so that's really serving to draw down those stocks and we've seen that happening in Brazil.
we've certainly seen it happening right here with our Florida processors.
So, that is contributing to that overall decline in availability of orange juice on that global perspective, so whether it's in the United States or abroad as well.
Well, let's come under the issue of taste, if we may, Dr. Deansler, because people have talked about a bitter taste in some of the orange juice perhaps because of disease, and that perhaps lower quality orange juice is there and that may put consumers off.
Is that an issue? Certainly, consumers indicate that taste is a leading reason why they purchase 100 % orange juice and so I think it's important to note is that that is part of the reason why we have those supply constraints because the juice quality that's reaching consumers is the juice quality that is set to meet the standards here in the United States and abroad so when you have that decline in that quality in terms of the juice in the fruit itself it's not going to make its way into the market and so you know that's what's contributing to that decline and supply as well it's just that declining
quality. So are you seeing that declining quality in what Florida is producing at the moment?
So what we have been seeing here in Florida is overall impact in the decline associated with disease particularly a disease that are Florida processors, Florida growers rather are combating known as citrus greening.
And again, I think that that has contributed to a decline in the supply because the oranges that are being processed and are reaching consumers are those that meet that quality standard. Marie Sosandova, Citrus Commission of Florida, and that's it from World Business Report.
Thanks for being with us.
Bye bye. This is Ashley Ekinode from The Ben & Ashley Eye, almost same as podcasts.
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