Overview of What It's Like to Do Big Ag Business in Venezuela and Ukraine
This Bloomberg/Odd Lots episode (hosts Tracy Alloway and Joe Weisenthal) interviews Jeff Kazin and Mike Rolfson — former long‑time Cargill executives and co‑founders of Agris Academy — about the realities of running large agricultural and food businesses in Venezuela and Ukraine. The conversation covers how political shocks, currency breakdowns, nationalization, security risks, labor loss and damaged export infrastructure transform day‑to‑day operations, and what multinational firms must do to operate (or re‑enter) in those markets.
Guests & background
- Jeff Kazin: 30 years at Cargill across grain trading, vegetable oils, packaged oils business in Venezuela, M&A and feed/aquaculture businesses across Latin America.
- Mike Rolfson: Long Cargill career including running/expanding the business in Ukraine (arrived 1995), later worked in ag tech and venture capital; co‑founder with Jeff of Agris Academy (focused on supply chain education and risk).
Key topics discussed
Venezuela
- Currency collapse and hyperinflation: bolívar value collapsed (roughly described from ~1:800 to ~1:12,000 in a short span), currency effectively stopped functioning; government controls forced local currency transactions even while inputs were dollarized.
- Dollar scarcity became the central operational problem: multinationals needed dollars for spare parts, imported inputs and even currency for printing banknotes; teams shifted to “dollar generation” activities (exporting whatever they could) to pay for critical inputs.
- Nationalization and security: some plants were nationalized (instances described as “at gunpoint”); assets left idle were quickly stripped for parts or scrap, reducing the value of idled facilities.
- Brain drain: highly skilled employees emigrated en masse; many were rehired within multinational networks in other countries (e.g., Mexico City).
- Creative workarounds: bartering or exporting nontraditional goods (pallets, salt) to earn dollars; early Bitcoin mining used by some Venezuelans as a personal escape valve/remittance method.
- Compliance: U.S. multinationals had to stick to anti‑bribery rules; the company culture enforced refusing facilitation payments even when that created commercial headwinds.
Ukraine
- Resilience and crop mix shift: despite war, significant grain production continues; farmers shifted toward simpler, lower‑input crops (wheat, barley) that are cheaper to grow and easier to seed/reseed.
- Human capital shortages: labor to run combines, trucks, elevators is scarce; the workforce issue is acute.
- Export infrastructure damage: key export points and elevators have been damaged or are in contested areas; alternative export routes (transshipment on rivers such as the Danube, smaller ports, lumpy logistics) compensated partially.
- Market impact: volumes, routes and price returns to producers changed; the export footprint is impaired but functional in modified form.
Main takeaways
- Resource presence (oil, grain, mills) is not enough; functioning currency, rule of law, logistics and spare‑parts access are equally critical to commercial viability.
- Currency dysfunction is often the single most disruptive factor: it forces companies to reallocate people and capital to secure hard currency rather than their core business.
- Security and asset protection are paramount: idle assets are often looted; investors will require guarantees and on‑the‑ground security before committing large capital.
- Multinationals can be “pockets of stability” in otherwise fragile environments — the corporate compound, internal norms and processes often provide predictable operating conditions for employees.
- Ukraine’s agricultural base and institutional knowledge remain strong; with time and investment the blueprint for rebuilding export capability exists, but personnel and infrastructure recovery will take patience.
Practical advice for multinationals considering entry or re‑entry
- Start small and learn: pilot with a modest, capital‑light operation (e.g., portable feed mill) to understand on‑the‑ground realities before heavy capex.
- Hire local expertise and trusted operators: on‑the‑ground knowledge of government channels, logistics and risk is essential.
- Prioritize security and asset protection: expect to spend on physical security, secure logistics and contingency planning.
- Manage currency exposure: develop mechanisms (legal and compliant) to access hard currency — consider export strategies that generate dollars and explore modern fintech options carefully.
- Maintain strict compliance culture: enforce anti‑bribery rules and have clear training and escalation channels — walking away from markets rather than paying illicit fees can be the company policy.
- Collaborate with peers: multinationals often coordinate in early, risky markets; shared norms and mutual expectations can reduce friction.
Operational challenges & risks (concise list)
- Currency collapse / hyperinflation
- Dollar scarcity for parts and imports
- Nationalization or abrupt political intervention
- Theft, looting and insecure transport corridors
- Skilled labor emigration (brain drain)
- Damaged export infrastructure and port closures
- Reputational and compliance/legal risk if corruption is encountered
Notable anecdotes & data points
- Bolívar example: rapid collapse in valuation (from ~1:800 to ~1:12,000 in a few years) and stories of currency being burned for fuel.
- Plants once shut are often stripped for scrap — idle assets rapidly lose recoverable value.
- Multinationals rehired many Venezuelan refugees into other regional operations (e.g., Mexico).
- Early Bitcoin mining in Venezuela acted as an informal escape valve/remittance mechanism for some households and entrepreneurs.
Implications for supply chains and fintech
- Stablecoins, crypto and alternative fintech tools may offer ways to bypass local currency shortages, especially for individuals and small producers; institutional adoption is complex (regulation, compliance) but increasingly relevant.
- True self‑sufficiency is rare: even agrarian industries require specialized foreign parts and equipment, making access to global hard currency central to recovery.
- Companies and countries aiming to harden supply chains (e.g., China’s ambitions) face the same reality: control of inputs, logistics and currency flows matters as much as raw resources.
Bottom line
Doing big ag business in Venezuela or Ukraine is less about the presence of crops or factories and more about managing currency, security, people and logistics. Multinationals that return successfully will combine local expertise, cautious phased investments, strong compliance, and realistic plans for securing hard currency and assets.