What It's Like to Do Big Ag Business in Venezuela and Ukraine
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
In this episode of Odd Lots, hosts Tracy Alloway and Joe Weisenthal speak with Jeff Kazin and Mike Rohlfsen, cofounders of AgrisAcademy and former Cargill executives, about the challenges of operating multinational agricultural businesses in geopolitical hotspots. Jeff managed Cargill's Venezuelan operations during the hyperinflation crisis under Maduro, while Mike was Cargill's first employee in post-Soviet Ukraine in 1995. (05:06) The conversation explores how these executives navigated currency collapses, corruption, security threats, and infrastructure breakdowns while maintaining global food supply chains. (09:20) Their experiences offer crucial insights into the practical realities of doing business in unstable economies, from dealing with hyperinflation that made paper money worth less than its fuel value to managing brain drain as skilled workers fled deteriorating conditions.
• Main Theme: The operational challenges and creative solutions required for multinational agricultural companies to function in economically and politically unstable environments, highlighting the gap between having natural resources and the ability to commercially extract them.
Speakers
Jeff Kazin
Jeff Kazin is the cofounder of AgrisAcademy and completed a 30-year career at Cargill, one of the world's largest agricultural conglomerates. During his tenure, he held various leadership roles including head of wheat trading, CEO of a joint venture between Cargill and Monsanto, head of refined vegetable oils trading for the Western Hemisphere, and oversaw Cargill's large Venezuelan oils and packaged foods business during the hyperinflation crisis under Maduro.
Mike Rohlfsen
Mike Rohlfsen is the cofounder of AgrisAcademy and was Cargill's first commercial employee in Ukraine, arriving in April 1995 as a young, Russian-speaking representative who helped build the company's presence from a theoretical office to multiple business units worth hundreds of millions in investment. After leaving Cargill, he worked in agricultural technology venture capital before partnering with Jeff to establish AgrisAcademy three years ago.
Key Takeaways
Natural Resources Don't Guarantee Commercial Success
The mere existence of valuable resources like oil or fertile farmland means nothing without proper infrastructure, rule of law, and processing capabilities. (02:31) As Joe Weisenthal noted, "assets in the ground or anywhere mean nothing without the rule of law, refining, processing, shipping infrastructure, etcetera." This applies globally - from Venezuela's degraded oil infrastructure to Greenland's untapped resources. Companies must invest heavily in the entire ecosystem, not just extraction, to create commercially viable operations.
Currency Instability Can Paralyze Operations
When local currencies become unstable, businesses must pivot from their core operations to dollar generation and currency arbitrage. (09:04) Jeff described how Venezuela's bolivar went from 1:800 to 1:12,000 against the dollar in just three years, forcing Cargill to create dedicated teams focused solely on securing hard currency for basic operations. (29:40) The company had to export anything possible - from salt to wooden pallets - just to generate the dollars needed for spare parts and raw materials, fundamentally changing their business model from production to survival.
Operational Excellence Becomes a Competitive Advantage
In unstable markets, Western companies' adherence to legal and ethical standards actually attracts business partners and customers. (24:44) Jeff explained that food safety standards and contract reliability made Cargill attractive to global brands like Nestlé operating in Venezuela, because they knew Cargill would deliver quality products without requiring bribes or facilitation payments. This reputation for consistency and ethical behavior becomes a significant differentiator when local competitors may cut corners or operate unreliably.
Start Small and Learn Before Major Investment
Successful market entry in challenging environments requires starting with smaller, portable operations to understand local dynamics before committing major capital. (49:00) Jeff recommended beginning with small feed mills or similar operations that can be set up relatively quickly and cheaply, treating them as "paying tuition" to learn how things actually work on the ground. This approach allows companies to discover unexpected challenges - like undisclosed bribe requirements - before making irreversible large investments.
Brain Drain Accelerates During Crisis
Economic instability triggers a cascading effect where the most skilled and educated workers leave first, compounding operational problems. (34:54) Jeff described how Venezuelan employees, despite having good jobs at Cargill, lived in secured compounds due to security concerns and basic infrastructure failures like intermittent electricity and water. The first wave of emigrants included the most educated and skilled workers who could easily find employment elsewhere, leaving behind fewer people capable of maintaining complex operations like power generation and petrochemical plants.
Statistics & Facts
- Venezuela's bolivar collapsed from approximately 1:800 to 1:12,000 against the dollar in just three years during Jeff's tenure managing Cargill's operations there. (09:04) This hyperinflation was so severe that the BTU value of paper bolivar notes became worth more than their purchasing power, leading people to literally burn them for fuel.
- Mike Rohlfsen was Cargill's first commercial employee in Ukraine starting in April 1995, and over five years helped build the operation from a theoretical representative office to seven or eight business units with a couple hundred million dollars invested. (07:12)
- At one point, Venezuela's currency situation became so dire that they couldn't afford to pay for printing new bolivar notes, which were being printed outside the country in dollars, creating a shortage of physical currency even for basic transactions. (20:28)
