# Operational Realities of Emerging Market Ag Trade

**Podcast:** Odd Lots
**Published:** 2026-01-29

## Transcript

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Joe, one of the big topics of discussion, there are a lot of topics of discussion nowadays, but when it comes to the recent uh takeover of Venezuela, the Trump administration's takeover of Venezuela.
I don't know how acquisition.
I don't know how to describe it.
Um but the action in Venezuela.
One of the themes or things that you saw people talking about was this idea that, well, even if the goal is to get more oil, Venezuela's oil industry is a mess.
It's in shambles.
Yeah, so you hear things about, you know, ships that are rusting in the dock and pumps that don't work and whatever.
People talking about really creaky infrastructure and also just a bad environment for doing business.
Yeah, I mean, this is the thing.
And so in the Venezuela-specific context, we know that the oil infrastructure has been degraded for years, which is why there is all these numbers about the massive amounts of upfront investment that would be required to get the oil started.
But then there's this other phenomenon that's global, which is that there's really not much of a connection per se between the existence of natural resources in the ground and some way to get them out commercially anywhere.
This also happens to be the case in Greenland.
It happens to be the case in Western Australia, which is a very like well-run country, which is that assets in the ground are anywhere mean nothing without the sort of rule of law, refining, processing, shipping, infrastructure, etc.
So all these places of various different degrees, the actual existence of some asset in Venezuela's case, oil, that's only part of the story.
Absolutely.
So this got me thinking: what is it like to actually uh do some sort of industrial business in a place like Venezuela?
And I always wanted to do more on the Venezuelan economy.
I think it's pretty interesting and more interesting now.
So that is exactly what we're gonna do today.
We're also gonna talk about doing business in another um hot spot.
Hot spot.
Hotspot is a good way of putting it, which is Ukraine.
Right.
We did a number of episodes um in uh immediately after Russia's invasion of Ukraine, talking about the effects on the grain business.
But the important thing, which we didn't get into that much, although I think we did a little bit, is like, well, the grain business, the wheat export business, it still exists, it was impaired, but then the day-to-day business of running a commercial operation in that intense environment, how that changes and so forth and so forth.
How does that change under uh the new competitive strains?
And I just want to say one more thing, which is, you know, when you talked about, well, what is the right word now to describe our relationship with Venezuela?
It's I've been thinking about a lot of this too.
Can you have a word?
No, I don't, because it it's very context dependent, right?
If you were to listen to the administration, he's like, oh, Maduro was arrested, right?
If you believe this was a flagrant violation of international law, you'd say he was kidnapped, etc.
There's almost no words to describe it.
You saw the president talking about already selling Venezuelan oil.
So whose oil is this already?
It's just a it's a very odd situation to say the least.
Definitely.
Um okay.
So speaking of odd situations, we have the perfect guests to talk about them.
And just I just gotta say, I got a headline, US Seek's immediate talks on acquiring Greenland.
Trump says, so at some point we will have another conversation about weird relationships with parts of the world that we um didn't think about as much.
Yeah, the Greenland economy episode is uh is yet to come inevitably gonna arrive.
Okay, so we're gonna be speaking with Jeff Kazan.
He is the co-founder of Agris Academy, and also the other co-founder, Mike Rolfson.
So, Jeff and Mike, thank you so much for coming on Outbots.
Really appreciate it.
Thanks for having us.
Yeah, thanks for having us.
So, first of all, why don't you give us a sort of um nutshell summary of your career history?
Because this is why we're talking to you.
Both of you had very long, interesting careers at Cargill, which is you know one of the massive, massive agricultural conglomerates, among other things.
So talk to us about why why we're talking to you, I guess.
Yeah, I guess I'll start out.
This is Jeff Kazan.
I um I did a full career in Cargill, 30 years, and you know, started at the ground up, you know, at uh you know, Baton Rouge, Louisiana ports, buying grain to go to export.
Was ahead of wheat trading, did a lot of wheat trading at some point, spent some time in there, mergers acquisition shop around the world looking at various businesses.
Ended up as a CEO of a joint venture between Cargill and Monsanto at the time, switched over into the vegetable oils, particularly the refined vegetable oils, was the head of trading for the what we call the West, so the Western Hemisphere on the refined oil side.
And that's actually where my time with Venezuela was connected.
Cargo had a very large uh oils business there, actually a packaged oils business.
And I finished up my career um in the feed side, a lot of the aquaculture, very large salmon feeders around the world, shrimp, all kinds of uh various aquaculture, and then really the western side, uh, South uh Latin America on the feed side, all the way to Argentina.
So a typical uh highly varied uh cargill career.
Similar story with me back then when Jeff and I started, you know, cargill intentionally threw you around to many different places.
So yeah, I had three different domestic roles in the in the early to mid-90s, uh, that got your feet wet in different markets in the United States.
And uh, I also was involved on the export side out of Houston, you know, similar to what Jeff did.
And then about five years in, I got tapped on the shoulder to go to Ukraine.
There was no real commercial presence for Cargill then.
I was what year are we talking about?
This was this would have been April of 1995.
Okay.
Yeah.
So I was uh I was young, I was single, I spoke Russian, I was uh perhaps tongue in cheek.
You ticked all the boxes, expendable and uh, you know, with a with a blank slate that that not really knowing what was going on at the time and probably rather difficult to find people to come there.
Yeah, I I I had raised my hand already to go and and and fortunately they they circled back to me and gave me that opportunity.
And it was five wonderful years there, taking it basically from uh from a theoretical representative office to I think we had seven or eight business units and a couple hundred million dollars invested.
So it was a wonderful experience over those five years.
And uh I also was with Jeff in the merger and acquisition shop uh shortly after returning and uh went into corporate ventures for a while after that and left Cargill a little earlier than Jeff did and went through ag tech and and um uh ag tech oriented venture capital.
Then about three years ago, we kicked this off.
Um, I hope you guys are cool with us turning this into a five-hour conversation now, because I imagine there's an incredible number of stories, and I already have a uh billion questions.
So we're gonna be doing a little bit of that on the fly.
Jeff, talk to us about the years you did business with Venezuela and maybe the difference in what years those were, and then the sort of different conditions from like the beginning to the end as you saw them.
Yeah, so uh because of the oils business, I was attached to that.
And I'd like to say that um it was a varied business, and I ended up, and I had a lot of grain experience too.
So I ended up kind of the head of overseeing trading for all of it.
And probably the the biggest statement is I think when I started the boulevard, the currency was like one to eight hundred.
And this is uh and I get my years right.
And I think you know, three years later, it was like one to twelve thousand or something like that.
You ended up, we ended up in the that period of super hyperinflation where the economy basically seizes up.
And you know, you watch from the capability.
If you don't have a functioning currency, and the government makes you sell in local currency, in order to go, you have to have some way to exchange it.
And we effectively became dependent on the government to do the exchange to go out and buy dollarized raw materials right now.
80% of global trade is still in dollars, and a lot of the grain trade is in that probably is the most single-telling thing.
The currency ceased to function, and that really changed the game on the ground in Venezuela.
I want to get into some of the currency complications in a little bit, but I was surprised that Cargill had any business at all in Venezuela.
Can you just tell us what exactly Cargill was doing over there?
Yeah, and keep in mind, I'm a currently a former employee, and Cardiel does not own the business there anymore.
I was uh reached out to by Cargill.
Basically, this is very typical of Cargo.
They'll have feed males, they'll go in, they they go out, they'll start with feed males, they'll uh they had the long-term salt.
Salt was a big play there.
Cargill is a large producer globally of salt, a lot of things quietly.
I think there was a lot of industrial use salt there.
They had the petrochemical business was using salt.
I don't actually, I'm not an expert on the petrochemical side.
And then there are lots of food processing businesses around the world.
In this case, you know, they were natural flour millers, uh, oil refineries, oil bottlers.
The rice I had not seen anywhere else in the world.
Um, it was actually gone by the time I got there.
Uh, pasta plants.
So in this case, probably the more unique thing was that not only were we doing primary processing, but we were going all the way to consumer.
They actually had a very, I think the number one brand that they had bought over time.
I think there was an acquisition from Bungie Predates me uh in there also.
So they were, you know, this was a very wealthy country and and a place where you could do some very good business in and then repeat that model in multiple countries all over the world.
And so um, yeah, that's how they got there.
It was very natural flow, and they had a very large investment there, today's markets move fast.
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We are realizing that one thing we're constantly thinking about on the show is how companies actually get built.
Not just like the headline version of that story, but the messy operational reality of it.
Right, we love messy operational reality of things.
The never-ending quest to dive deeper, how companies make it big, what causes one company to succeed, why others fail.
I have good news.
That is exactly what the acquired podcast does.
Ben Gilbert and David Rosenthal pick a company and then explore all the ins and outs of its trajectory.
Lots of detail there, how it scaled, the ups and downs, and so much more.
Yeah, and we actually we had them on Oddlots back in February last year.
We talked to them about everything from TSMC, NVIDIA, Mars, Hermes, scale, capital structure, the importance of incentives, all of the different, I guess, ingredients that go into some of the success of these names that we talk about every day.
Also, their show actually turned 10 years old in 2025, just like us.
So we're uh, I guess the same age in podcast years.
Big year.
Anyway, if you like Oddlots, the way we get into various market dynamics, how the economy actually works under the hood, you'll obviously appreciate and enjoy the acquired podcast.
They do similar work, similar ideas, all focused on the context of individual companies.
So go check out the early days of real post-Soviet optimism, right?
And people hadn't become jaded yet, and they probably hadn't woken up to sort of all the various pathologies and stuff that would occur in the wake of the dissolution of the Soviet Union, et cetera.
Talk a little bit about the calculation and the hopes for Ukraine and the degree to which, you know, over the many years that you've uh paid attention to this market and worked in it, how they unfolded relative to, say, expectations.
Well, I I almost would say you uh underestimated the optimism at the time.
You know, in in 95, there was a tremendous amount of optimism.
There, we had a very dynamic team.
Quite frankly, uh, even the older folks that we would find uh to help be a part of what we were doing commercially, even though they all they had known is is the system.
There were folks that that were experienced and hardworking and very excited to jump into uh the sort of things that we were doing in a very differentiated way.
So we had we had rock stars in our group that were 22 and out of school, and we had rock stars that were 60 years old that were probably had had some sort of legacy experience in agriculture uh in the Soviet Union, but was able to translate that to us.
And uh it was an absolutely um fantastic experience uh back then.
It was more than just a job.
It was you felt it was transformational.
It was uh you were changing the way business got done there.
There was uh there was an insane amount of chaos, but working in a regimented uh ethical way got you business by by uh you know, in another route.
So yeah, we made it work.
It was it was classic cargo at the time, sort of being sort of pioneering and and entrepreneurial.
And uh, yeah, we made it work and started with the trading side and slowly but surely put assets on the ground and a lot of other more formal things that made it look more and more like a regular geography by the time you know the year 2000 rolled around and when I left.
So, Mike, you were on the ground in Ukraine and Jeff, you were managing the Venezuela business remotely.
What was that actually like?
Because I imagine, you know, we're talking about um a couple decades back now.
Communication must have been more difficult than it is even nowadays.
No, we it was very typical.
I wouldn't say, you know, there was we had leading edge uh AS400s back in the day, and so communications had always been a priority of a trading firm.
And so there was a lot of investment in that, right?
You know, that was very typical that you would have one, and then remember I'm a trading manager, not the overall business manager, but I would have, you know, we would have uh local merchants in each country, and you've got to connect and coordinate that.
You know, think about if you're buying, say you're buying a multi-grocery boat cargo, you're gonna load that cargo in New Orleans with all kinds of different commodities, and it's gonna, you know, you're gonna leverage that out to get your freight cost down and create competitive advantage.
And so you're coordinating um all your different trading groups in the region, and then that actually goes out on a global basis.
So you know you're constantly looking for that edge.
So I play the coordination role, and then at the local level, like you have to have local expertise on the ground, particularly in the cases Venezuela started to become unstable.
You need people that understand how to navigate the government, how to navigate the various you know channels to get things and continue to get things done.
And that takes local know-how.
So that was kind of that big picture role that I would be filling in, of course, the risk management side.
And then you have that very local execution side to make things happen.
You got to have both.
Yeah, and the same proxy existed for us, at least in our our external communication and how we linked up.
So my my usual routes of communication went through our Geneva office and then you know outward throughout the through throughout the rest of Cargill.
So the external communication was world-class.
We had satellite uh phones through which we ran our modems and that kind of thing early on, at least.
Internal, a whole different story.
I could probably waste 45 minutes uh explaining uh just simple sending a fax type story and things like that in 1995 and 1996, but uh before things got a little bit better um integrated.
But but yeah, it was a it was a dichotomy between internal and external, but uh manageable nonetheless.
One of my first journalism jobs was literally monitoring the fax machine and making sure if a fax came in that the newsroom would be aware of it.
Thrilling times, we could easily do an hour on internal communications and the sort of like pre-email, pre-slack, pre-IB.
The pre-IB era is very long ago, but pre uh, you know, pre-digital document management in general, and how that must have been.
And maybe we'll have you back just to talk one day about that.
Um, Jeff, I remember I had a um, it's interesting enough.
I forgot about this, but when my first year of college, I had a roommate who I think had done some uh mission work for his church uh in Venezuela, and he was there when uh he by the time he was roommates, he was talking about oh, this guy Hugo Chavez, it looks like he's going to win, this is gonna be bad news, etc.
And so should have taken that more seriously and paid more attention.
What was though the point a lot of people were concerned about Chavez, obviously.
What was the point though in which you sort of saw like, okay, this is this is turning down.
And what was it?
That what was the process by which, like, oh, we're starting to get serious inflation, we are starting to have a more difficult time doing business or importing machine dollar denominated machinery.
When did that sort of sink in for the business?
Yeah, so I I arrived, we were already to Maduro, so we were already so Chavez uh the time there had already passed.
And you know, it it's the it's the frog in the boiling pot, right?
It starts small and then it starts to, you know, and then you get all these unintended consequences, and you're you're trying to, and then you know as a socialist regime, you're trying to plug holes, right?
And all these things that start to go on.
And plus, you know, the you also have a government that is healthily paranoid about being overthrown, right?
There's a power aspect that's going on all of this at the same time.
I think it really really took a plunge.
I mean, it wasn't good at Chavez, but when the currency and the you know, the as you said, the oil industry starts to deteriorate.
So that spigot of dollars is dropped, drying off.
It takes ever more dollars to pay off everybody in the system, right?
It's a constant payoff system.
And then you just you don't have enough money, so you just run the printing press, right?
I and I can remember this.
There was a point, it got it happened so fast.
A couple of stories.
One is the BTU of a paper boulevard, the BTU value is worth more than it could buy.
You can burn it.
So you literally burn them for fuel.
You can burn it through fuel.
That's crazy.
And there was a time where they were they were having the boulevards printed, um, but they didn't pay their printing bill, and they were flying it in.
The printing was being done in dollars outside the country.
They didn't have enough money to buy the boulevards to fly them in.
So you really you started running out of currency on the ground, like you just even if you wanted to work on it.
There's all kinds of these kind of stories, but it was right in that probably two years in the Maduro space when when the currency stopped functioning, that was really when we knew we were in trouble.
Just to go back to something you said, so an American company working in any foreign country has to abide by American laws, particularly related to things like bribery and corruption.
And maybe for both of you, and I imagine, you know, that this is a very prominent issue in both these countries, maybe more in Venezuela than Ukraine, et cetera.
But we know that there's significant corruption in Ukraine, et cetera.
Can you talk a little bit about essentially how you function in these environments where probably lots of people are getting paid off literally or in the bribery sense, and how you have to navigate that from the perspective of a multinational?
I'll start.
Sure.
And going back again within the uh the perspective of the mid-90s, there were two impediments.
And I use the word impediment, you know, not that it impeded us, but it it did create uh a headwind for shall we say the ease of doing business and the scale of doing business.
Yeah.
So so uh the the two parts that created impediments for us is is there still was a fair amount of governmental influence in the grain business in 1995, and it really was from a county perspective and a state or what they refer to as oblist perspective, all the way up to the central government.
So there were plenty of ways to keep those people happy and quietly buy grain at scale that would also go through a state-owned railroad system and a state-owned port system.
So most of the infrastructure, and there were gatekeepers at various stages that could easily be uh catalyzed, shall we say, uh, to get grain out the door at very reasonable numbers and trade at large scale.
And I would uh I could name names, but I, you know, there's plenty of uh some of the global traders that don't have to apply to to the U.S.
uh rule rules-based system.
So what we basically did is did it old school.
We went straight to the farms in smaller quantities in reasonable amounts with people we could trust and just gutted it out through atypical ways of getting the grain out of the country, which ironically is um some of the infrastructure that we built on the Danube River system that it's very lumpy, it's transshipment through cranes and vacuation systems and things like that, as opposed to a big, you know, high-scale elevator, those are some of the things today that are getting grain out of the country because some of the main elevators have been uh destroyed or damaged in some way.
So that was our biggest problem.
You know, uh it but you could get around it, and quite frankly, it was more rewarding doing it that way because we saw our impact on the ag sector.
But uh that was that was sort of the big picture reality uh at the time when I first got there.
I think in my case, it it is comforting as operating is to know you don't have to pay those types of bribes or facilitating payments.
The company had a did a very good job of instilling that.
Everybody who joined, trained on it yearly, and and quite frankly backed it up, right?
If you didn't make your numbers because you would have had to have paid a bribe to get there, it didn't hurt you career-wise.
They knew you talk about it, you tell them I'm not gonna do this, and it happened, and we had these stories that happened.
But it so on that side, it made it very clear for your employees to know how to operate.
The other thing I want you to think about in the global food space, right?
Is if you're a Nest sleigh or a frito lay or one of that, and you're buying raw material, so you have a plant in Venezuela.
Okay, you want to make sure that you have food safe product, US grade, and you know, the standards, right?
Food safety.
You want to actually it actually draws business to you, right?
Right.
The brand value of American food.
Right.
And that you're going to act honestly, and you they don't have to pay a bribe to get a truck, you know, to the plant on that day, right?
The things like that, that the way you can do business.
So uh at that time, let's call them Western companies, or let's now today more modern companies.
They like to go to some of these early markets together.
And uh, because you they knew that they could have a supplier that you know, if you were making malt barley for the brewery, and it's uh you know, South African brewery, they knew that you were actually gonna you know make a contract and stick to the contract no matter what.
If we had to work it out, there was crop failure, you would you know, hold your word was your bond.
And I you know, I'm gonna tip a hat off to my former employer.
They were very good about how that operated, and I work with them in places basically in any all the corners of the world, and everything from you know, fish meal to lysing to wheat.
That brand uh helps out in these environments because you you know, you were the customers can count on you and in food super important right because if you screw that up you can kill somebody and um or tarnish the customer's brand right if something gets through this that's the same way it is in the US actually but not with the maybe the same criticality when you're working in a remote location around the world so this actually leads into something I'm really curious about which is obviously Cargill is a private company operating at that time under a socialist regime under Majiro what was the relationship like just between a private commercial enterprise and a socialist government especially for something as critical as food right I imagine the government cared about the food supply we we how we had to follow both sets of laws right you have to follow the local law too right so if they say you must transact in boulevards you have to transact in boulevards now we didn't have tether or Bitcoin at this point right so the world's changing in an interesting way um you have to follow that.
I mean, you, you know, you you don't want to I don't know, poke the bear, right?
And then you have to have people that become experts in how whatever government you're working with runs.
And we do.
And that's how we would, but this was a very common, still is common to operate in some of these places where, you know, you know, places that have cocoa, right?
You know, some of the African countries there are Zimbabwe, right, South Africa.
Um, you still have this situation.
You have to become, there is a competitive advantage in becoming experts at working in difficult places.
Were you ever pressured though, for instance, to lower grocery prices?
Oh, absolutely, all the time, right?
And there were laws on theoretically how much you could make and how the counting was done on that.
And you know, if we had a global rice shortage, it was not the fact that we had a global rice shortage and prices rising, it was cargo that was doing it too, you know, to the people.
You you had to have an escape goat effectively.
And you know, at some point you just know that you can't import at uh price X and sell it for X minus, you know, a bunch, and you'll you'll just bleed out.
And quite frankly, at some point, and several geographies, we get a situation where corporations says we will put no more dollars in the country.
And we were there, and I can still remember that.
So if we wanted to import something, we had to get dollars either from the government or figure out how to export something that created dollars.
So that's where you really start to struggle because you basically are relying on the government to exchange boulevards for dollars.
Um, and that's where we tried all kinds of things to try to export.
I mean, there was salt there, we tried pallets, but every time you tried to do something, somebody in the economy was like grabbing that.
Oh no, if you really want to move that, you know, to the port, that's gonna require some facilitation payment or something like that.
It just and the team down there was desperately trying to because the other thing we needed beyond just the raw materials, we needed spare parts.
And this maybe applies to your question about what's the situation there.
You know, if you need to buy some electrical equipment from Siemens, they're not going to want boulevards, they want euros or dollars.
So we were having to try to figure out how to generate enough dollars just to get spare parts.
And um, you know, I'm not sure how I can only speak for my situation, is now the team is really focused instead of kind of on their day-to-day job of running logistics and and parts, you know, and getting things in, um, their jobs switch to how do we originate dollars.
So you have, you know, a couple of people that are just expert in government and maybe like camp out at government offices for long periods of time trying to figure out winding through the red tape, and then you have people trying to figure out, you know, hey, can we, you know, put uh one ton, one kilo bag or one metric ton bags together of salt that's sitting in this pile and get them out of the country and sell them to generate dollars.
So now you have a dollar generation team, and that can that can play out all over.
Argentina before Malay.
I don't know what the situation is now, was like that also.
When you have hyperinflation, you get into the situation where you have to have a team that's just hunting dollars.
I wasn't expecting the conversation to go in this, but for either one of you, and Jeff, you mentioned the non-I wasn't expecting to talk about tether in this episode.
But in today, 2026, when you think about sort of these currency bottlenecks that exist, do cryptocurrencies, or whether it's stable coins or something truly decentralized like Bitcoin, are people seriously either implementing or thinking about how some of these new uh financial technologies can solve pain points within the global ag trade.
Mike, this is your specialty.
Yeah.
Well, again, I I can't speak to the specificity, maybe uh country by country, but certainly the if you look maybe in the big picture, the average producer somewhere in the world that has a currency issue where it impedes them and and maybe the quality of their bank, the their access to capital, uh, their access to to foreign currency to um to upgrade whatever it is, absolutely the tethers of the world and things like that are going to fundamentally change um the access to that sort of thing where where when you compare it to the way it was before, for sure.
And I'll and I will maybe add a little half answer to to what you threw out there too.
There's a lot of great stories uh for folks looking for um something to to entertain themselves uh around Bitcoin, especially the early Bitcoin mining that was going on in Venezuela for people that were concerned about where the country was going, where they would you know tap into a small hydro plant at maybe a family's uh place out in the woods somewhere and and and mine Bitcoin, put it on a wallet and had it as their escape valve in case they needed it.
And sure enough, you know, there was a night where they traipsed through the jungle and went to another country and had it on their wallet and and uh started another life.
So yeah, that there was some very interesting early pioneering Bitcoin stories around the the what the Bolivar forced folks to do uh early on, hey there allots listeners.
As we come into 2026, we are realizing that one thing we're constantly thinking about on the show is how companies actually get built.
Not just like the headline version of that story, but the messy operational reality of it.
Right.
We love messy operational reality of things.
The never ending quest to dive deeper, how companies make it big, what causes one company to succeed, why others fail.
I have good news.
That is exactly what the acquired podcast does.
Ben Gilbert and David Rosenthal pick a company and then explore all the ins and outs of its trajectory, lots of detail there, how it scaled, the ups and downs, and so much more.
Yeah, and we actually we had them on OddLodge back in February of last year.
We talked to them about everything from TSMC, NVIDIA, Mars, Hermes, scale, capital structure, the importance of incentives, all of the different, I guess, ingredients that go into some of the success of these names that we talk about every day.
Also, their show actually turned 10 years old in 2025, just like us.
So we're uh I guess the same age in podcast years.
Big year.
Anyway, if you like Oddlodge, the way we get into various market dynamics, how the economy actually works under the hood, you'll obviously appreciate and enjoy the acquired podcast.
They do similar work, similar ideas, all focused on the context of individual companies.
So go check out the acquired podcast.
You can find them wherever you get your podcasts.
Talk to us about people actually leaving Venezuela, because this is also something that you hear a lot about, which is you know, if you were a Venezuelan with um some amount of means in the past, you were very incentivized to leave.
Um, especially if you're working in certain businesses that the government was targeting.
Did you experience that at Cargill as well?
This sort of brain drain?
It happened all the time.
First, I want to set the scene, right?
We have a um at the time we had uh an office in Caracas, very nice, right?
A lot of employees there, not just kind of the because we had a brand business, right?
We had people that were you know label designers, and I mean it was the full-on, think of it, I don't know, more of maybe the Procter and Gamble, the retail side of things.
So big office, nice.
Um, we had you know uh satellite communications there, there was no Starlink yet.
Um so the office was a nice place, right?
And people actually, you know, they're like, Oh yeah, I was there on Saturday, and I'm like, you know, and the problem is is when you left that office, you zipped to your dated community, more likely an apartment complex.
Um you you just had to go from secured compound to secure compound, and then it became you know, you didn't know if you were having water that week or hot water.
You might not have electricity for several days.
Um, you might not have access, there might not be anything to buy in a grocery store.
Um now our employees were getting some food from us because we made some basics, right?
You know, every week we would make sure that we got something transferred from the plants and and put this stuff together.
So the life um style that people lived was not easy, even for those that theoretically had, you know, we're well educated, had good jobs.
And eventually, um, even our business course, the the business is slowing down and they leave.
Um, and then of course, in our case, we had a a plant that got uh nationalized at gunpoint.
Well, if you're you know a highly skilled manager operator, you don't want to stick around and start to have to do your job at gunpoint, right?
Because they don't have any expertise in how to run the plant.
So the big wave, the first wave, the first I somebody said several million Venezuelans were the most educated, the most skilled, and it compounded itself, right?
Because you know, now nobody knows how to run the electric generation station, right?
That nobody knows, you know, obviously the petrochemical industry, right?
You can go get re-employed around the world, you know, if you're a you know, uh petrol engineer, no problem.
And so those people went all over the place.
And the beauty of working for a multinational is we picked up as many as we could, and that is, you know, in that conversation to bring, you know, you have an employee they call, they're they're very nationalistic, they know they're doing important work, they've had enough, and you get that call, and they go, you know, they're they're they it's kind of sheepish.
They're like, I they feel like they're abandoning you.
And you know, we go and find them.
My story was, you know, employee, one of my last employees just says, I'm I'm going to Mexico City.
Um, I think his wife had was working for Sony at the time and had some type of employment.
And I said, Well, what are you gonna do?
And he goes, I don't know, but I'm not gonna be here anymore.
You know, I mailed my I mailed my big screen TV and a couple of things, DHL, and I'm gonna take my guitars on the plane and I'm done.
And I said, Well, I know what you're gonna do.
You're gonna go to this address and you're gonna work for me in Mexico.
And that played out hundreds of times inside my employer.
Um, you'd go to a meeting uh in Mexico City.
I still remember a management meeting.
They run a very large crush-refined facility north of Mexico City.
And half the people in the room are Venezuelans.
Talented, smart, educated.
And that, you know, that played out.
I know, you know, if from my social media, you know, that happened in lots of Western companies.
They were very, I my experience working with Venezuelans was it was fantastic.
They had a good education system, smart, business savvy, and um we gladly re-employed them around the world.
Sticking with Venezuela for a moment, and we've heard all the numbers about the oil industry and the amount of upfront capital it would take to sort of profitably begin shipping oil at scale or selling oil at scale.
What is your understanding like right now of the equivalent within the realms that you're working in, grains?
Like is there the same sort of view that all the infrastructure that was being used during the days when it was working profitably would need a significant amount of capital for an entity like Cargill or the sort of family of global food companies to want to re-enter that business?
Look, I am not a Venezuelan expert.
Our business is actually in education and risk management around supply chains.
Um and we do a lot of work with U.S.
growers.
So this was a bit of an accidental experience to uh to from from what happened to to bring me here today.
Um we do know we were struggling to keep the plants maintained.
These are, but they're and I'm sure there's a lot of work that has to be done.
I think the number one thing you have to have is security, right?
You have to be able, you're gonna need some promises.
There's a lot of companies that lost a lot of money in Venezuela, right?
With the assets they had, because the second you walk away from an asset there, try to even say mothball it, it everything gets stolen.
Okay.
That you don't expect there's you walk into a plant that you shut down five years ago that there'll be anything there.
Um you would have to defend it all times.
Otherwise, if somebody's gonna go in there and you know sell the parts in the black market and scrap the rest because scrap iron trades in dollars, and um, so you can't expect that there's unless the whatever it is is running, um you can't expect much.
And I know that there they were started as strange again, strange things that happen as the domestic situation got worse.
They actually had to increase imports of finished goods because you couldn't finish them in the country anymore.
But there was still demand and you had remittances, right?
Same with like Mexico, right?
So there is some dollars floating even into people that stayed.
I know you know, we had some employees that talk about sending money to their families in Venezuela and easier to do now, probably, but that was you know the Miami banking connection and some things like that.
So um I suspect that there's yeah, tremendous amount of work, but I'm not an expert on the current situation.
I think it can be done in the basic staples.
Those plants are not that hard.
Flour mills, oil refineries, yeah.
You know, there's no doubt if the world put their mind to it.
And I just saw we sold uh 300 million dollars worth of oil here this morning.
They went apparently to buy the currency.
Remember, we talked about currency stabilization.
Apparently, they must have used a lot of that to buy boulevards and create a more stable exchange so you can get the economy floating.
So, you know, it hats off to the current administration for somebody's obviously paying attention.
But yeah, it's gonna take security, it's gonna take some promises, stability, because you know, you're talking about putting hundreds of millions of dollars on the ground into a place where effectively those type of investments were lost, and uh, I don't think that's gonna be an easy sell to the multinational world.
What was it like just moving stuff within Venezuela?
Because you describe how an empty plant would uh would be gutted fairly quickly.
I imagine if people saw an opportunity, uh, you know, a truckload of something that could be valuable um on the road, they probably seized on that as well.
Yeah, I mean, it doesn't matter how you know, Venezuela was, you know, we had um security experts that work for us that understood what they had to ground, you know, do on the ground to get shipments, like say from the port to the plant or from the plant to uh to a grocery store, right, or something like that, or some kind of distribution.
Very it's very difficult.
My more recent, you think this doesn't go on in Mexico, you know, we were losing a lot of trucks.
Sometimes we'd get the trucks back, sometimes we lost the cargo and the trucks.
Um that still goes on, right today.
And you sit there and try to understand what is the cost of doing business, right?
And you will lose some along the way.
And um, sometimes you halt you hire local companies that are more able to navigate how to get things moved from point A to point B, and you effectively have to work from inside your compound.
You also have to secure uh from theft, right, at the compound, right?
It's just the all these drags on the economy when you get into these situations, right?
It's just dragging the entire country down.
In hyperinflation, I think if you studied in it, you know, Mike and I both have some economics degrees.
Um, there's all these dragging taxes on people.
You know, you your employee gets paid today, and they just as soon as they get paid, they run out and spend it.
Like they're done for the rest of the day.
Right.
They chew leather tax.
Right.
And that and you know, now everything has to be secured with you know multi-fences and barbed wire and constant guards and guards and trucks and all that stuff.
And if you can remove that burden from the economy, it's just a huge, you know, in you know, in uh boost to the economy.
Mike and I are you know watching things in Argentina.
Uh I love going there, it's a beautiful place and highly recommend.
Um, let's see how that goes because it feels like the the country is starting to lose some of those shackles.
Tracy, I just have a warning to you, by the way.
To me specifically, okay.
Yeah, you're not gonna like it.
I've been watching the show Landman uh CBS.
Yeah, and so when we do commodity episodes, I'm gonna make a lot start referencing a lot of things that I observe.
But one of the themes is one of the plot lines very early on is the pro is the phenomenon of both trucks that disappear because the cartel is still them, and then magically reappear a month later, and it's not worth asking any questions because then you have to get the FBI involved and then et cetera.
So uh that the idea what uh what Jeff was saying about the truck suddenly coming back is something that um I'm familiar with because I'm a viewer of TV.
Stood up by the television.
I'm gonna steal myself for all the land mass.
Yeah, you're gonna get a lot, especially when we do oil episodes.
Yeah.
Um, Mike, uh, talk to us the uh give us uh sort of your sense of Ukraine now and versus before the war, and obviously there's still wheat flowing out, but we've talked about the impairment, etc.
What is the sort of scale of the impairment and the damage, etc., and what sort of levels are coming out of Ukraine and sort of give us your sense of where things are these days versus at the end of uh 2021?
Sure.
And and again, I'm gonna I'm gonna say something fairly similar to what Jeff is I'm not as on the ground there, though I'm sure very close with a lot of friends that are still farming at scale and uh and trying to make whatever it is they're doing uh work.
I I would I would sort of start off with a theme I'm sure you've heard that you know they're incredibly resilient people.
They've been through similar things like this before, and perhaps not this generation, but certainly in the not too distant past, uh whether it be the Holodomore and you know, post-Soviet uh uh situation and uh and and some of the starvation that came out of that, and then the the world wars one and two, and so it isn't like it's that distant in in their past, and they're figuring it out in a in a relatively simplified way.
And and and I think that the the two biggest changes uh as it pertains to the grain side is uh a simplification.
So instead of some of the more complex to grow or expensive to grow crops like sunflowers and corn, um, they're pivoting more back to the basics of uh of wheat and and barley and and and things like that that just went in doubt, put that out there and and and see if we can get at it in the spring.
The human the human capital piece is is an enormous problem right now.
They, you know, just to find people that can can be part of your work teams, whether it be driving the trucks or driving the combines and tractors and or or overseeing the grain elevator operations is is really, really hard.
And and then as I alluded to earlier, the some of the main horsepower export points have either been damaged or eliminated entirely or disrupted in terms of them being kind of grazed to where they're located relative to this this current you know uh fighting front, sort of where it's located.
But they're limping along, and you know, I I've been kind of surprised to be honest with you, the total amount of grain that's been grown.
It's just the mix has changed.
The directions through which they're exported are changed, and and certainly that that ultimately changes the price that comes back to the producer there.
So I'm sure they're not doing particularly well, but they're you know, to their credit, they're still uh they're still giving it a hard swing.
Just real quickly, so the uh a thing I would like to learn today, what is it about wheat that makes it a sort of simpler crop to process and export than uh corn?
Well, the the seed is is materially uh less expensive.
The the fertility required is is is materially less expensive, you know, per acre in their world world per hectare.
The other thing that's just circumstantially uh supportive in that part of the world is the the organic matter and the the richness of the soil there is is incredible.
So you can kind of get away with it with with lesser intensive agronomic crops like wheat to still eke out a pretty darn good crop.
So that's the the circumstance there.
It's also fairly easy to recycle your wheat and you utilize it as seed, uh, where that's not as straightforward with other crops.
I have one last question, and this is to both of you, but what would be your major piece of advice or message to a multinational company that's considering either, you know, maybe they're looking at Venezuela and going, there's an opportunity there, I want in, or maybe they're thinking about post-war Ukraine and expansion there.
What would you tell those companies?
Well, I mean, you have to have some expertise if you're going to go into these places.
So if you don't have it with you, you need to find it and find people you trust.
Security is going to be your number one part of it.
Start, you know, start with a small uh business, right?
To learn how things actually work.
We used to start with feed mills.
They're well, you can put up a kysmill, relatively small portable feed mills and start to learn how things actually work on the ground.
We have hundreds of stories where we bought businesses, thought we knew what was going on, even after we'd been there, only to find up on first day that, oh, you know, you weren't you got you're supposed to pay a bribe to the meat inspector or something like that.
So my advice is find a small business that you can run there with a reasonable investment and treat that as a learning curve or learn, you know, paying tuition before you jump in and uh make it uh make those big uh hard capital asset investments.
Yeah, and Ukraine has slightly different context.
I think the blueprint is there is if you look at uh the the I would kind of describe the glory days of of the grain business in the late uh 90s when the infrastructure really got built back back up in in a way that served the global markets with a lot of value-added processing, tremendous amount of investment that went through the the aughts, you know, probably oh five, oh six, oh eight, right around there.
So the blueprint is there.
I I just think it's gonna take you know resilient people, uh patience, uh attempting to maintain your teams uh there uh within the reality of of the things that are gonna be personal decisions for them for their safety, for their family, for whatever.
Um you're just gonna have to go with that flow for the foreseeable future and see how this all plays out.
All right, Mike and Jeff, thank you so much for coming on Aut Lots.
That was fascinating.
We could go on for another hour or two or three and listen to all your stories um of doing business in these places, but we're gonna have to leave it there.
So thank you so much.
Yeah, thanks for having us though.
Thank you.
Joe, that was super interesting.
Super interesting.
Both from an agricultural perspective and then obviously a Venezuelan and Ukrainian perspective.
One thing that stood out to me was this idea of large companies, multinationals coming together when they enter a new market like that because it becomes easier to operate, I guess, at the legal and cultural level that they're used to.
That was really interesting.
Yeah, it's I hadn't thought about that at all, right?
So it's like global multinationals, even setting aside law, you know, they have certain norms you just sort of expect.
And so someone from Nestle talks to someone from I don't know what whatever, and they're like, Oh, we'll have a shipment here at this time, and they can more or less expect that that entity will do that, right?
And without too much translation or whatever.
And so the idea that that is really important is something I hadn't thought of.
Also on this, and it's something I've thought about even working, working at a large multinational ourselves, is this way that like large companies are sort of we call them multinationals, but they're also like nations unto themselves in this sense.
Like, think about the fact that when you move from New York to Abu Dhabi to Hong Kong and back to New York, that there is a team that facilitates all of these processes of like visas and stuff like that, and so forth.
And like, and I thought about that when he described the phenomenon of the workers being more comfortable in the office than back home.
That like the the corporate office in this environment is like this like pocket of sort of, I guess you would say, developed world ease and comfort, right?
And that the moment you leave that office, you are out of that.
Then you suddenly have to worry about electricity.
Then you sort of have to worry about maybe running water and security, and how big companies sort of create these security and legal environments within themselves that are these like cross-border pockets, but that will be the same from one office to another, regardless of what country they're operating in.
Yeah, absolutely.
The other thing that I was thinking about was the currency question when it comes to Venezuela.
I mean, you would assume with maybe this new relationship with the US, access to dollars maybe will get a little bit easier.
But it was fascinating to hear from Jeff just how creative they got when it came to securing dollars.
So for instance, you know, trying to export wooden pallets in exchange for US currency and things like that.
I basically bartering, right?
Yeah, it does sound like it basically comes down to borrow bartering, or like here are some sacks of salt that can be used.
And then you have this issue, which is that you can have all of the talent on the country, although much of it's left in in many of these cases, but you have all this talent and you have all this raw commodities, but you need a part and you need it from some advanced specialty maker of an industrial part for a refinery or whatever.
Yeah.
And that's sold by a European multinational, and you need a hard currency for that.
And so there is no getting around this fact that like true self-sufficiency is very rare.
It almost doesn't exist anywhere in the world, so long as any one component.
And of course, we know this is what try is trying to solve for.
They want to have every aspect of the entire supply chain in house such that there is no possibility of them not being able to access one part and grinding a whole industry to a halt.
Yeah.
All right.
Um, we could go on.
Yeah, yeah.
Shall we leave it there?
Let's leave it there.
This has been another episode of the All Thoughts Podcast.
I'm Tracy Alloway.
You can follow me at Tracy Alloway.
And I'm Joe Weisenthal.
You can follow me at the Stalwart.
Follow our guests, Jeff and Mike and their work at Agris Academy at Agris Academy.
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