>Of all places, Venezuela has been on a cheese revolution since the beginning of this century, producing in 2020 3x the amount it did in 2000. We were thrilled to see that the country with usually the most troubling news in the region is actually LatAm's 2nd largest cheese producer and surpassed Switzerland (the cheese homeland) in production for the first time in 2009.

TBF my guess would be this is partially if not primarily because of the price caps the (economically illiterate) government put on milk (and other goods) during hyperinflation...if your a milk producer and you can't sell it for a profit then you're better of turning it into cheese instead, which you then can increase in price to go along with inflation...the government likely indirectly caused this in a not-good way. Also cheese keeps better than milk and can be exported easier...shocking. Venezuela's socialist government has completely mismanaged their economy through dumb policies with bad back-end consequences.

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https://www.businessinsider.com/how-venezuela-crisis-turns-bootleg-cheese-into-a-big-business-2020-3

https://www.reuters.com/article/us-venezuela-food/missteps-as-venezuelas-hugo-chavez-backs-farming-idUSN2734134020080429

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excerpt: "The government bought one of the country’s largest milk companies last month to stem a common practice by farmers of selling milk for cheese, which is subject to fewer price controls than milk, or shipping it to neighboring Colombia."

>My point was that they have managed to operate successfully well before their IPO and associated reporting requirements.

They were profitable, but were they as profitable as they could have been? Did they generate as high of an ROIC as they could have? Also the fundamental difference in Saudi Aramco and Venezuela's oil company is that Saudi Aramco is run as a business with little to no direction from the Saudi family (though they do enjoy all of the dividend benefits)...in Venezuela the government directly makes business decisions for the oil company and that has led to poor capital allocation decisions...this is also somewhat true for PEMEX as well.

>They seem to be following best practices and hiring professionals for operations. Then again, aren't these professionals essentially government employees?

Again, the company does not get directly dictated what to do by the government, as does tend to happen in Venezuela and somewhat with PEMEX as well.

>Regarding the BOD, do note there are two government ministers sitting on the BOD.

Out of how many BOD members though? with Venezuela you have pretty much 100% government control and with PEMEX still more government control than 2 BOD members.

>You say Saudi Aramco is publically traded but it’s only got a measly 1.5% traded and only from 2019.

They still have to operate as a publicly traded company with an unbiased BOD, and have to do all the financial reporting/auditing that comes with being publicly traded.

>Its basically fully government owned and lines government coffers nicely every year.

But it's not the government making capital allocation decisions, it's the BOD and management...this is the key difference

>The whole point of the IPO was becuase the government wanted cash. To be fair they are using it for a sovereign wealth fund to diversify their revenue. Furthermore, the IPO didn’t attract much interest from western capital markets for problems commonly associated with SOEs, like corporate transparency and political risk.

Again though...the company does not take direction from the government (at least directly).

>It sounds more like Saudi Gov is just more competent at management than the Venezuela Gov.

The thing is the Venezuelan government directly controls and mandates what their oil company does as far as dividends, capital investment, etc....this is not the case with Saudi Aramco. Even with Saudi Aramco though, these companies (with large state ownership) do tend to have worse capital investment ROI and poor capital allocation over time.

>Its not so simple. After all, some of the largest oil producing companies are SOEs (Equinor and Aramco being examples).

Both of these are publicly traded/have private shareholders...sure the state does own the bulk of the equity, but they are partially private and have to publicly report financial results. The other primary difference is that their profits are not solely used to fund the government/they are not operated in that ways as a source of tax revenue...both of these 2 companies have a line between the BOD and the government, which is not the case with PEMEX or Venezuela's oil company (which report directly to the government).

>The issue with venezuela's oil production decline may be down to lack of investment and mismanagement but that isn't really the case for Mexico.

Yes it is the case for Pemex...Pemex profits accounted for about 25% of Mexico's government revenues. Literally the first article that came up below...it's pretty well known that a lack of investment is the main reason for Pemex's long-term declining production.

https://money.cnn.com/2012/08/17/news/economy/mexico-oil/index.html

>That has more to do with demand for domestic oil production increasing in the US, which means less demand for Mexican oil.

Pemex can sell oil to anybody...oil is a globally traded commodity...they don't need just the US to buy it.

>You can see the result of that for New Mexican oil and Mexican oil production. One goes up whereas the other goes down because people are buying less from Mexico.

This is primarily due to the declining production of Pemex oil...

I would point out that both Venezuelan and Mexican oil are state-owned/operated production firms...also in both countries the governments use them to fund government spending and there is little to no capex in keeping up/expanding oil production...basically the state is really bad at running companies efficiently, and often uses them as a piggy-bank, which has been generally true forever. Governments suck at running companies/making them grow long-term. Capital allocation is terrible within these companies generally speaking.