WATERVILLE, Wash. — Paul Katovich

C-08,C-09

Katovich started out with Columbia Grain Growers as an exporter, in effort to bring value back to farmers. (part of deleted recording — too long)  He moved to Waterville in January 2002, working for Central Washington Grain Growers before the HighLine Grain Growers merger in 2018.

History of the company

Five grain handlers merged into HighLine in QQQQ. The company also purchased a seed company.

Katovich became QQQQ in 2016, and then assumed the CEO position upon the official merger in 2018.

The grower groups wanted to evolve, managing grain handling, storage, logistics and marketing for current and future farmers.

“These companies are built around the concept that we are stewards of a platform,” Katovich said.  “It’s not ours, it’s just our turn.”

Co-ops are designed to do the things individual farmers or farm families can’t do on their own, he said. That includes engaging in local, state or national politics to represent rural America and agriculture, and show that the decisions made in Olympia and Washington D.C. impact farmers.

Policy makers need “connectivity'” to farmers, so they know who to call when they have questions, Katovich said. 

Striking the balance is the calling card of HighLine, which he called a “fiercely independent” cooperative.

“We’re not multi-state, we’re not national, we’re not global,” he said. “A lot of patrons would recognize many of us as employees on the street in different towns. You get a whole lot larger, and that just gets more difficult.”

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HighLine has advocated for farmers on a wide range of issues, from QQQQ to rail needs to supporting research into a rapid test replacement for the long-running, cumbersome falling number test for starch damage in wheat.

Federal and state decisionmakers and agencies are figuring out that the U.S. has done well innovating and building new, but doesn’t do a great job of maintaining, renovating or upgrading, he said. 

QQQQQ and QQQQ are “powerful tools” developed over the last decade to allow companies to multiply their own funds, he said.

“We spend a lot of time in that arena,” he said. “It’s paid dividends, not just for agriculture, but those that share our homes.”

‘Nefarious force’

Katovich questions “the repetitive nature” of studying the lower Snake River dams impact, calling it “concerning.”

“It leads you to believe there is some other nefarious force behind it,” he said. “This is akin to having a conversation with your toddler about why you should brush your teeth at night. We don’t need to have the conversation with our toddler every night. We determine what the answer is, and then we move on. And the toddler accepts this. We’re not seeing that behavior when it comes to the lower Snake River dams. There’s a reason for that. And that’s what the conversation should be about: What’s behind this, and why? Where are we going with this conversation?”

Seated in his office in July, he showed off a deep drawer stuffed full of past studies of rail systems and dams.

“That’s enough,” he said. “We don’t need to spend more money studying things we already know the answer to.”

The farmer’s largest concern is competitiveness on the domestic and global market.

“That’s beyond their scope,” Katovich said. “HighLine can engage in those conversations, but we’re at the origin of the transportation network. Our handle doesn’t even handle the cost of the employees dumping trucks, We find paths outside of our primary function of handling, storing, shipping the crop. We need other income streams to make the cooperative functional and manage our investment in rehabilitation or any growth prospects. A lot of our income is coming from ancillary business income streams. That’s by design.  We’re trying to make it as cheap as possible; essentially, anyone that’s doing business with the cooperative is doing it at cost. That’s the point. We’re doing our part, but the transportation costs themselves, largely inflationary, ultimately the farmer’s paying the price.”

When wheat is under $5 per bushel in Douglas County, “that’s unsustainable,” he said.

Global competitiveness are the forces involved, he said. 

“The whole concept that you can take away the dams, remove the baseload power that those create, change fundamentally the environment on the river that has now been stable for more than seven decades, and then expect something different to somehow miraculously get better — even those who think that, it should give them pause. ‘Wait a second, there are a whole lot of problems with this.’ That’s why I think there’s something else behind it.”

With ever-rising transportation costs, the farmer pays without a mechanism to compete with cheaper wheat coming out of the Black Sea.

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Thirty years ago, Katovich said, he learned “the cure for cheap prices is cheap prices.”

“It doesn’t last forever because it’s not sustainable,” he said. “What exactly the catalysts are that move markets, those are hard to predict. Trying to predict the market is like trying to guess which marble in the bowl will make the whole bowl shift.”

Buyers and sellers get really comfortable in a position, and feel nothing will change, he said.

“Well, something is always changing,” he said. “Buyers wait too long, and then they get in a foot-race to get coverage when something fundamental has really changed. That’s when markets move 25 to 50 cents in a day … At some point, that’s usually what ends periods of low prices.”

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Katovich attended high school and college in Idaho. There was a good mix of friends from different backgrounds at the University of Idaho. He got into grain trading because he enjoyed the rural environment and culture,

“(I) thought that would be a nice way to spend a career, trying to help those around you,” he said. “In rural environments, the people you’re seeing are people that you know. That’s not true in an urban environment; I’ve lived in both … Here in a a rural environment, you tend to get to know people in a different way, and I just think that’s fundamentally a better way to be.”

Katovich lives in Waterville, where HighLine’s main office is located. The management team is spread out “on purpose,” so each town has staff on hand to help farmers who walk in the door, he said. 

Short line

Katovich’s “number-one bucket list item” as CEO is to see that the Palouse-Coulee City QQQQ short line is fully rehabilitated. 

“I know how imperative having a true balanced shipping platform of rail and barge is to our patrons and to our competitiveness locally and globally,” he said. “We really need to be — and are, currently — the Olympic athlete of transportation. That’s largely because we have this nice balance between a robust, first-in-class river system and two significant Class 1 rail providers that go through our region. We have the best opportunity to be efficient.”

The Pacific Northwest doesn’t have the same crop density as the Midwest, so a short rail line helps gather large numbers of acres to hit today’s shuttle system preferences. 

“One of the major impetuses behind HighLine is to support a shuttle system … These cooperatives that are left are largely doing the exact same thing for the exact same type of farm, just in a different county. We’re a patchwork quilt of support mechanisms for our mukti-generational farm families.”

WSDOT won a 2022 QQQ grant is the largest  rural commitment that the federal government made for rail rehab and construction. It will go a long way towards addressing the worst conditions on all three rail lines, Katovich said

The project is slated to begin this spring, and covers Four Lakes, Wash., to Davenport. The 2024 QQQQ grant covers the CW branch from Davenport to Wilbur, leaving just one stretch. Katovich points to broad support from the industry and state legslators.

“Great odds of seeing this happen in my career, getting not only the CW branch but all three of the PCC branches upgraded to something that is sustainable in the long run,” he said. “That probably gives the next generation an opportunity to focus on something else.”

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Katovich spends time with his kids, who are both in college. He and wife are committed to various Waterville clubs and to their local church.

“Having an impact at a local level is a way that people should try to spend their time and give back,” he said. 

During annual or grower meetings, HighLine emphasizes the message that its workers try to be good stewards of a program created by previous generations of farmers.

“There were generations of people who came before us that built this platform and were thinking about us, even though they will never know us,” Katovich said. “To recognize that, and then to project it forward — how do we maintain a system that in many ways is at the end of its useful life? How do you extend that? How do you evolve to meet the demands of those who will follow us? That’s really what we talk about, what we focus on, why cost controls and patronage are so important to us. Our focus is to essentially give (farmers) an opportunity to do their marketing, transportation, and the cooperative is here to allow them to do that at cost. That was the design. Those that came before us were contemplating exactly what we are attempting to be today, and to pass that torch on to those that think in a similar way, that’s the goal.”