Bushels of success

REARDAN – Keith Bailey earned his college degree through what he jokingly calls Washington State University’s “extended program.”

“I started college in 1974 and finished in ’92.”

Money – or rather the lack of it – and several careers intervened.

But growing up on a ranch outside St. John, Bailey was taught to finish what he started, even if it took longer than expected.

Today, Bailey is president and CEO of AgVentures NW, a management company owned by the Odessa Union Warehouse Cooperative and Reardan Grain Growers.

He also works as the general manager of both co-ops and serves as chief operating officer of HighLine Grain, a marketing and transportation business owned collectively by five grain merchandising companies including his Reardan and Odessa employers.

During a recent interview, Bailey talked about growing up on a 200-head cattle ranch in tiny Ewan, Washington, how agribusiness has evolved, and where it’s headed.

S-R: Tell me about your first jobs.

Bailey: I washed dishes at Steptoe’s Wheel Inn and Café, where my mom cooked. I must have been around 12, because I remember my mom and me driving home from work when the guys landed on the moon (in 1969). And all through high school, I worked on our ranch and others to earn money for college.

S-R: Did you have a career in mind?

Bailey: I wasn’t sure what I wanted to do. I enrolled at the University of Idaho intent on studying forestry. But after a couple of years, I realized I wasn’t going to have enough money to finish, so I dropped out and went to work.

S-R: Where?

Bailey: I started out on a Soil Conservation Service project at Newman Lake, then transferred to Hailey, Idaho. Later I moved back to Spokane and worked for Inland Power and Light. But I wanted to get back into the ag field, so I switched to Cominco American, which sold chemical fertilizer.

S-R: Was not having a college degree a career impediment or just an inconvenience?

Bailey: It became an impediment while I was working for United Grain Growers in Wilbur. When I was hired, we started a malting barley program with 60 acres. Three years later, we had 10,000 acres, and Great Western Malting in Vancouver offered me a job. But it was contingent upon my agreeing to finish my degree. That turned out to be a good thing, because it gave me opportunities that I wouldn’t have had otherwise.

S-R: Did you go back to school full time?

Bailey: No. I was traveling a lot, so I’d watch videotapes of WSU classes at night, and take tests at nearby Clark College during my lunch break.

S-R: What brought you back to Eastern Washington?

Bailey: Great Western Malting got bought out in 1998 by ConAgra, which brought in its own management team, and I was given an opportunity to look for another career. So I went to work for Odessa Union Warehouse Cooperative. I started out as marketing director with the understanding that I would succeed the retiring manager a year later, which I did.

S-R: How did you end up as president and CEO of AgVentures NW?

Bailey: A headhunter for Reardan Grain Growers called me, asking for candidates (for the manager position). I gave him a list, and he said, “Your name’s not on the list.” I told him if Reardan was interested in talking about collaborating, Odessa might be, too. So the two boards got together and agreed sharing a manager would be more efficient. But they didn’t want to merge, because they’d lose their local identity. So we came up with this umbrella organization – AgVentures NW – that manages both cooperatives’ facilities and personnel.

S-R: What lessons learned in previous jobs – going all the way back to dishwashing – have proved useful in your current position?

Bailey: I learned a lot about work ethic on a farm. My dad and grandfather taught me that you don’t quit until you finish something. That’s why not graduating from college left a void in my life.

S-R: Did your grandfather start the family farm?

Bailey: My great-grandfather started it, then my grandfather and his brother ran it together. When they retired, my dad took over. My folks still live in the 1872 farmhouse where my father was born, but we lease the farmland to one tenant and the pastureland to another.

S-R: Besides always finishing what you start, what other lessons have paid off?

Bailey: One thing I learned on the farm and later living in a fraternity is how to get along. People skills are very important, even in a small company like ours.

S-R: When Odessa and Reardan combined management in 2005, did it go smoothly?

Bailey: We were charting new territory, so I got help from people back in Kansas who had gone through something similar. We did have a few growing pains, such as integrating our different software programs. But one thing we decided at the board level was that, even though one company is larger than the other, the two companies have equal representation on the AgVenture board.

S-R: What’s the best advice you got from Kansas?

Bailey: Don’t sweat the small stuff.

S-R: Did the recession have much impact on your operation?

Bailey: We had some pretty good years between 2007 and 2012. Wheat got all the way up to $15 a bushel, and our margin went from $300,000 to $3 million, after expenses. Since then, we’ve had wet years followed by drought and falling yields. Now the local price is below $5, which doesn’t even cover the cost of production. But the two co-ops’ earnings are still much better than they were before we combined management because we can use resources like employees and equipment more efficiently.

S-R: This year’s local harvest was one of the worst on record. Based on supply and demand, shouldn’t that put upward pressure on soft white wheat prices?

Bailey: Don’t forget this is a global market. We now compete with growers in Australia and the Black Sea region. Also, we used to have government programs that subsidized sales to Pakistan and Egypt. We don’t have those anymore, so demand is down.

S-R: How will that impact your bottom line?

Bailey: When prices were high, our gross annual sales were around $110 million. This year they’ll probably be around $40 million. Even so, our margins are driven by volumes received at our elevators, so droughts hurt.

S-R: What’s the mood of your board members?

Bailey: They’re concerned, as they should be. Yields are down, and there’s a lot of political unrest right now – world unrest. The good news is that, because of a commodities insurance program, these guys can survive a bad year.

S-R: How has AgVentures evolved since 2007?

Bailey: We’ve added a human-resources person who takes care of a lot of daily dealings with employees, and makes sure we’re following guidelines for proper management practices. We’re also spending more time and money on safety enhancements.

S-R: Is there a busiest time of year?

Bailey: Canola harvest starts in early July, followed by wheat. Corn, which is a little early this year, will continue into December. In the winter months we’re busy moving and shipping grain and cleaning bins, and then right before harvest our teams are out repairing elevators. There’s always something to do.

S-R: What’s your typical workday?

Bailey: I live in Davenport, which is 37 miles from Odessa and 14 miles from Reardan, so I drive about 27,000 miles a year. I usually leave the house at 6:45 in the morning, and last night I got home around 8.

S-R: What do you like most about your job?

Bailey: The variety, and the people I work with.

S-R: What do you like least?

Bailey: Things I can’t control – markets, weather. One thing I learned long ago is that reacting too quickly usually gets you in trouble. You have to know when to get excited.

S-R: Most farmers are loath to admit things are going well, even in the best years. But would you say this is a good time to be a farmer?

Bailey: It has been, and it will be again. We’re in a lull right now, mainly due to poor crop conditions. There’s an opportunity today for young people to get into farming. But farms will continue to get bigger. They have to. A new combine will run you $500,000, and that doesn’t include the header, which used to be included and now costs another $100,000.

S-R: AgVentures NW has allowed two co-ops to earn more without sacrificing their individual identities. Have other grain companies asked you to do the same thing for them?

Bailey: I’ve been approached, but my wife and I are comfortable here. Our kids live nearby, and we’ve just started the grandchild thing. So it would take a lot to pry us loose.