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Upstart craft distillers have built the demand for Kentucky grains.
Lexington, KY – It’s a great time to be in the bourbon business, according to a new economic impact study that shows the industry booming over the last two years, nearly doubling in workforce size.
And you don’t have to be a bourbon lover to love what it’s doing for communities that call themselves home to those distilleries, be they the major, well-known places or the new establishments.
The study, released by the University of Louisville’s Urban Studies Institute, in conjunction with the Kentucky Distillers’ Association (KDA) and the Kentucky Agricultural Development Board, reported that the number of state distilleries has tripled in two years and set major new benchmarks for payroll, tax revenue, exports and barrel inventories.
That includes making a major impact on local agriculture sectors. Eric Gregory, president of the Kentucky Distillers' Association, said part of what the study did was to look at those local ties.
“We also wanted to benchmark where we stood on the grains issue, because we know we use a lot of corn and we’re using more corn than ever before, but how much of that is locally sourced corn versus corn from other areas?” he said. “We found that about 40 percent of our grains were coming from Kentucky farmers.”
But from the perspective of the newer facilities, Gregory said the overwhelming majority, if not all of those operations, are using 100 percent Kentucky grains.
“We have started looking at what some of the obstacles are for some of the bigger facilities to use more locally sourced grain,” he said.
One issue facing many of the large, well-established distilleries is that they have used the same grain contracts for 70 years, and making a change in grain could mean that their bourbon would differ in flavor.
“We’re going to be working closely with the Kentucky Corn Growers Association and the Governor’s Office of Agricultural Policy and probably the ag commissioner’s office to see if we can get all of these sides together and talk to see what we can do to source our local grains,” Gregory said.
Bernard Peterson, along with his brothers and nephew, raise their corn crop near Bardstown, Kentucky, arguably the heart of bourbon country, with such distilling operations as Jim Beam, Heaven Hill and Maker’s Mark located in the area.
He said his involvement with the bourbon industry comes mainly because of his location.
“I grew up in Loretto, Kentucky, milking cows, and we evolved into a crop-producing farm as our business interest changed over the years,” Peterson said.
The farm actually began a relationship with the nearby distillery by using its spent grains, a byproduct of the distilling process, as cattle feed.
Peterson said because of that connection, when the farm began to grow grain, that relationship flourished.
Today, he grows a little over a million bushels of corn annually, approximately 95 percent of which goes to bourbon production.
Quint Pottinger of Affinity Farms, located in nearby New Haven, Kentucky, grows about 600 acres of corn and soybeans. While he is a young farmer, his family farm can be traced back the 1780s.
It is his proximity to some of the bigger distilleries in the state that has helped contribute to the prosperity of the farm. Much of his corn crop is earmarked for the bourbon industry.
“We have a big distilling market here, and the demand for corn is going up with the demand for bourbon,” he said. “They are just pumping out more of it every year, so it’s really helped in driving our market and driving our prices, if we can maintain quality.”
Pottinger added that he strives to produce high-quality grain to develop a good relationship with customers so they will keep coming back.
According to the study, several distilleries have voiced a desire to get more of their grains from Kentucky producers, depending on price and quality requirements, including corn from non-genetically engineered seeds.
As it stands now, the local grain that is utilized by Kentucky’s distilling business supports 1,500 jobs and almost $60 million in farm output.
Kentucky producers could supply as much as 80 percent of those grains, which would double that impact.
In return, state farmers are getting an estimated $2.5 million worth of spent grains to feed their livestock from distilleries, most of which is given away.
The report noted that the distillers produce enough spent grain to feed 90,000 cows a year.
At the end of the day, bourbon brings about $3 billion into Kentucky’s economy, something that benefits everyone.
Gregory said in the next couple of years another dozen distilling operations could open around the state. Currently there are 31 distilleries located all across Kentucky, the most since Prohibition.
This new study is the third since 2010 and is the most comprehensive analysis ever conducted on the economic and fiscal impact of bourbon and distilled spirits in Kentucky, Gregory said.
“To be honest, we’re all blown away by the findings,” he said.
To view the complete economic impact study, go the KDA website at http://www.kybourbon.com.