A Century After Prohibition, The Government Is Funding Moonshine


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Thomas Phippen Acting Editor-In-Chief
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America banned the sale and consumption of alcohol nearly a century ago. Now, the federal government actively supports the production of moonshine.

Monday marks the 83rd anniversary of the day America officially ratified the 23rd Amendment, finally undoing the 13-year-long constitutional ban on any alcoholic beverage outside the Roman Catholic Mass.

America has come so far from prohibiting liquor, that this fall the Department of Agriculture (USDA) gave out $2,746,850 million to help 14 small farmers market their liquor, wine and beer products through a special grant program that matches business investment with taxpayer funds.

The grants to help alcohol producers is really accidental, however, and make up a fraction of the total $45 million USDA dispensed to 325 small farm businesses in 2016 as part of the Value-Added Producer Grants program, announced in October. USDA aims to give small startup businesses a cash boost to get them up and running.

The Value-Added Producer grants are different from USDA’s subsidies, which are usually cash payments to farmers when market prices on big commodities are low. With producer grants, USDA will match a small business’s investment in operational costs, like marketing, up to a pre-set amount — usually around $250,000.

Most of the 14 farmers receiving grants will use the money to assist with hiring additional staff, advertise their products and expand to new markets.

USDA “will match dollar-for-dollar any investment we make in marketing, legal fees and wages for signage,” Mark Eschenbacher, a partner at Badlands Distillery in South Dakota, told The Daily Caller News Foundation. “If we spend $1,000 on something, they’ll give us $500 back.”

At Badlands, most of the ingredients used to distill the corn-based moonshine is grown on the farm, the rest comes from neighboring ranches. A previous owner of the farm was even busted for selling moonshine during prohibition, and spent a year in prison, Eschenbacher said.

An extra $250,000, spread over a period of two or more years, can do a lot to help a small, artisanal vodka distiller in, say, Michigan, get its product to a market dominated by global brands in a state where alcohol is distributed through a state-controlled agency.

Michigan distiller Richard Anderson told TheDCNF that he “saw the grant as an opportunity to help accelerate our strategy to replace some of the global competitors with local products and services.”

Anderson’s distillery, Iron Fish LLC, a $250,000 grant recipient that makes vodka, bourbon and rum, is a brand new company. He teamed up with another family to turn land that hadn’t been used as a farm for 15 years into a viable agriculture producer.

Located in “one of the poorest townships in one of the poorest counties in the state,” Iron Fish represents something rare in rural communities: A startup that creates jobs and builds up the local economy. While the $250,000 grant helps, it’s a fraction of the total capital investment, Anderson said.

“We’re able to grow our business, employ more people, purchase more products and services in our market” with the grant, Jamie Walter, president of Whiskey Acres in northern Illinois, which received a $250,000 grant, told TheDCNF.

Walter understands the concerns that taxpayer money be put to good use. “I’m a taxpayer, and I’m a small business owner. I want to see a return on investment.”

The money, though, had been allocated to grants programs by Congress well before Whiskey Acres ever applied. Why not “apply for those and bring those dollars back to our local economy?”

The grants also could help farmers expand to new markets, even overseas. The Michigan Hops Alliance, which received $248,000 from USDA, hopes the grant will help hiring and marketing efforts to help them expand exporting their hops to Europe and elsewhere. “We have a lot of interest all over Europe,” Brian Tennis, cofounder of the Hops Alliance, told TheDCNF.  “It’s just, how to get it to them in a way they can afford?”

Hops, a key ingredient in brewing that gives craft brews distinctive flavor, tastes different depending on where it’s grown. For Hops Alliance, which distributes hops from hundreds of farmers in Michigan to more than 500 brewers around the country, opening up international markets would be a big help.

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