Privatization and comparative advantage

This is a great story on a part of Washington’s economy: The boutique booze boom in Washington. It begins by talking about Westland Distillery’s Emerson Lamb:

“It has been our stated goal to put Washington state on the map as the world class place to make single malt whiskey alongside Scotland,” said the 25-year-old Lamb.

Lamb’s declaration, which would have drawn fall-off-your-barstool-laughter a decade ago, is not only gaining traction among distillers but has also set off a race to deliver the first great single malt in Washington state — and to grow the barley to make that happen.

Indeed, researchers from Oregon State University to Washington State University have confirmed what Lamb and farmers have long suspected: that the maritime climate here mirrors that of Scotland, where some of the world’s best single malts are made.

According to the article, Washington has the most micro distilleries in the country — a situation that was brought about thanks to the Legislature getting the state out of the way in 2008 by making it easier to open a distillery.

The story notes that liquor privatization brought craft distillers new challenges because they no longer have the ease of dealing with the state monopoly rather than various individual stores. One would think that the competition required by privatization has helped to strengthen the distillers in the business. Separated the wheat from the chaff, if you will.

Even better, it seems that privatization has made distillers focus on what might be Washington’s comparative advantage:

Many believe single malt, uncommon in America, is one way to get onto those shelves.

Many Northwest distilleries believe they can dominate the single malt category much like Kentucky has dominated the bourbon market. The Northwest has better growing and aging climate to make single malt than other regions, they say.

In June 2010, after planting more than 1,000 different types of barley and wheat around Western Washington and other areas, WSU’s Jones concluded that the maritime climate from Vancouver, Wash., to Vancouver, B.C., is ideal for growing the barley strains that have low protein and high starch, the same types that produce a “complex flavor — sweet, but not white-sugar sweet,” he said. “You can compare it to a maple syrup … It has a very natural sweetness.”

This means new opportunities for farmers as well:

There are only a handful of regions around the world that have the right climate to grow this type of barley, Jones said. . . .

“There was zero winter barley planted in Skagit County five years ago. Today, there’s at least 5,000 acres,” Jones said. Nearby counties are also starting to grow barley.

(On that point, per USDA, Washington ranked 4th in the nation in barley production in 2013.)

One thought on “Privatization and comparative advantage

  1. Great Story, Cheers for REAL privitaization, in contrast to faux privitazation, where all we do is take the FTEs off the State’s books and pay for them anyway (contracts with “privates”, etc). THIS is REAL.

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