Cover Crops for Distilling Generate Profits

Gaesser Farms sold 1,000 bushels of cereal rye to Revelton Distilling Co., in Osceola, Iowa, shortly after harvest in mid-July 2022. The transaction will play a big role in making cover crops profitable for the southwest Iowa row-crop operation for years to come.

Chris Gaesser, who farms with family near Corning, visited the distillery in early September to make sure grain quality was sufficient to make high-quality bourbon and whiskey. A taste test provided that answer, along with an agreement to sell Revelton 9,000 bushels this year, which will meet all of its rye needs.

"I got to taste a little bit of Shine (a white whiskey) straight out of the still, and it was good," Gaesser says.

Revelton President and Primary Distiller Rob Taylor says buying cereal rye from a local farm is a win for everyone. Because of Taylor's personal relationship with the Gaessers, he knows the grain will make tasty spirits because it's properly grown, cleaned and stored. Plus, paying a farmer for a cover crop encourages more to be planted, which helps the environment.

"The Gaessers are incredible conservationists," Taylor explains. "Iowa farmers get paid a premium price, but we still have to be concerned about our price structure. We have a great symbiotic relationship."

Revelton paid the Gaessers $12.50 per bushel for rye in 2022. This year's price is expected to increase to $14 to $15 per bushel, pending market value.

The Gaessers have planted cereal rye cover crops since 2010 -- about 3,500 acres, 65% of their total acreage -- to improve soil health and resiliency, and prevent erosion. Gaesser says fieldwork can resume at least a day faster after a big rain in cover crop fields rather than non-cover crop, and valuable topsoil stays put. Soil tests show organic matter has increased 0.5% in the last seven years. Cover crops have contributed to corn and soybean yield increases of 5 to 10 bushels per acre (bpa).

Making cover crops profitable was also a goal. The family accomplished it by increasing yields, lowering herbicide expenditures, growing and cleaning their own seed to lower costs and selling cereal rye for seed (a minimum of 1,000 bushels per year) and now to Revelton.

Gaesser estimates it costs $15 to $17 per acre to broadcast seed cover crops on unharvested acres. Drilling cereal rye for harvest includes 100 pounds of nitrogen per acre, costing about $30 per acre.

Last year, the Gaessers harvested 100 acres of cereal rye, averaging 63 bpa. Forty-five to 60 bpa is common, Gaesser says. This year, with the Revelton contract, they plan to harvest 400 acres. The family keeps between 3,000 to 3,500 bushels for their own use, and they sell the rest.

The Gaessers sold cereal rye seed last year for $12 per bushel, but in the past, prices ranged from $9 to $16 per bushel.

Profits on harvested cereal rye average $200 per acre, Gaesser estimates. For nonharvested cover crop acres, he says soil health and agronomic benefits usually more than pays for the practice.

"There's a lot of tertiary benefits to cover crops, but early on, we knew we needed to find a way to make them work (financially)," he says. "If you want to make something work, and you're creative enough, you'll find ways to do it."

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-- For more on Revelton Distillery, visit https://www.reveltondistillery.com/…

-- Watch a how-to video on the Iowa Soybean Association Cover Crop Net Return Economic Simulator at https://www.iasoybeans.com/…

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