When it comes to farming, change ensures long-term survival.

That's the case for two very different Tasmanian farms diversifying into alcohol production, particularly Lawrenny, a historic farm dating back to the 1800s.

Ross Mace has been farming beef on Lawrenny since he bought it 20 years ago, but it's never been big enough to make a good profit.

"We just wanted to run cattle and fatten cattle, but the property isn't really big enough to employ staff and to afford staff, so right from a very early stage we looked to diversify and four years ago the idea of whisky distilling became a possibility," he said.

This whisky lover has embraced the concept with gusto, and is aiming to develop a closed-loop operation where every ingredient that goes into the whisky comes from the farm and every part of the distilling is done on-site.

"We are saying we are in control of all our produce," he said. "We grow the barley, then we malt the barley, we grist it, we ferment it, we distil it, we mature it here and bottle it all on the estate."

Lawrenny Estate and the nearby Derwent River. ( ABC News: Peter Curtis )

This year the farmer grew his second ever crop of barley — the key base ingredient for his whisky — and according to farmer and distiller Joe Dinsmoor, it gives the product its unique earthy flavours.

"Growing our own barley on-site and malting on-site really gives us an edge, and it really does define Lawrenny's terroir as a whisky producer," he said.

"In the future we will look at cultivating our own yeast strains.

"With all of that, we're really almost self-sufficient to produce a world-class whisky."

Barley is harvested at Lawrenny Estate. ( ABC News: Fiona Breen )

Mr Mace has invested millions in the distillery, revamping a historic barn to house the equipment.

"When we are finished — we are building a new bond store now — we'll have invested close to $3 million," he said.

"Wow, frightening. I should have been 40 years younger."

It's a lot of money to spend on a start-up when the product takes up to seven years to mature.

In the meantime, the farm is generating some extra income from its own line of gins and vodkas as well.

For Mr Mace and his wife Mary, the first Lawrenny whisky can't come soon enough, but for now they'll have to make do with gin.

Using potatoes supermarkets have rejected

Further south on the coast near Dunalley, the Daly family are running a very different operation.

The family has been growing potatoes for 30 years, harvesting 6,000 tonnes per year.

Their move into spirits, and in particular potato vodka, grew from a desire to use their reject potatoes.

"We're trying to aim for a no-waste farm," Ruby Daly, the second generation of the farming family, said.

Father-daughter farming duo Gerard and Ruby Daly inspect a nicola potato before sending it to be processed into vodka. ( ABC News: Fiona Breen )

Twenty per cent of the Dalys' annual harvest — or 1,200 tonnes of potatoes annually — are rejected because they're not suitable for the supermarkets due to their shape or blemishes.

Some rejects go into a new retail range of potato salads, some go to the cows for dinner, and now 10 per cent of the odd potatoes are going into vodka.

"My mum is the person with the brains behind it," Ms Daly said.

"She absolutely hates waste, she's one of those people that will do anything she can to save product, so she is the brains behind potato vodka."

It hasn't been easy though. Ms Daly and her brother in-law Tom Bleathman had to hit the books and the internet to find out exactly how to make potato vodka.

"No-one in Australia has any experience with potato vodka, we were the only ones doing it," she said.

"We've really had to research, we have done a lot of self teaching, we really had to figure out what to do to make it work."

The family is now producing 400 bottles of potato vodka a month, as well as gin and liqueurs.

A pile of nicola potatoes at the Daly family farm. ( ABC News: Fiona Breen )

The move into spirits has prompted a lot of interest from other farmers.

"People really want to save their waste," Ms Daly said.

"It is really disappointing how much you throw out.

"Farmers go through so much as it is, and to throw out what they do is just not good enough, so we need to try and all stick together and make it sustainable."

These farming families are not only investing their money in these new spirit ventures — they're investing their heart and souls.

But as with all businesses, there's no guarantee of success.

Excise tax is a struggle for small businesses

One hurdle they need to overcome is the Australian government's excise tax on spirits.

For a bottle of vodka or whisky worth about $80 or $90, $25 goes to the federal government in excise tax.

The higher the volume of alcohol in the bottle, the higher the tax.

Founder of the modern Tasmanian distilling industry, Bill Lark, said the industry was lobbying government.

"We're one of the highest excise countries in the world and it really is a killer for a start-up distillery," he said.

A small rebate has been secured and there's promise of another, but the tax is still high.

Ms Daly feels it hard.

"We're starting to break even with it, but we have to pay a lot of excise tax; $23 on 40 per cent alcohol," she said.

It's been 26 years since Mr Lark successfully lobbied the federal government to overturn restrictions on small distilleries operating in Tasmania and started producing whisky in his kitchen.

Now there are 36 distilleries across the state.

"I suspect there will be something like 40 at the end of the year, but the great thing about that is to a large extent we have all remained great friends," Mr Lark said.

"We support each other, we help each other, and a lot of people around the world and Australia like the way we do that."

Farmers Ross and Mary Mace enjoy a glass of homemade gin. ( ABC News: Fiona Breen. )

Watch this story on Landline on Sunday at 12:30pm.