Two hundred years ago, Islay was awash with farm-based distilleries. Gerard Gilbert visits the Englishman who's turning back the clock

The sandy-haired barman on the Islay ferry tells me he's from South Uist in the Outer Hebrides. "Are there any whisky distilleries on South Uist," I ask. "No," comes his slightly rueful reply. "Islay has all the whisky." While that may not literally be true, the perception of Islay as the "whisky island" holds firm thanks to its seven world-famous single malts.

The sandy-haired barman on the Islay ferry tells me he's from South Uist in the Outer Hebrides. "Are there any whisky distilleries on South Uist," I ask. "No," comes his slightly rueful reply. "Islay has all the whisky." While that may not literally be true, the perception of Islay as the "whisky island" holds firm thanks to its seven world-famous single malts.

Bruichladdich, Ardbeg, Laphroaig, Lagavulin, Bowmore, Caol Ila and Bunnahabhain - names to make a malt whisky lover's heart beat faster. Single malts - the products of just one distillery - have seen a huge upswing in popularity since the doldrums of the 1980s, and there are several whisky pilgrims on this two-hour crossing from the mainland - including a Japanese couple, a trio of Swedes and a group from Spain. Drams are being sipped as we watch the coastline of Islay's sister island, Jura, glide past the windows on a beautiful evening.

Andrew Jefford, in his book about the island and its whiskies, Peat, Smoke and Spirit, calls Islay "the conscience of Scotch" - its distinctive, peaty single malts are often used to add character to blended brands such as Johnny Walker, Bell's and Teacher's. About 25 million litres of whisky leave the island every year, estimates Jefford. "If the export and excise revenues of that whisky were to make their way back again," he adds, "this would be a wealthier part of Britain than Ascot or Henley."

But of course they do not, and Islay remains a hard place to make a living, with even the most enterprising of 120 farmers dependent on subsidies. I'm off to catch up with one of the island's most enterprising farmers, an English incomer called Mark French.

Of course "incomer" is a relative term; Mark and his wife Rohaise have been tilling the land on Islay for 25 years. I should know, for Mark was my closest childhood friend, I was best man at their wedding (in the church at Bowmore, overlooking the town's distillery) and I am f the somewhat absent godfather of their daughter, Chloe. Having inherited some unusually fertile land on the western part of the island known as the Rhinns, Mark and Rohaise have diversified into pony-trekking and smoking their own beef and venison, selling it under the name of Islay Fine Food Company.

As teenagers in Kent in the 1970s, Mark and I, along with my brother, Richard, would brew homemade beer (at first from Boots kits, but later using real Kent hops and barley) and make our own wine using everything from primroses and gooseberries to peaches and walnut leaves. Mark's latest project rather dwarfs the exploits of the Winemakers and Brewers Association of Luddesdowne and Meopham (as we styled ourselves). In the old stone milling sheds behind his farmhouse - barely sheltered from the Atlantic by some gnarled sycamores - he is about to open the first new whisky distillery on Islay since 1881.

The idea first came as he sat dreaming over a dram with his friend, Anthony Wills. Wills, who has run his own independent malt whisky bottling company since 1995, is now the managing director and principle shareholder of their venture, the Kilchoman Distillery. "Anthony was talking about building a tiny distillery in the boathouse on his property on the edge of Loch Indaal," says Mark. "But it got me thinking. I had the buildings and the barley as well as the water to do it on a much bigger scale here." The proposed operation has inevitably been dubbed a "boutique distillery", but Kilchoman will actually be something that used to flourish on Islay until the 1801 Excise Act viciously eradicated it - the farmhouse distillery. "Whisky distilling on Islay used to be a by-product of farming," says Mark. "In a sense, Kilchoman will be just that. It's the first farm-scale distillery in Scotland for over 200 years."

Whisky is, in effect, distilled beer - or ale, because this is beer made with barley but no hops. The barley is malted - that is to say it is soaked in water and allowed to germinate - releasing the sugars that will react with the yeast in the brewing process. The malted barley is then dried using a peat fire - it is this, and not the peaty water, that adds the distinctive flavour to Islay malts. The genius of Mark's distillery, and one that should appeal to environmentalists and whisky purists alike, is that all the barley will be grown on his farm, malted on site, with water from a burn above his house - the same water, in fact, that supplies Bruichladdich, on the other side of the glen. The waste from the process, known as draff, will be fed to Mark's cattle, while other by-products will be used to fertilise the land. The beef from the farm will then be marinaded in Kilchoman whisky and sold in the distillery shop.

The sourcing of materials is a hot subject within the whisky business: Kilchoman's motto is "From Barley to Bottling, 100 per cent Islay". A recent resolution put before the Scottish Parliament by the National Farmers' Union, demanding that only Scottish barley be used in the making of Scotch whisky, was thrown out last month, so imports from Eastern Europe will continue to flood the industry. Does it matter? Mark would like to see Scotch Whisky adopting a Protected Geographical Identity (PGI) like Champagne. Over a dram at his local pub, we even discuss the idea that Mark might apply for a PGI himself - even if it doesn't succeed, it will be sure to garner publicity for the distillery.

Kilchoman is stealthily stealing some of the thunder from its nearest neighbour, Bruichladdich, the distillery with attitude. Until Kilchoman fires up its stills later this month at the height of the Islay Whisky Festival, Bruichladdich (pronounced "Bruichladdie") is still the most westerly, as the well as the youngest (even though it is 104 years old) distillery on Islay. And if Islay is the "conscience of Scotch", Bruichladdich sees itself as the conscience of Islay malts. It is the only distillery not owned by a giant, such as Allied Domecq or Diageo, and it is self-consciously the maverick of the whisky producers. The Gaelic motto on the bottle, "clachan an choin" translates as "the dog's bollocks". The distillery has PR acumen, as witnessed by the media mileage earned when, in the run-up to the last Gulf War, the US military picked up on the distillery's web cams, pointed at Bruichladdich's mashing tubs and stills. The Americans thought they'd stumbled on a potential biological warfare plant.

Apart from this American so-called intelligence, the internet has thrown up other surprises. When the Kilchoman website was first set up three years ago, Mark received e-mails from malt whisky enthusiasts in every corner of the world, each bearing the same essential message: "Fantastic news ... Scotch whisky is coming home."

Kilchoman as the spiritual home of whisky? The clue to this belief is a Celtic cross in the graveyard of the sadly neglected Kilchoman church, its roof half-missing and its insides exposed to the Atlantic gales. The cross commemorates the Clan Macbeatha - immigrants from (arguably) the real home of whisky, Ireland and physicians to the 14th-century Lords of the Isles, who had their summer palace here at Kilchoman. "They were distilling whisky as a medicine originally," says Mark. "So it is possible that Kilchoman was where whisky distilling started in Scotland." Possible, but also a slice of history that lends a ready-made pedigree for the Kilchoman brand - and one that Mark is willing to exploit.

Back at Mark's farm, the scene is one of great industry as a team from Forsyths of Rothes - the industry's expert coppersmith's - work around the clock to complete the intricate piping to and from the mash tubs and stills. The design of the Kilchoman distillery was by the renowned Jim Swan and the engineering consultant Ron Gibson (formerly of William Grant & Sons). The distiller will be Malcolm Rennie, a local man trained at Bruichladdich and Ardbeg. The money - £900,000 in all - has come from a combination of private investors, a grant from the local enterprise company and a small-firms loan guarantee, but that still leaves an obvious cash-flow problem.

It is going to be at least five years before Kilchoman whisky is being imbibed by single-malt aficionados. To make ends meet, 20 per cent, or 60 barrels, of each year's produce is to be pre-sold - £1,000 should put your name on a cask. Given the way that malt whisky appreciates in value, and the dicey state of the stock market, this may not be a bad investment. And just think how much fun you could have if you decided to drink it instead.