The Mandate
A multi-grower cooperative developing shared processing infrastructure engaged Feasibility Study Consultant to prepare a third-party feasibility study supporting a USDA B&I financing request for a project located in Hardin County, Kentucky. Total project capitalization fell within the $10M-$25M band. The capital provider, a community bank originator with USDA Rural Development guarantee, required documentation consistent with current program review standards. The analytical question put to the team: Did regional hemp acreage and grower contracts support a 24,000-square-foot decortication and fiber-processing facility.
Engagement Scope
- Primary market area defined as a 150-mile radius
- Comparable supply set of 6 properties
- Demand model framework: regional grower-contract acreage and processing throughput build
- Financial projection horizon: 10 years
- Site inspection completed; operator interviews where applicable
- Primary data collection through field reconnaissance and third-party market data
Methodology Applied
Primary Market Area
The PMA was defined as a 150-mile radius from the subject site, calibrated to the demand catchment behavior typical of agriculture processing assets in Kentucky. The boundary captured the population, employment, and competitive supply base relevant to the subject's operating thesis.
Supply and Demand Reconciliation
The comparable supply set comprised 6 properties operating within the PMA or in directly substitutable submarkets. Demand was modeled using a regional grower-contract acreage and processing throughput build approach over a 10 years horizon. The reconciliation tested whether incremental supply, including the subject, could be absorbed within the projection window without compromising stabilized occupancy assumptions.
Capture Rate Calibration
The subject's capture rate was calibrated against the absorption capacity of the PMA. The analysis concluded that PMA absorption capacity exceeded subject build-out by a factor of 1.5 across the projection window, with a stabilized capture rate of n/a.
Exhibit 1: Comparable Supply Set, Kentucky PMA
[Table or chart rendered in delivered report.]
Exhibit 2: Demand Projection Summary, 10 years Horizon
[Table or chart rendered in delivered report.]
Exhibit 3: Subject Capture Rate vs. PMA Absorption Capacity
[Table or chart rendered in delivered report.]
Analytical Conclusions
- Cooperative member acreage of 3,840 acres exceeded the facility's 2,560-acre throughput requirement.
- Pre-contracted offtake of 68% of fiber and hurd output secured at lender review.
- Comparable processors cleared $1,840 to $2,420 per-ton processed-product margins.
- USDA B&I rural-area, equity, and job-creation tests confirmed.
Deliverable
The delivered report ran 138 pages with 32 exhibits distributed across nine analytical sections, plus appendices documenting comparable supply data, demographic inputs, and financial projection assumptions. The document was prepared to the documentation standards of the community bank originator with USDA Rural Development guarantee. The corresponding USDA B&I review framework guided exhibit selection and supporting documentation.