Selecting the proper site for a value-added processing business is important to the long-term profitability of the business.  Locating the plant where you can purchase adequate quantities of inputs at their lowest cost is critical.  For commodities like corn and wheat, this usually requires an evaluation of market basis patterns.  Even if your business is a cooperative with delivery requirements, you will usually pay your patrons the going market price for the commodity at delivery, so basis patterns are still important.  In addition, the cost of natural gas, electricity and other inputs affect the bottom line.

On the other side of the business equation, don’t forget about access to markets for your product.  Being close to customers and having low-cost modes of transportation are important. 

Creating a value-added processing business often means buying your feedstock from a commodity market and selling your product into a commodity market.  Commodity markets are usually quite volatile.  Having a wider profit margin than your competitors means that you will make more money during good times.  More importantly, it means that your losses will be smaller when times get tough.  This can mean the difference between staying in business and closing down.

To help you assess and evaluate various sites from you value-added processing business, read Location, Location, Location: Value-Added Processing/Manufacturing.