FTC issues annual report on concentration of the ethanol market

By Erin Voegele | December 08, 2017

The Federal Trade Commission recently released its 2017 Report on Ethanol Market Concentration, finding that concentration is substantially unchanged from a year ago.

The annual report is required under the Energy Policy Act of 2005 “to determine whether there is sufficient competition among industry participants to avoid price-setting and other anticompetitive behavior.” Under statute, the report must be completed and delivered to congress and the U.S. EPA administrator by Dec. 1 of each year.

According to the FTC, the 2017 report concludes that “the low level of concentration and large number of market participants in the U.S. ethanol production industry continue to suggest that the exercise of market power to set prices, or to coordinate on price and output levels, is unlikely.”

The report indicates that margins for the U.S. ethanol industry averaged 23 cents per gallon during the first eight months of 2017. Over the same period, the average net cost of corn was 81 cents per gallon, and ethanol prices averaged $1.45 per gallon.

From June 2016 through May 2017, the report shows that domestic ethanol production increased from 15 billion gallons to 15.6 billion gallons. Production capacity, including capacity under construction, increased to approximately 16.6 billion gallons per year. The FTC said this marks the fourth consecutive year of capacity increases.

According to the report, ethanol exports have also increased. From July 2016 through June 2017, the U.S. exported approximately 1.3 billion gallons of ethanol, up 40 percent from the same period of the prior year. The FTC noted that the increase marks the fourth consecutive year of increased ethanol exports.

The report also notes that more than 100 U.S. firms currently produce or are capable of producing ethanol. The largest ethanol producer’s share of domestic capacity is approximately 11 percent, unchanged from its 2016 share.

A full copy of the report can be downloaded from the FTC website.