FTC issues annual report on ethanol market concentration

The Federal Trade Commission on March 3 issued its latest annual report on ethanol market concentration. As in previous reports, the FTC determined that “there is sufficient competition among industry participants to avoid price-setting and other anticompetitive behavior.”

According to the report, ethanol production capacity increased to 17.8 billion gallons per year in 2020, up from 17 billion gallons in 2019. Actual production, however fell to 14.6 billion gallons, down from 16 billion gallons in 2019.

Ethanol exports were also down. From July 2019 through June 2020, the U.S. approximately 1.4 billion gallons of ethanol, down 6 percent when compared to the prior year period. The FTC said this marked the second consecutive annual decline during a July-to-June period after five consecutive years of increased ethanol exports.

According to the report, more than 100 firms produced ethanol last year. The largest ethanol producer’s share of domestic capacity is approximately 12 percent, roughly the same as its 2019 share.

Overall, the report shows that the ethanol industry is less concentrated today than it was when the FTC issued its first annual report on the topic in 2005. In addition, the possibility of entry and the availability of ethanol imports provides additional constraints on the exercise of market power by current industry participants. The FTC determined 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 coordination on price and output levels is unlikely.

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