2023 Report on Ethanol Market Concentration 

I. Introduction 

This Report presents the Federal Trade Commission’s (“Commission” or “FTC”) 

concentration analysis of the ethanol production industry for 2023. 1 The report includes certain 

data and information from the U.S. Energy Information Administration (“EIA”), industry 

participants, and other sources. 2 Section 1501(a)(2) of the Energy Policy Act of 2005 requires 

that the FTC annually “perform a market concentration analysis of the ethanol production 

industry . . . to determine whether there is sufficient competition among industry participants to 

avoid price-setting and other anticompetitive behavior.” 3 Pursuant to the statute, the FTC must 

measure concentration using the Herfindahl-Hirschman Index (“HHI”) and consider all 

marketing arrangements among industry participants in preparing its analysis. 4 Also pursuant to 

the statute, the FTC delivers its report to Congress and the Administrator of the Environmental 

Protection Agency (“EPA”) by December 1 of each year. 

The HHI is a measure of market concentration. A given market’s HHI is the sum of the 

squares of the individual market shares of all market participants. 5 As in previous reports, FTC 

staff (“staff”) analyzed concentration based on U.S. ethanol production capacity and actual 

production of ethanol. Staff’s analysis does not address whether ethanol production in any 

geographic area constitutes a relevant antitrust market; instead, it calculates concentration on a 

1 This Report builds upon Commission reports from previous years. Prior reports contain background information 

not included in this Report. See FTC, Oil and Gas Industry Initiatives: Reports, https://www ftc.gov/adviceguidance/competition-guidance/industry-guidance/oil-gas-industry-initiatives. 

2 Certain data and information relied upon in this Report may be revised or updated between annual reports. 3 Energy Policy Act of 2005, Pub. L. No. 109-58, § 1501, 119 Stat. 1067, 1074, amended by Energy Independence 

and Security Act of 2007, Pub. L. No. 110-140, 121 Stat. 1492. For purposes of this Report, we presume that 

Congress used the term “price-setting” to mean “illegal price fixing.” 

4 Id. 

5 For example, a four-firm market with market shares of 30 percent, 30 percent, 20 percent, and 20 percent has an 

HHI of 2600 [(30*30) + (30*30) + (20*20) + (20*20) = 2600]. HHIs range from 10,000 in a one-firm (pure 

monopoly) market to a number close to zero in a highly unconcentrated market. 

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nationwide basis, based on ethanol production capacity and actual ethanol production. For both 

measures, HHIs are calculated for producers and marketers. For both production capacity and 

actual production, concentration for producer shares is lower than concentration for marketer 

shares. Based on production capacity, the HHIs are 539 for producer-based shares and 855 for 

marketer-based shares. Based on actual production, the HHIs are 522 for producer-based shares 

and 912 for marketer-based shares. 

The 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 

coordinate on price or output levels, is unlikely on a nationwide basis. As has been the case each 

year since the Commission began reporting, the current HHIs indicate that a single ethanol 

producer or marketer likely lacks market power at a national level.

6 Successful anticompetitive 

coordination at a national level would require agreement among a very large number of 

competitors and thus is similarly unlikely. Moreover, imports and the possibility of entry would 

likely impede the exercise of market power by any group of domestic firms. 

II. Industry Updates 

A. Renewable Fuel Standard 

Since 2005, Congress has required that the national transportation fuel supply contain 

a minimum annual volume of renewable fuels, including fuel ethanol. 7 This statutory 

mandate, known as the Renewable Fuel Standard (“RFS”), increased every year through 2022. 

In 2007, Congress revised the RFS, significantly increasing the minimum volumes of ethanol 

6 See U.S. Department of Justice and Federal Trade Commission Draft Merger Guidelines § II. 1. (2023), 

https://www.ftc.gov/system/files/ftc gov/pdf/p859910draftmergerguidelines2023.pdf (“Draft Merger Guidelines”); 

U.S. Department of Justice and Federal Trade Commission Horizontal Merger Guidelines § 5.3 (2010), 

https://ww7w.ftc.gov/sites/default/files/attachments/merger-review/100819hmg.pdf (“Horizontal Merger 

Guidelines”). 

7 See Energy Policy Act of 2005 § 1501, supra note 3. 

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which requires more plant downtime. Most market participants interviewed stated that 

demand for ethanol was more stable during the last year, as compared to the preceding year. 

Most market participants interviewed stated that the EPA’s waivers allowing E15 

gasoline (having a 15 percent ethanol blend) to be sold during the summer of 2023 had little 

impact on demand for ethanol. 15 

C. Prices and Margins 

Ethanol prices were fairly stable over the past year as compared to previous years. 

Prices remained in a narrow range, while corn prices declined, which caused margins to 

increase. Figure 1 shows daily net cost of corn, 16 ethanol prices, and margins from the 

beginning of 2014 to October 20, 2023, expressed on a per-gallon basis. 17 Margins are 

measured by a return over operating costs estimated for a hypothetical dry mill in Iowa, as 

reported by the Iowa State University Center for Agricultural and Rural Development. 18 

15 See EPA, Fuel Waivers, https://www.epa.gov/enforcement/fuel-waivers (2023 Fuel Waivers, Nationwide) (last 

updated Sept. 21, 2023). 16 Net cost of corn is the daily nearby futures price in Chicago plus Iowa corn basis. Weekly corn basis is calculated 

as the price that Iowa ethanol plants pay, as reported by the U.S. Department of Agriculture’s Livestock and Grain 

Market News, minus the Chicago Board of Trade nearby futures price. See infra note 18. 

17 October 20, 2023 is the last date for which data from Iowa State University were reviewed for purposes of this 

Report. 

18 See Iowa State University, Center for Agricultural and Rural Development, Historical Ethanol Operating Margins, 

https://www.card.iastate.edu/research/biorenewables/tools/hist eth gm.aspx (last visited Oct. 25, 2023). “Return 

over operating costs” is specifically defined as the difference between the revenue from ethanol (including revenue 

from ethanol and dried distillers grains with solubles) and variable production costs (including corn, natural gas, and 

labor). As of November 2016, revenue includes sales of corn oil, a byproduct of ethanol, which could make margins 

not comparable before that date. 

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3.5 

3 

2.5 

2 

1.5 

0.5 

0 

-0.5 

- Ethanol Price ($/gallon) 

--Return Over Operating Costs ($/gallon) 

- Net Cost of Corn ($/gallon) 

Data from Iowa State University, Center for Agricultural and Rural Development, Historical Ethanol Operating 

Margins 

Figure 1: Ethanol Price, Corn Cost, and Margin 

Jan. 2014 to Oct. 2023 

The average estimated margin from the beginning of 2023 through mid-October 2023 was 

$0.46 per gallon, which is higher than the same period last year and in 2021. 19 

D. Market Trends 

Domestic ethanol production capacity increased slightly, and actual production 

decreased slightly, since last year’s Report. Production capacity (including capacity under 

19 Id. Margins are as reported in previous Ethanol Reports. See supra note 1. 

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construction) was 18.4 billion gallons per year. 20 Actual production from July 2022 through 

June 2023 decreased to 15.3 billion gallons per year from 15.5 billion gallons per year during 

the prior 12 months. 21 

Ethanol exports decreased. From July 2022 through June 2023, the United States 

exported approximately 1.22 billion gallons of ethanol. 22 This marked a decrease from 1.40 

billion gallons of ethanol during the previous July-to-June period. 23 

Over 100 firms produced ethanol in 2023. The largest ethanol producer’s share of 

domestic capacity is 17 percent, the same as last year. 24 

Most market participants interviewed described transportation issues relating to rail and 

trucking as being similar or improved during the last year, as compared to the preceding year. 

III. Analysis 

Section 1501(a)(2) of the Energy Policy Act of 2005 instructs the Commission to use 

HHIs to measure concentration in the U.S. ethanol production industry. 25 HHIs can provide a 

snapshot of market concentration based upon the number of market participants and their 

20 Production capacity increased slightly from 18.127 billion gallons per year in 2022 to 18.382 billion gallons per 

year in 2023. Staff’s total capacity estimate takes into account information obtained through interviews with market 

participants and publicly available information, including information published online by the Renewable Fuels 

Association (“RFA”) as of August 3, 2023, regarding Ethanol Biorefinery Locations. RFA, Ethanol Biorefinery 

Locations, https://ethanolrfa.org/resources/ethanol-biorefinery-locations. Staff’s capacity total is greater than the 

EIA annual published estimate of 17.663 billion gallons. EIA, U.S. Fuel Ethanol Plant Production Capacity (release 

date: Aug. 7, 2023), http://www.eia.gov/petroleum/ethanolcapacity/. EIA’s Fuel Ethanol Production Capacity 

estimate is intended to measure estimated gallons of fuel alcohol that a plant is capable of producing over a period of 

one year (365 consecutive days) starting on the first day of each report month. Id. 

21 EIA, Monthly Energy Review, Table 10.3 Fuel Ethanol Overview (release date: Oct. 26, 2023), 

https://www.eia.gov/totalenergy/data/browser/?tbl=T10.03#/?f=M&start=201903&end=202106&charted=7-18. 

22 Calculations based on July 2022-June 2023 monthly exports reported in EIA, U.S. Exports of Fuel Ethanol (Oct. 

31, 2023 release date), http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M EPOOXE EEX NUSZ00 MBBL&f=M (calculating a monthly sum of barrels converted to U.S. gallons (1 barrel = 42 U.S. gallons)). 

23 Id. 

24 See 2022 Ethanol Report, supra note 1, at 6 (largest producer’s share 17 percent). 

25 Energy Policy Act of 2005 § 1501(a)(2), supra note 3. 

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respective sales, production, or capacity. 26 An analysis of competition among market 

participants using these HHIs assumes that the U.S. ethanol production industry is an appropriate 

(or “relevant”) antitrust market, a question that this Report does not address. 27 Such an 

assumption precludes consideration of a broader product market that includes other gasoline 

blending components that might be viable substitutes for ethanol. In the event that ethanol 

competes with other blending components, HHIs based on fuel ethanol production and marketing 

would likely overstate concentration in the industry. This assumption also precludes 

consideration of whether broader or narrower geographic markets than the United States could 

provide further insight about competition in ethanol production and marketing. 

This Report presents four HHIs for the ethanol industry, based on two different measures 

of market share (production capacity and actual production) and two different methods of 

attributing those market shares to various market participants (producers and marketers). With 

regard to measuring market share, for purposes of this Report “production capacity” is defined to 

mean a plant’s maximum annual output of ethanol minus any required downtime for 

maintenance. 28 “Actual production” is defined to mean a plant’s actual annual output of 

26 The Commission and the U.S. Department of Justice generally use HHIs to measure concentration in a relevant 

antitrust market. See Draft Merger Guidelines, supra note 6, § II. 1; Horizontal Merger Guidelines, supra note 6, § 

5.3. 

27 A relevant antitrust market has both product and geographic aspects. A relevant product market is a product or 

group of products such that a hypothetical profit-maximizing firm that was the only seller of those products likely 

could profitably impose at least a small but significant and nontransitory increase in price (“SSNIP”). If such a price 

increase would not be profitable because of the loss of sales to other products, the product or group of products 

would not be a relevant product market. Similarly, a relevant geographic market is a region such that a hypothetical 

profit-maximizing firm that was the only seller of the relevant product in that region likely could impose at least a 

SSNIP above the competitive level. If such a price increase would not be profitable because of the loss of sales to 

sellers outside the region, the region would be too narrow to be a relevant geographic market. See Horizontal 

Merger Guidelines, supra note 6, §§ 4.1-4.2. See also Draft Merger Guidelines, supra note 6, Appendix 3. 

28 Production capacity is also sometimes referred to as “operating capacity.” For purposes of this Report, production 

capacity is distinct from “nameplate capacity,” a common industry term that may refer to the intended full-load 

sustained output of a facility. Nameplate capacity may also be variously known as “rated capacity,” “nominal 

capacity,” “installed capacity,” or “stated design capacity.” 

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ethanol. 29 With regard to attributing market shares to market participants, “producer” is defined 

to mean a firm that in fact manufactures the ethanol. As discussed below, “marketer” is defined 

to mean the firm, whether the producer itself or a third-party firm, that sells and transports a 

producer’s ethanol output. 

FTC staff calculated market shares based on domestic ethanol production capacity for 

producers and marketers. FTC staff relied on publicly available information and interviews with 

producers and marketers to determine the production capacity of each ethanol plant and 

marketing activities of marketers. FTC staff then calculated capacity-based HHIs for producers 

and marketers. 

EIA staff calculated market shares based on actual production for producers and 

marketers. Due to the confidential nature of the ethanol production data the EIA collects, FTC 

staff provided to EIA staff the information necessary to attribute market shares to market 

participants. 30 EIA staff then separately calculated production-based HHIs for producers and 

marketers. 31 

A. Concentration with Market Shares Based on Production Capacity 

FTC staff calculated market shares based on fuel ethanol production capacity. 32 

Production capacity provides a useful and easily confirmable indicator of a producer’s 

29 Actual production is also sometimes referred to as “operating production.” 

30 For producers for which EIA maintains production data, FTC staff provided EIA with the identities of those 

producers’ marketers. EIA staff used this information, in conjunction with its own data on ethanol production, to 

calculate the HHIs that attribute market share to marketers. 

31 Because the production data are confidential, EIA staff did not disclose the volumes of ethanol attributable to any 

individual producer or the market shares based on those volumes. 

32 The RFA website provides frequently updated data on ethanol plant capacity and capacity expansion plans. 

Capacity information is also available on many individual producers’ websites, some of which also provide details 

of construction and expansion plans. Staff obtained the production capacity for some producers directly from firm 

officials. 

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competitive significance. 33 In determining each producer’s aggregate capacity, staff included 

the capacity of existing plants, as well as the projected capacity of plants currently under 

construction and plants currently undergoing expansion. 34 Incorporating capacity from such 

projects into current market share calculations is consistent with the approach set forth in the 

Draft Merger Guidelines and Horizontal Merger Guidelines. 35 

1. Attributing Market Shares to Producers 

Under the first approach to market concentration, FTC staff attributed market share to 

each producer based on the producer’s percentage of total production capacity. This method of 

calculation yielded an HHI of 539, a level regarded as not concentrated under the Draft Merger 

Guidelines and Horizontal Merger Guidelines. 36 This HHI is lower than the corresponding HHI 

of 545 in 2022. 37 

33 In markets for homogeneous products (such as ethanol), a firm may derive its competitive significance primarily 

from its available capacity – i.e., its ability and incentive to increase production in the event of a competitor’s price 

increase or output reduction. See Draft Merger Guidelines, supra note 6, Appendix 4; see also Horizontal Merger 

Guidelines, supra note 6, § 5.2. 

34 Staff included the capacity of these construction and expansion projects only where the producer had finalized 

construction plans, received the necessary financing for construction, and begun physical construction. Ethanol 

producers frequently announce capacity additions, new plants, plant sales, and cancellations of plans to build new 

capacity. These HHI calculations represent staff’s best estimate of the industry’s concentration as of October 2023. 

This approach therefore excludes any more recent publicly available information that might be relevant to industry 

HHI calculations. These HHI calculations also might not capture the full complexity of industry ownership 

structures, especially the degree of control by minority interests held by marketers or third-party management 

service firms. However, the HHI resulting from attributing production to the marketer should capture any such 

complexity not reflected in the producer HHI. 

35 Firms that are not currently producing but likely would respond rapidly in the event of a SSNIP have competitive 

significance even though they do not currently supply the relevant market. See Draft Merger Guidelines, supra note 

6, Appendix 4; see also Horizontal Merger Guidelines, supra note 6, § 5.2. 

36 See Draft Merger Guidelines, supra note 6, § II. 1; Horizontal Merger Guidelines, supra note 6, § 5.3. 

37 See 2022 Ethanol Report, supra note 1, at 9. The industry continued to experience shifts in plant capacity through 

plant expansions, conversions, openings, and closures over the past 12 months. Because the HHI captures these 

adjustments in the aggregate, it ignores the individual activity of industry participants. For example, the HHI may 

include a producer’s acquisition of another producer’s facilities that coincided with the restart or reconstruction of 

an idled facility. Alternatively, the HHI may exclude a plant that was converted to other uses, formally closed, or 

judged unlikely to reopen in the near future. 

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2. Attributing Market Shares to Marketers 

Under the second approach, FTC staff attributed the market share of each producer to the 

firm that markets for that producer. Some producers sell the ethanol they produce directly to 

blenders and end users. Many producers, however, enter into marketing agreements with third 

parties to sell their output. An ethanol marketer may represent and make limited decisions for 

multiple individual producers, essentially aggregating those producers’ capacities under a single 

entity. For purposes of competitive analysis, attributing production capacity to marketers rather 

than to the actual producers provides a measure of industry concentration that captures this 

aggregation. For a producer that engages in direct sales, staff attributed the market shares to the 

producer itself. 38 For a producer that does not engage in direct sales, staff attributed the market 

shares to the third-party firm that marketed the producer’s ethanol output. This approach yields 

an HHI of 855, not concentrated under the Draft Merger Guidelines and Horizontal Merger 

Guidelines. This HHI is lower than the corresponding HHI of 869 in 2022. 39 

B. Concentration with Market Shares Based on Actual Production 

EIA staff calculated market shares based on actual production. Firms that produce 

ethanol must report their monthly production volumes to EIA. Using production data is 

instructive because capacity data have certain limitations, particularly insofar as stated capacity 

does not necessarily represent actual production capabilities. Ethanol plants can sometimes 

produce more than their stated design capacity (i.e., nameplate capacity) and sometimes operate 

at increasing rates as their owners and operators improve the production process and gain 

38 Some marketers publicly announce new agreements with producers. Where staff could not determine whether a 

producer marketed for itself or used an outside marketing firm, staff attributed market share to the producer. 

39 See 2022 Ethanol Report, supra note 1, at 10. 

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expertise in operating their plants. 40 Thus, actual production may reflect a market participant’s 

competitive significance more accurately than would the sum of its plants’ stated design 

capacities. 

There are some limitations on the accuracy of HHIs based on actual production, just as 

there are limitations on capacity-based HHIs. HHIs based on production over a given period 

may overstate or understate actual concentration due to entry and exit of firms, expansion of 

existing capacity, and variations in capacity utilization rates during the relevant period. 

Specifically, the production-based HHIs provided below do not fully reflect the impact of new 

facilities that began production during the last 12 months, nor do they fully reflect the impact of 

plant closures and idling during the period. In both cases, these facilities produced only a 

fraction of what they otherwise could produce in a full year, leading to an understatement (in the 

case of new facilities) or an overstatement (in the case of idled facilities) of their competitive 

significance in the market. Similarly, the HHIs below do not account for the effects on 

concentration of plant expansions that have been in effect for less than 12 months and capacityenhancing improvement projects that are not yet in operation. These production-based HHIs 

reflect actual production volumes from July 2022 through June 2023. 

1. Attributing Market Shares to Producers 

Where EIA attributed the actual production market share directly to individual producers, 

the resulting HHI is 522, higher than the 2022 HHI of 516. 41 

40 Similarly, some ethanol producers may not be in a position to utilize their full plant capacity. Actual production 

may be a better indicator of their competitive significance in such cases. 

41 See 2022 Ethanol Report, supra note 1, at 11. 

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2. Attributing Market Shares to Marketers 

Calculating production-based concentration by attributing the market share of each 

producer to the firm that markets for that producer results in an HHI of 912, lower than the 2022 

HHI of 922. 42 

C. Entry and Imports 

The U.S. ethanol industry at a national level remains not concentrated today. This 

implies that any unilateral or coordinated attempt to exercise national market power is unlikely. 

Should the industry become more concentrated, the possibility of new firms entering the 

domestic market and the responsiveness of ethanol imports to relative changes in domestic 

ethanol prices would likely provide additional constraints on anticompetitive behavior by 

domestic firms. Potential entrants can purchase and restart existing production facilities that 

were idled due to recent economic conditions or can design and build new plants to enter the 

market. 

Ethanol import levels historically have responded to fluctuations in the price of U.S. 

ethanol relative to foreign ethanol prices, particularly prices for sugarcane-based ethanol from 

Brazil. 43 This responsiveness would likely constrain any potential exercise of market power by a 

domestic firm. Additionally, to the extent U.S. prices increase because of the exercise of market 

power among a subset of U.S. producers or marketers, it is likely that other producers would 

42 Id. 

43 Brazil has been the largest exporter of ethanol to the United States every year since 2011. See EIA, U.S. Imports 

by Country of Origin (release date: Oct. 31, 2023), 

https://www.eia.gov/dnav/pet/pet move impcus a2 nus epooxe im0 mbbl a.htm, and prior FTC reports on 

ethanol market concentration, supra note 1. Although the United States is a net exporter of ethanol, demand exists 

for imported ethanol with low greenhouse gas emissions, such as sugarcane-based ethanol. See EIA, U.S. ethanol 

exports fell for the first time in four years in 2019 (May 1, 2020), 

https://www.eia.gov/todayinenergy/detail.php?id=43575. 

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react by exporting less to take advantage of more favorable U.S. ethanol prices (thereby 

increasing U.S. supply). 

IV. Conclusion 

Regardless of the particular measure of market share or the market share attribution 

method used to calculate concentration, the ethanol industry remains not concentrated at a 

national level. Furthermore, the possibility of entry and the availability of ethanol imports likely 

provide additional constraints on the exercise of market power by current industry participants. 

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 national market power to set prices, 

or coordination on price and output levels, is unlikely. 

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Figure 2: Domestic Fuel Ethanol Concentration 

Concentration Based on Production Capacity 2022 HHI 44 2023 HHI 

Shares attributed to each producer 545 539 

Shares attributed to marketers for all marketing agreements 869 B855 

Concentration Based on Actual Production 2022 HHI 45 B2023 HHI 

Shares attributed to each producer 516 522 

Shares attributed to marketers for all marketing agreements 922 B912 

Note: Production capacity for 2023 includes the annual production capacity as of October 2023 

and the capacity additions under construction and expected completions within 12 to 18 months 

thereafter. Actual production data for 2023 are from the annual period of July 2022 through June 

2023. 

44 See 2022 Ethanol Report, supra note 1, at 14. 45 Id. 

14 
- - - -

- -

- -

- -

Figure 3: Historical Fuel Ethanol Capacity and HHis 

20,000 

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~ ~ ~ ~ ~ ~ ~ ~ ~ ~ N N N N 8 8 8 8 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N N 

M illion - Production Capacity (left axis) Gallons HHI 

per Year 

..,.._ HHI Based on Production Capacity (Producer) (right axis) 

15