FTC Reports on Ethanol Market Concentration

Cindy Zimmerman

FTCA new report from the Federal Trade Commission says U.S. ethanol industry become more competitive in 2007.

According to the report, “The ethanol production industry is not concentrated, and has become even more unconcentrated over the last year.”

The FTC utilizes the Herfindahl-Hirschman Indices (HHIs) to determine concentration. As outlined by the FTC and the Justice Department, HHIs with values below 1000 are deemed not concentrated and competitive. Based on actual production volumes of ethanol (as compared to total capacity that includes gallons under construction), the FTC gives the U.S. ethanol industry a score of 465, down from 736 in 2006.

Since 2005, the number of ethanol production facilities operating across the country has increased from 95 to 134 as of December 2007. Similarly, the number of firms producing ethanol has also increased. “As of September 2007, 103 firms produced ethanol in the United States, a one-year increase of 13 firms, and a two-year increase of roughly 28 firms,” the FTC reports. While the number of firms producing ethanol has risen, the market share of the nation’s largest producer has decreased to approximately 16 percent, down from 21 percent in 2006.

Read the FTC report here.

Ethanol, Government, News, RFA