Ethanol exports and profits have grown tremendously in the last 10 years. In a recent article by Scott Irwin of the University of Illinois at Urbana-Champaign entitled ”What’s Up with Ethanol Production Profit’s”, reference is made to profits decreasing but remaining positive saying,” Whether this is merely a hiccup in the long-term trend of profitability likely depends on developments in the ethanol export market.” It was upon this premise that interest into looking at current and historical ethanol exports became the topic of this article.

80 percent of ethanol exports go to the top 5 export destinations. These include: Canada, Brazil, China, India, and the Philippines (listed 1st to 5th) see Figure 1.

In the last 16 years, there has been significant growth in ethanol exports to many countries. However, to narrow down the trade partners with the strongest growth, those which display the largest average year over year growth within the last 16 years are listed in Table 1. These countries were selected for both their average growth, and the 2016 quantity of trade. Of the top five high growth nations, only two have free trade agreements, South Korea and Colombia. While the three remaining do not, these countries, among others, represent potential opportunities for growth; Brazil, China, and Jamaica.  

Ethanol export growth can be attributed to many things but especially with the growth of the Flex Fuel vehicles (FFV), vehicles that can take a high blend of ethanol rich fuel (E-85 and E-15) ethanol blended fuels provide an inexpensive gasoline fuel substitute. As countries have increasing numbers of newer model vehicles the demand for ethanol increases (EPA Recommends: Model year 2001+ vehicles for E-15; and FFV Vehicles can use E-85).

With this growth now being mentioned it is important to understand that there are other influencing factors. Some of these include:

·         Prevalence of FFV within export destination countries.

·         Demand for Ethanol blend fuel (Foreign and Domestic).

·         South American Corn Production.

·         Ethanol production from other sources, sugar cane especially.

·         Legislative decisions

·         Logistical challenges

As export markets for U.S. Ethanol continue to grow sustained profits and increased profits must be sought through bolstered trade relationships. To prioritize target markets; Table 1 shows the countries with average U.S. export growth greater than 100 percent over the last 16 years.  

Preston Lyman is a Research Analyst with Decision Innovation Solutions (DIS). DIS is an Iowa-Based economic research firm which provides regular farm economics research and analysis to the Iowa Farm Bureau staff and members.