In the dynamic landscape of the U.S. ethanol industry, operational efficiency has emerged as a critical factor for long-term profitability. Since October 2014, when the USDA began publishing the Grain Crushings and Co-Products Production report, analysts have been able to track key metrics that reflect changes in production efficiency. This article provides an updated analysis of these trends, focusing on the gallons of ethanol per bushel of corn, pounds of dried distillers grain with solubles (DDGS), and pounds of corn oil per bushel of corn. The findings highlight significant improvements in certain areas while revealing trade-offs in others.

Efficiency Trends in the U.S. Ethanol Industry

The analysis reveals a compelling narrative of advancements and challenges within the U.S. ethanol sector. Over the past decade, dry mill plants, which account for approximately 91% of total ethanol production, have seen notable improvements in converting corn into ethanol. Specifically, the conversion rate has increased from around 2.8 gallons per bushel in late 2014 to nearly 3 gallons by mid-2019 and again at the end of 2024. This represents a roughly 9% improvement in efficiency over the period, despite a temporary dip during the early stages of the COVID-19 pandemic.

Conversely, the production of DDGS has experienced a steady decline. Starting at about 17.34 pounds per bushel of corn in October 2014, the DDGS conversion rate fell to 14.78 pounds by June 2024, marking a 15% reduction. Meanwhile, the production of corn oil saw rapid growth, increasing from 0.48 pounds per bushel in December 2014 to 0.94 pounds by December 2024—a more than 100% increase. These trends suggest that producers have prioritized ethanol and corn oil production over DDGS, likely driven by economic incentives and technological advancements.

Insights and Implications

From a broader perspective, this analysis underscores the strategic decisions made by ethanol producers to optimize their operations. By focusing on enhancing ethanol and corn oil yields, producers have managed to boost overall revenue. According to the data, these efficiency gains contributed an additional 19 cents per bushel of corn processed over the last decade, representing a meaningful 3% improvement in total revenue. However, this progress came at the cost of reduced DDGS production, highlighting the inherent trade-offs in operational efficiency.

For readers and industry stakeholders, this analysis offers valuable insights into the evolving dynamics of the U.S. ethanol industry. It demonstrates how producers adapt to market conditions and leverage technology to maximize profitability. As the industry continues to evolve, understanding these efficiency trends will be crucial for policymakers, investors, and operators alike.