USDA’s 2002 Ethanol Cost-of-Production Survey

Hosein Shapouri and Paul Gallagher

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: In 2003, the U.S. Department of Agriculture surveyed 21 dry-mill ethanol plants to estimate their 2002 production costs, including both variable (feedstock and plant operation) and capital expenses. These plants produced about 550 million gallons of ethanol in 2002. Net feedstock costs for the surveyed plants ranged from 39 to 68 cents per gallon in 2002. For cash operating expenses, the average energy expenditure was 17.29 cents per gallon. Labor costs ranged from 3 to 11 cents per gallon, maintenance costs from 1 to 7 cents, and administrative costs from 1 to 18 cents. For capital expenditures, new plant construction costs from $1.05 to $3.00 per gallon of ethanol. Average investment to expand existing ethanol production capacity was 50 cents per gallon; hence, expansion tends to cost less than new capacity. Comparison with a 1998 survey of ethanol producers showed that total operating costs in 2002 had changed very little from 1998. It also showed that the average cost of building new plants had dropped, possibly due to designs that emphasize economies of scale.

Date: 2005-07-01
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