Why are fertiliser prices still high ?

Updated: 04/12/2008

Banded fertiliser on lettuce
Source: David McKenzie, Weekly Times – December 2, 2008

THE local fertiliser market was a “law unto itself” and should be subject to tougher competition laws, a Senate inquiry has said in an interim report tabled today.

The Senate inquiry into fertiliser pricing said two companies dominated the market in a way that “seriously compromises effective competition in the industry”.

The interim report considers that the fertiliser industry operates in a distorted market not governed by the usual supply and demand factors and is, to a large extent, a law unto itself in the setting of fertiliser prices.

It said evidence to the inquiry raised “serious concerns” about the degree of protection for farmers from anti-competitive activities and abuses of market power.

Instances of stockpiling of fertiliser, price gouging, difficulties in securing supply of fertiliser, uncertainty regarding price and a failure to honour contracts had been provided to the inquiry, the report said.

The committee believes the powers of the Australian Competition and Consumer Commission need to be strengthened to more effectively fulfil its role in promoting competition and fair trading.

The senate committee full report is due in mid 2009 is expected to detail how this could be achieved and the potential for an industry code of conduct monitored by the ACCC.

The interim report also called for uniform standards relating to the description, sale and use of fertiliser products, and more regular State Government testing of fertiliser composition.

VFF Economics Committee Chairman, Russell Amery, said that it was time that the concentrated fertiliser industry started behaving like every other competitive aspect of the agricultural market.

“The interim report has identified what farmers have been saying all along – price gouging and failing to honour contracts are a prevalent part of the fertiliser industry,” said Mr Amery.


Are you paying Triple Price for Fertiliser ?

Source: Graham Fuller, Stock & Land, Wednesday 20 Nov 2008

fertiliserPlunging commodity prices are not being mirrored by falls in one of farming’s most important input costs, namely fertiliser.

The issue is once again in the spotlight as producers weigh up shrinking harvest profits ahead of summer crop planting.

AgForce Grains policy director Lindsay Krieg says the price of urea in the Middle East, has falling sharply from $US880/t  to around $US250/t over the past few weeks.

“Over the same period, local supplies of urea rose around 30 p.c. and show little sign of coming down,” Mr Krieg said.

fertiliser bag“Taking into account the US dollar price of urea in the Middle East, Australia’s current exchange rate and factoring in the cost of freight we should be paying around one third of the current retail price”, Mr Krieg said.

“Fertiliser companies could be forgiven for this if they were carrying old stock that cost them the high prices but surely, after five months of falling world prices, they have new stock on hand.”

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