The Australian Competition and Consumer Commission (ACCC) does not yet have the evidence to do anything about alleged fertiliser price gouging, its chief executive officer, Brian Cassidy has told the Senate fertiliser price inquiry.
"I am just pleading for people to come and tell us," he said.
Clear examples of the huge gap between the world benchmark prices and what farmers are paying domestically for standard lines of fertiliser left representatives of the ACCC answering "I don't know" to many questions drilling down into whether there is collusion or an abuse of market power in the fertiliser industry.
The ACCC was called to give evidence to the special fertiliser inquiry last week following a report it tabled in August which found no reason to suspect anything odd going on with fertiliser prices, blaming the spike in the past 18 months on global supply and demand constraints rather than abuses of market power.
This is despite new evidence put to the committee on Friday which revealed world prices for products like urea and DAP have dipped below $US300.
Charlie McElhone, from the National Farmers Federation, told the inquiry last week world fertiliser prices, in particular urea, have gone down from about $US850 a tonne to below $300 a tonne since August this year.
"On the flip side…we are seeing no movement on the domestic market — if anything, we are actually seeing new record highs, particularly in some of our northern members’ production systems," Mr McElhone said.
"So there is no reflection of the actual decrease in the world price."
Mr McElhone said while there's been a depreciation of the Australian dollar of around 30pc recently, in that time there has also been a decrease in the world price of fertiliser by over 60pc.
"…even factoring in the exchange rate depreciation, if domestic prices were in line with world price movements the domestic price would be somewhere in the vicinity of $360 to $370 a tonne.
"Instead, what we are really talking about are prices of between $1,200 and $1,300 a tonne."
Senator Bill Heffernan, who chairs the Senate Select committee looking into the issue, backed up Mr McElhone's figures with some of his own for DAP, which he said was priced on the world market at the Australian equivalent of $365 a tonne, while domestically it could be found last week for just under $1700 a tonne.
"I think there is a culture within the fertiliser industry where we just believed what we were told," Senator Heffernan said.
"We would go in and order 50 tonnes at whatever the price was. You believed it and you got it—up until this year, that is.
"So we have that is, a problem.
"We have plenty of work to do in this committe.
"We are a long way from finished.
"There is a new phenomenon occurring in the market now — that is, price gouging on the way down as well as on the way up."
Senator Heffernan told the inquiry that at a recent conference in Sydney a fertiliser industry representative from the United States exclaimed "we got away with it last year".
He said the phrase used was "we put it up $100 a tonne a fortnight, several times more than the market would bear".
But despite claims by Senator Heffernan that 70pc of the sales of fertiliser and 100pc of the manufacture are controlled by one company, the ACCC insists there is no monopoly power at play in the Australian fertiliser industry.
The ACCC's general manager of mergers, acquisitions and sales Tim Grimwade, did concede, however, that Incitec Pivot does hold "substantial market share".
But ACCC chief executive officer, Brian Cassidy, said he does not agree with assertions that the ACCC does not have the power to do anything about concerns of market abuses.
"We do not have the evidence to do anything about it," Mr Cassidy said.
Earlier in the inquiry NFF illustrated "substantial market share" with examples where there may have been some diversity of fertiliser resellers in an area, but those resellers are often selling for the same supplier.
It outlined a case where there were five to 10 distributors working within the one region yet only one supplier was delivering to them.
NFF told the inquiry it would like to see more open, publicly available data on world price movements for fertiliser – mapped out against the exchange rate and factoring in the domestic market price.
"The ACCC has the power to get a balanced view of that across the whole of the country and to monitor that over time," Mr McElhone said.
"That is the only way that our members will have a real comfort moving forward so that we do not get those same kinds of breakaways from the international price movement."
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