Call for fertiliser price transparency

Pinnaroo, South Australia, farmer Corey Blacksell said unlike the grain market or even the crop chemical market, price discovery at a retail level in the Australian fertiliser sector was virtually impossible.

"The price discovery mechanism at a retail level is non-existent," Mr Blacksell said.

"You can get a rough gauge on what the international price is landed at an Australian port but that does not necessarily correlate with what prices are being offered to growers."

Mr Blacksell said he was concerned fertiliser suppliers were using farmers as their risk management tools.

"I've heard anecdotally that farmers have been told that even though the world market has dropped, fertiliser suppliers still have stocks from last year that was more expensive and they have to sell that before they start offering the cheaper prices.

"You only need to translate this to the grain market to see it doesn't make sense, if I store grain that is worth $400 a tonne one year and the next year it is worth $300/t then no-one is going to pay me $400/t."

Mr Blacksell said he had eventually sourced phosphorus (P) fertiliser at a rate in the low to mid $500s a tonne, but said the first quoted price was $635/t.

"I told the supplier in question what I had heard the price was elsewhere and within hours they got back to me and said they could match it, it was a big drop, around $100/t.

"The problem for me is that there is no place you can go to get a transparent price across the whole market, and there are probably plenty of people that get lumped with those more expensive prices because they don't have the information."

Fertiliser companies have become increasingly risk averse in recent years to taking on too much stock for fear of price fluctuations leaving them with expensive inventory

Andrew Weidemann, Grain Producers Australia (GPA) said his organisation supported more transparency in pricing.

"Ultimately it is in everyone's best interest if there is a fair and transparent price out there.

"I understand it is not always as easy as global prices plus freight, there's the cost of carry, there are other things to consider but it would be good for everyone if there were clearer pricing signals that gave buyers a bit more confidence when buying they were getting a good price."

In the west, Duncan Young, WAFarmers grains section president, said the pricing issue was not as pronounced in his state.

"We've heard it is a bit of a problem in the eastern states but here it seems relatively transparent."

Andrew Whitelaw, Mecardo commodity analyst, said moving to a more open pricing system was a logical step for the fertiliser sector.

"Unfortunately it is not as easy to determine local fertiliser pricing at port compared to our other agricultural commodities such as grain, wool and livestock," Mr Whitelaw said.

"This makes it difficult for analysts and in turn farmers to work out pricing levels compared to the rest of the world.

"We welcome any transparency which the industry can provide, as it would be beneficial for all stakeholders."