MPs have asked the Competition Bureau to investigate the fertilizer industry’s business practices.
The request follows a bruising appearance by fertilizer industry representatives before the House of Commons agriculture committee.
Committee members voted unanimously May 12 for a motion by Saskatchewan Conservative MP Randy Hoback that the Competition Bureau “study the pricing, sales and supply” of the fertilizer industry.
When Canadian Fertilizer Institute (CFI) executives appeared before the committee several days earlier, Hoback had been one of many MPs to attack the industry for high prices and manipulating supply to make sure farmers paid top dollar.
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He said fertilizer companies pressured agents and farmers to buy last fall, when prices were high.
As well, he questioned the CFI executives’ claims that the worldwide economic turmoil has lowered prices this year.
“The market meltdown started in September or October of last year,” Hoback said.
“In November, we were in the heart of it. If we were having a market meltdown, your prices should have started melting down then and not in January-February.”
Hoback was complaining that prices were kept artificially high because many farmers book their spring fertilizer purchases before the end of the year.
Hoback wasn’t the only MP to pile on that day.
Committee chair Larry Miller, an Ontario Conservative, offered a bitter example of how when grain prices increased in 2007, “fertilizer prices went up probably the same amount as those large increases in commodity prices and maybe even higher.”
He referred to witnesses last year who called it “extra price taking.”
“Larry Miller calls it price gouging,” Miller said.
CFI vice-president Clyde Graham objected to Miller’s premise, but he conceded that fertilizer companies, like farmers, try to run a profitable business.
He said there is a logical explanation for why fertilizer prices track commodity prices upward.
“If grain farmers decide that the prices are outstanding for their products and they need to maximize their yields, they’re going to put on the recommended rates of fertilizer around the world and then there will be increased demand for fertilizer and the market will respond.”
Alberta Conservative MP Blake Richards didn’t accept the explanation.
“When you see price increases in the crop prices and then you see these price increases in fertilizer that correspond, very few farmers would believe that’s a coincidence or that some outside force (is) leading the way or some global force that’s leading that to happen,” he said.
Graham objected to a reference by one MP to “you guys” in the fertilizer industry because there is no unified industry.
The CFI has 43 members, he said.
“Everybody in the market, because it’s a free market, operates and makes their own decisions.”
