FARMERS are furious they're being denied the benefit of massive falls in world fertiliser prices.

The National Farmers' Federation says global fertiliser prices have dropped by about 70 per cent - from $US850 a tonne to below $US300 - in recent months, while local prices remain at record highs.

Although the falling dollar was slicing away some of the benefit, prices should still be much lower, it says.

With commodity prices on the way down, farmers face a severe cost squeeze unless lower fertiliser - and fuel - prices are passed on.

"Farmers are outraged and angry, and they want to know what's going on," NFF economist Charlie McElhone told The Weekly Times.

"Our immediate concern is a lack of competition in the domestic market.

"We're not making accusations, but we need more faith that the competition watchdog has the power and the will to investigate this issue properly."

The revelations at a senate inquiry last week have prompted calls for a fresh investigation of fertiliser prices by the Australian Competition and Consumer Commission.

Mr McElhone said the recent ACCC inquiry - which found no evidence of anti-competitive behaviour by local fertiliser suppliers - had been done before the recent price movements.

"Since the ACCC analysis came out, we have seen a distinct break away from what is happening on world markets."

Mr McElhone said world prices had dropped from $US850 a tonne to below $US300 since mid-August, with no reflection of that in local prices.

After factoring in a lower Australian dollar, domestic prices should be about $360-$370 a tonne, he said.

"Instead, what we are talking about are prices of between $1200 and $1300 a tonne."

"It is an area worth continual review rather than a one-off piece of work," Mr McElhone said.

Inquiry chair Senator Bill Heffernan and Senator Christine Milne both indicated the inquiry would act on the NFF suggestion.

Senator Heffernan laid into the ACCC report, which he said had not "drilled down" to get evidence.

"I thought it was a farce . . . as useless as tits on a bull."

Australia's farmers were "sick of getting it up the back passage" on fertiliser prices, Senator Heffernan said, referring to massive price spikes early this year and suggestions that suppliers had deliberately withheld fertiliser.

"We (the inquiry) are not going to give up on this. We are not going to let our farmers down. There is collusion in the market there is monopoly behaviour. There is a world cartel. It is a disgrace."

Senator Heffernan said fertiliser held in stock was now being sold at earlier higher prices, rather than at current world prices.

"If it was good enough for the goose on the way up, it ought to be good enough for the gander on the way down," he said.

A spokesman for leading local fertiliser supplier Incitec Pivot said the company refuted NFF's claims and was preparing a detailed response to present to the Senate inquiry.

ACCC chief executive Brian Cassidy said the ACCC had been asked to do a price inquiry by the Rudd Government, not a full-blown investigation using its powers to subpoena information and witnesses.

He said the ACCC had tracked world and local prices over the last couple of years, and found that "the two basically track each other" with a lag of about two months.

The ACCC could only investigate potential breaches of the Trade Practices Act if evidence was presented to them that provided a "reason to believe" a breach had occurred.

"We have had no anti-competitive behaviour in the fertiliser market drawn to our attention."

Concern is also brewing over fuel prices, with big falls in global oil prices not flowing to the bush.

World oil prices have plunged to a three-year low of less than $US55 a barrel, but farmers are yet to see much of the benefit.

"There is growing outrage among our members about the situation.

'Along with fertiliser, fuel is a key input for farmers. They can see world prices falling, but they're not getting any relief locally."

Adding to the concern is the collapse in world commodity prices as the financial crisis threatens to halt global economic growth.

The lower dollar is cushioning much of the impact, but grain and wool farmers are being hit hard.

According to the latest Westpac-NFF commodity index, more than 17 per cent was sliced off world farm commodity prices last month.

A 16 per cent fall in the Australian dollar limited the effect of the drop to 1.3 per cent.

But there were big variations. Barley and canola prices dropped by more than 9 per cent, wool was down 8 per cent and wheat by almost 6 per cent.

Dairy prices rose by more than 7 per cent and beef by more than 3 per cent.