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 prices said two companies - Incitec Pivot in the east and south, and CSBP in the west - dominated the market in a way that "seriously compromises effective competition in the industry''.

"The committee (of inquiry) 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,'' the interim report said.

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 so that (it) can more effectively fulfil its role in promoting competition and fair trading,'' it said.

Details of how this could be achieved would be outlined in the inquiry's final report due by the middle of next year, the report said.

It would also examine the potential for an industry code of conduct and whether the ACCC should have more of a role in monitoring the industry.

The interim report also called for uniform state standards relating to the description, sale and use of fertiliser products, and more regular state testing of fertiliser ingredient levels.