A special Senate select committee has been established to examine why fertiliser prices have risen so dramatically, especially in the past year, and whether there is any evidence of collusion or market power abuses by fertiliser manufacturers or distributors, or if world supply shortages and a booming global demand is the culprit.

The committee will also investigate revenue earnings of the major fertiliser companies, and whether they are taking advantage of the demand situation or pricing fertiliser higher because of current high prices for grain.

Last week Incitec Pivot announced a 197 per cent increase in its half yearly profits only last week, but attributed this more to "strategic management" rather than higher fertiliser prices.

The National Farmers Federation, NSW Farmers Association, Department of Agriculture, the Australian Fertiliser Services Association and a representative from the South Australian premier's special drought office will be the first to give evidence to the inquiry.

The committee has received about 40 submissions – many confidential - in relation to the price hikes and while this week's hearing is the only one scheduled so far, it's expected more hearings will be announced before the committee has to report to Government by June 16.