• The President of UOKiK, Tomasz Chróstny, has imposed a penalty of over PLN 2 million on Cefetra Polska – one of the largest companies in the Polish grain trading market.
• The trader demanded all contracted supplies from the farmers, even when the circumstances preventing the farmers from supplying grain were beyond their control, e.g. drought or other cases of force majeure.
• Such practice constitutes unfair use of contractual advantage.

The decision of the President of UOKiK concerns the contracts between Cefetra Polska and farmers supplying it with grain, as well as rapeseed and legumes. The investigation has shown that the trader required its counterparties to deliver the agreed quantities even when the farmers could not do so due to force majeure or other circumstances beyond their control. In some cases, force majeure losses went beyond 50 per cent of the average annual agricultural production on the supplier's farm.

Cefetra Polska, to demonstrate the occurrence of force majeure, required the farmers to submit documents proving that a state of emergency due to a natural disaster was declared in the areas where they operate. It should be noted that the farmers have no control over the declaration of such a state and it has never been declared in Poland. In addition, the company required proof of a very large extent of losses on the supplier's farm, which in practice made it impossible for the supplier to be exempt from their obligation, and consequently led Cefetra Polska to claim contractual penalties and costs of purchasing the products from another entity.

Entities which contract the supply of products originating from agricultural holdings should provide for the possibility of exempting the farmers from part or all the supplies in the event of circumstances beyond their control and whose consequences cannot be prevented. Such protection of the farmer's interest is stipulated in the cultivation contract provided for in the Civil Code and purchasers should not circumvent the regulations by lowering the standard of protection of agricultural producers, e.g. by naming contracts differently (sales contract, delivery contract, cooperation contract, etc.). This is because, in most cases, farmers sell products originating from their own farm and therefore, in the event of unexpected circumstances, e.g. the destruction of some crops by rainstorms, they are unable to deliver the agreed quantity of produce.

According to the President of UOKiK, the practice employed by the company burdened suppliers with excessive contractual risk.

"Agricultural production is highly dependent on the forces of nature. Losses due to adverse weather conditions can affect a large part of a farm's production. In such circumstances, it is therefore unacceptable to demand that farmers deliver the contracted quantity, as it is a manifestation of unfair use of contractual advantage. It is important that both parties to such contracts treat each other honestly and responsibly – the purchasers should make it possible to reduce the scope of supply in case of fortuitous events, whereas the farmers should only exercise such rights if they arise from circumstances beyond their control," says the President of UOKiK, Tomasz Chróstny.

The penalty imposed on Cefetra Polska was PLN 2,070,557.26. The decision is not final and may be appealed to the court.

If you are a farmer or entrepreneur operating in the agri-food industry and your large contracting partner abuses its contractual advantage by imposing unfavourable terms of cooperation, notify UOKiK. We have prepared a special form to help you report any irregularities. Click here to fill it out: https://ankieta.uokik.gov.pl/formularz-zgloszenie-przewaga/.

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: biuroprasowe@uokik.gov.pl
Twitter: @UOKiKgovPL