The Italian bank Credito Emiliano (Credem) has for years accepted Parmigiano Reggiano – also known as Parmesan – as security for loans granted to manufacturers of cheeses with Protected Designation of Origin (PDO).
According to the Harvard Business School case study Credem: Put on cheese, Published in March 2015, is valued by Credem as a security accepted cheese at the current market price.
It usually offers a loan-to-cheese value ratio between 70% and 80% what the bank suggests “Exceptional quality degradation and negative market price fluctuations”,Nikolaos Trichakis, Gerry Tsoukalas and Emer Moloney from Harvard Business School wrote.
When producers cannot repay their loans or prices are falling and the value of the collateral does not support the outstanding debt, Credem can sell the cheese she is holding to cover a possible loss.
Parmigiano Reggiano sold in the EU must be made in and using milk from a handful of areas – Parma, Reggio, Emilia, Modena and parts of Mantua and Bologna.
The hard cheese made from raw cow’s milk must have matured for at least 12 months.
At the time of the Harvard study, Credem’s loans to those involved in the production and distribution of Parmigiano Reggiano amounted to 100 million euros.
Of this, between € 75 million and € 80 million has been guaranteed by Parmigiano Reggiano, which is held in facilities owned and managed by Credem subsidiary Magazzini Generali delle Tagliate (MGT).
According to the study, the MGT warehouse in the heart of the Parmigiano-Reggiano country offers enough wooden shelf space for 440,000 40 kg loaves of hard cheese.
Expand the Parmesan model?
According to the Harvard case study, Credem is investigating whether its Parmigiano Reggiano model can be transferred to other agricultural products.
“We are very strong in the Parmigiano Reggiano region and can use our national presence to export this approach to areas that have a tradition in certain agricultural products, such as Prosecco in the Veneto region.”William Bizzarri, MGT’s general manager, told the Harvard researchers.
Source: Harvard Business School http://www.hbs.edu/faculty/Pages/item.aspx?num=48733
Title: Credem: Put on Cheese
Authors: Nikolaos Trichakis, Gerry Tsoukalas, Emer Moloney.