Credito Emiliano, fondly known as CredEm, is a distinctive Italian bank that has found a unique way to support its local community in the Emilia-Romagna region. This bank has taken the love and appreciation for food and traditions to a whole new level by accepting giant wheels of Parmigiano Reggiano cheese as collateral for loans. This innovative approach, which began in 1953, has helped local farmers sustain their businesses, especially during challenging economic times.
In 1953, CredEm introduced the concept of the “Parmesan loan,” a unique financial product that allows local farmers to use their Parmigiano Reggiano cheese as collateral for loans. This arrangement is particularly beneficial given the nature of cheese production, which requires 18 to 36 months for the Parmesan cheese to age. Farmers, who need immediate funds to maintain operations, find this system invaluable.
The bank currently stores over 300,000 wheels of cheese, valued at more than 160 million euros. This cheese is kept in specialized warehouses, not typical bank vaults. A dedicated team, including the bank manager, oversees the cheese from the moment it arrives until it is returned to the farmer, fully aged and ready for sale.
How the Process Works
Consider a local farmer named Giuseppe, who has been producing Parmigiano Reggiano for generations. Facing tight cash flow, Giuseppe approaches CredEm for a loan. The bank approves the loan on the condition that Giuseppe surrenders a specific number of cheese wheels as collateral. This agreement provides Giuseppe with the necessary funds to continue his operations, from feeding the cows to paying workers and making the cheese.
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Once the Parmesan cheese is ready, it is either collected by the bank or delivered by Giuseppe to the bank’s warehouse. Here, the cheese is carefully stored and aged for up to 36 months. When Giuseppe repays the loan, the cheese is released from collateral, allowing Giuseppe to sell it to distributors. This system ensures that farmers like Giuseppe can continue their operations smoothly.
Parmigiano Reggiano is a highly valued cheese, produced exclusively in the Emilia-Romagna region of Italy, specifically in Parma, Reggio Emilia, Modena, Bologna, and Mantova. Each wheel requires approximately 131 gallons of milk and can weigh around 88 pounds, with a single wheel costing over $1,000. The annual production of 3.6 million cheese wheels values the industry at 2.5 billion US dollars.
“This mechanism is our life blood,” said Giuseppe Montanari, a cheese producer and dealer who uses the loans to buy milk. “It’s a great way to finance our expenses at convenient rates, and the bank doesn’t risk much because they can always sell the cheese.”
The cheese’s value is further emphasized by its significant role in Italy’s exports. In 2019, cheese exports were valued at 3.5 billion US dollars, with Parmesan representing a substantial portion. This cheese is not just a culinary delight but also a major economic contributor.
Credito Emiliano has built specialized, climate-controlled warehouses to store the cheese, ensuring its quality and security. Each wheel, weighing around 80 pounds and worth about 300 euros, is branded with a serial number to prevent theft. Despite these precautions, thieves tunneled into a warehouse and stole 570 pieces before being apprehended by the police.
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“Thank heavens we caught the robbers before they grated it,” said William Bizzarri, who manages the warehouses.
The Parmesan loan system is crucial for the local economy, especially during economic downturns. CredEm’s cheese unit provides loans for up to 24 months, the time it takes for Parmesan to age, at competitive interest rates. The bank offers up to 80 percent of the cheese’s value based on current market prices, making it a low-risk operation since the cheese can always be sold to recover the loan amount if necessary.
Credito Emiliano has considered accepting other local specialities like prosciutto and olive oil as collateral, but these products are harder to store and brand securely. The unique characteristics of Parmigiano Reggiano make it an ideal candidate for this innovative banking practice.
Emilia-Romagna is the only region legally allowed to use the Parmigiano Reggiano name, and the cheese has been a valuable asset for financial operations since the Middle Ages. The bank’s system ensures that producers can continue their operations without financial strain, maintaining the region’s rich culinary heritage.
“Parmesan cheese has been used for financial operations since the Middle Ages,” said Leo Bertozzi, head of the Parmigiano-Reggiano Producers’ Association. “This is both due to its value, since each compact wheel holds the equivalent of 550 liters of milk, and the fact that aging takes years, making financing necessary until the product can be sold.”
