A hand holds a sack of money in front of a large collection of parmesan cheese wheels
The act of turning water into wine may be divine. But at Credem Bank’s warehouse in northern Italy, which reportedly resembles a “cathedral of parmesan,” turning cheese into cash is just business.
Since 1953, the regional bank has been wheeling and dealing in Parmesan Reggiano — one of the most strictly regulated foods in the world, produced by just 300 dairies — accepting the cheese from producers as collateral for loans.
And, according to CNN, it hasn’t lost a euro on it yet.
Why bank on cheese
The $4.7B industry relies on a delicate supply chain, tight regulations, and age-old methods.
It can only be produced within a small geographic location using three ingredients — cow’s milk, salt, and rennet.
After 12 months of aging, the Parmigiano Reggiano Consortium performs a tapping test to certify a wheel’s quality with its (literal) stamp of approval.
Each wheel weighs 80+ pounds and can cost anywhere between $900 and $2.5k, depending on its age, with some maturing for up to 40 months.
For producers, that means revenue doesn’t arrive for at least a year. But farmers must be paid monthly, while other costs add up. Credem fills this gap.
While parm represents just 1% of the bank’s business, it’s a vital part of the overall industry.
“Without this system of leverage, the world of Parmigiano Reggiano cannot exist,” Italian dairy industry leader Paolo Ganzerli told CNN.
How it works
Certified wheels are scanned and saved in a digital log detailing their production date, dairy or origin, and status.
Then they’re stored on long wooden shelves in a climate-controlled vault, where they’re monitored daily for irregularities.
Producers receive 60%-80% of the wheel’s value upfront while saving on operational costs of aging the cheese, and banks hold onto an appreciating asset that it can sell if a producer defaults on a loan.
Blockchain technology has also recently doubled the bank’s lending capacity by allowing pledged wheels to be stored in producers’ own facilities.
BTW: Wine and whiskey are also commonly exchanged for financing, but food isn’t the strangest form of collateral out there. In 2011, a Spanish bank tried to offer Cristiano Ronaldo as collateral for a loan from the European Central Bank.
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