It is normal to give your house or jewellery as collateral when taking out a mortgage. Farmers can give their tractors or any other machinery as security while applying for loans. However, in Italy, using cheese as collateral for loans has proved to be a profitable business venture. In Reggio Emilia, an organization called Credito Emiliano, popularly referred to as Credem, takes cheese wheels, specifically Parmigiano-Reggiano, as collateral. This helps the farmers get money instantly without having to sell their valuable cheese.
The Parmigiano-Reggiano cheese, which is also known as the "King of Cheeses," is only produced in the provinces of Parma, Reggio Emilia, Bologna, Modena, and Mantua in Italy. Any other kind of cheese that is produced outside these areas is termed Parmesan.
This renowned cheese is made under strict guidelines. These include the feed of the cow, the freshness of the milk used, the composition of the cheese and the ripening process. This is what makes the cheese have a pungent, nutty and fruity flavour. Each wheel is about 80 pounds heavy and costs somewhere between $900 and $2,500 each. But to manufacture such a wheel needs a lot of patience because these wheels have to age from 12 to 36 months.
However, during all this time the cheese is very sensitive. It can get sweaty, bubbly, or even crack. Also, any damage done can spoil the inside. Farmers who require money usually have no other way out than to sell their cheese before it gets fully matured.For more updates, join/follow our WhatsApp, Telegram and YouTube channels.
This is where the use of cheese as collateral for loans benefits the farmers and the bank. The farmers give their ageing cheese to the Credem Bank, and in return, they get loans that are 70 to 80% of the value of the cheese.
There are more than 300,000 wheels kept at Tagliate General Warehouse. Every wheel is periodically inspected by experts who supervise the storage conditions. Outside the warehouse, about 10% of Parmigiano-Reggiano wheels suffer environmental damage. Inside Credem's facility, that figure falls to just 1%.
Also, the practice of using cheese as collateral for loans is quite safe for Credem. The reason is that the bank stores the collateral under its care, controls the quality of the product during ageing, and may immediately react to any decrease in the price of a wheel of cheese. This practice has become a convenient tool for many Italian farmers.
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