Interesting article in HBSWK.
Nikolaos Trichakis of HBS has prepared a case on Italian regional bank Credito Emiliano which takes cheese as collateral:
Since 1953, the regional bank Credito Emiliano has accepted curious collateral for small-business loans: giant wheels of Parmigiano-Reggiano cheese.
Known locally as Credem, the bank is the subject of a new Harvard Business School case study, “Credem: Banking on Cheese.” The case explains how the bank essentially replaces an expensive part of the operations process for dairy farmers in the Emilia Romagna region of Northern Italy. Besides holding the cheese as insurance, Credem stores and ages the wheels in climate-controlled vaults for the duration of the loan. The farmers save on operating costs. And in turn, the bank gains some expertise about a risky industry.
In my research I look at how operations affect financing and vice versa, and this was a prime example of how to tailor a financing infrastructure to the operating characteristics of a supply chain,” says Nikolaos Trichakis, an assistant professor in the Technology and Operations Management unit at HBS, who co-authored the case with Gerry Tsoukalas, an assistant professor at the University of Pennsylvania’s Wharton School, and Emer Moloney, a research associate at HBS.
The case describes the traditional production process for Parmigiano-Reggiano, commonly known in dairy circles as “The King of Cheeses.” The supply chain begins with some 3,500 family-owned farms. Every day, the farmers bring fresh milk to single-product producers, most of which are limited liability cooperatives of farmers, and most of whom outsource the maturation process to warehouse operators. Before it hits store shelves, cheese is matured for 18, 24, 30, or 36 months.