Cheesed-off Italians swap banks for Parmesan bonds

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An Italian dairy cooperative has raised €6 million by issuing bonds guaranteed by Parmesan cheese. Photo: Francois Guillot
08:45 CET+01:00
Fed up with their banks' reluctance to lend, an Italian dairy cooperative has raised €6 million by issuing bonds guaranteed by huge wheels of Parmesan cheese.

"We already have some loans but, after a certain point, the banks don't want to give you any more," Andrea Setti, the financial controller of the 4 Madonne cooperative, told AFP.

The cooperative, based near Modena in northern Italy, produces the famous cheese from milk supplied by some 40 dairy farmers. It has seen business boom in recent years with production rising to 75,000 wheels a year and turnover hitting €24 million in 2014.

But when it sought additional funding to boost its presence in the US market and concentrate on longer-aged cheeses, the cooperative ran into a wall of indifference from traditional lenders still recovering from the 2007-08 financial crisis.

The solution lay in an Italian government-backed mini-bonds scheme under which investors provide funding for six years in return for a five percent yield backed by cheese assets valued at a 120 percent of the bonds' worth.

The principle behind the scheme is not entirely unheard of in the region; several banks already hold hundreds of thousands of parmesan wheels as guarantees of loans to local producers.

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And the use of bonds to offset the capital costs involved in storing luxury products until maturity is already common in the whisky and wine industries.

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