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The "Contract Farming Program" (CFP)

The CFP Concept

The CFP of the Bank ofPiraeus is a new model of tripartite collaboration between producers, processing-commercial enterprises and the bank. For producers, CFP is related to the financing of a part of the production cost, provided that they have signed a contract for the disposal of their products with a particular buyer who participates in PB Contract Farming Financial Program (Processing/Commercial Enterprise, Agricultural Cooperative Producers’ Groups, etc.). For enterprises, the CFP pertains to their financing for the purchase of agricultural products from their producers with whom they have signed a contract. For the bank, it comprises a new and innovative way to finance the primary sector. The bank enters into a lending relationship at two levels. The first level concerns the buyer of the crop or the livestock production, to whom a “credit line” is granted. Then, a short-term loan is given to the producers who have concluded a contract with the buyer mentioned above. The access to this loan is facilitated by the use of the “CFP Card” for the procurement of agricultural supplies (e.g., pesticides, fertilizers, animal feed and fuel).

CFP, in the first stage of its implementation, aimed at coordinating and supporting contractual partnerships between farmers and Commercial/ Processing Enterprises or Agricultural Cooperatives. In practice, CFP addresses customers’ real needs and provides liquidity to both partners, while also procuring production disposal and product payoff with intervention and control through all stages of the transactional cycle. In practice, it represents an integrated banking model, which provides financing both to commercial/processing enterprises and to individual farmers, within a controlled economic “ecosystem.” CFP is the first banking program in Greece that contributes to the rationalization of the primary sector’s production by matching primary production with demand and financing both sides at the right time with customized tools. Moreover, CFP boosts the modernization of the transactional cycle, embracing the whole production-supply chain and payment administration.

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