CFP Numbers and Future Plans
Before the end of 2016, more than 240 businesses and 21,000 farmers had participated in the Piraeus Bank CFP. The total approved credit lines, to both commercial and productive units, amounted to more than €700,000,000. The range of the products covered expanded to 55 covering, among others, olives and olive oil, tobacco, cotton, grain, table and wine grapes, fodder, milk, fruits and vegetables, energy crops and organic products. These products are the “ambassadors” of Greece abroad and, with the support provided by the Program, are directed to more than 75 countries. The value of exports of enterprises and cooperatives that participated in the Program amounted to about €1.5 billion (equivalent to approximately 20 % of total Greek exports). Meanwhile, more than 14,500 people were employed in various positions in these companies.
The next step for the CFP is a double one: first, to implement a new program, the “Contract Banking Program” (CBP), and second, to extend the CFP not only to processors but also to final buyers, such as hotels and other bulk buyers.
Following the successful operation of the CFP, Piraeus Bank leveraged the acquired expertise and the commitment to increased contribution in the agri-food value chain to implement the next step. By applying the extended CBP, Piraeus Bank follows a holistic approach to the financial support of the agri-food value chain. Through the new program, the bank aims to finance the upstream and downstream activities across the agrifood value chain. More specifically, aiming at the reduction of the production cost of agricultural products, the bank offers the appropriate working capital to agricultural input supply stores, improving their access to the respective wholesale market and benefits from preferential pricing stemming from cash payment. In particular, through an automated system for ordering and financial liquidation, the bank is creating the right information technology environment so that agricultural supply stores can acquire agri-inputs timely and competitively priced. At the same time, the actual capital costs are low, as the approved credit is recycled through their sales. The challenge for the marketing chain is to allocate these benefits fairly to the rest of the participants in the chain and to ensure the rational functioning of the chain. Thus, farm products can become more competitive and also support the income of producers. The first pilot collaboration with Bayer CropScience started just before the end of 2015.
Moreover, under the CFP, the bank seeks to facilitate the promotion of the sector’s products by strengthening the financial connection between the companies and cooperatives involved in CFP and bulk buyers such as hotel units. In practice, the bank offers working capital to hotels to procure branded certified products from enterprises and cooperatives registered with the CFP. Financing is also based on a contractual basis between hotels and manufacturing companies/cooperatives. In this way, visitors and tourists enjoy on-site high-quality local products, and Greek products build a solid brand name. The next step is that visitors would seek and procure these products either locally or from their country.