About
Contract Farming represents an integrated banking model, which provides financing both to commercial/processing enterprises and to individual farmers, within a controlled eco-system, using the innovative mechanism of customized contract cards.
Innovation presentation
Contract Farming offered by Piraeus bank (PB) aims at coordinating and supporting contractual partnerships between Primary Agricultural Units and Commercial / Processing Enterprises in a closed-controlled eco-system, by means of the innovative mechanism of customized contract cards.
Contractual partnership has been a traditional international practice. However, in most cases in Greece, it has been implemented without efficient management and control, resulting in waste of recourses & liquidity, inefficient cash-flow planning and irrational loans’ use.
Contract Farming, based on PB’s significant knowhow in the agri-business, puts an end to these past practices and initiates a new era in the agricultural sector, building solid infrastructures for development and forming the Greek economy’s sustainable future.
Contract Farming is the first banking program in Greece that contributes to the rationalization of agricultural production by matching primary production with demand, and financing both sides at the right time, with customized tools. Moreover, it boosts the modernization of the transactional cycle, embracing the whole production–supply chain and undertaking payments’ administration. Through this program, PB supports the vital for Greek economy agricultural sector and contributes to the economic and social development.
Contract Farming development was initially driven by the growth prospects of the Greek agricultural sector that became more relevant in times of economic crisis. All related business areas were involved in the design and implementation of the program.
So far, 75 enterprises and 13.000 farmers have participated in Contract Farming. The total approved credit lines -to both commercial and productive units- amount to 400.000.000 €.
Uniqueness of the project
Contract Farming uniqueness originates from the following aspects:
• Through this program, PB mediates between partners providing co-ordination, controlled funding and a wide network of appropriately equipped agro-retailers forming in this way, the appropriate conditions for the sustainable development of the agricultural sector and the Greek economy.
• The card linked to Contract Farming is totally customized and enables farmers to perform their purchases in a convenient and secure way, monitoring their expenses and planning their future liquidity needs. In parallel, the card serves as a control mechanism in that it is credited with a certain credit line per customer-per time period, which is securely and fully repaid upon payoff of farmer’s production by the contract partner’s working capital.
PB Contract Farming Program is considered as a disruptive innovation that radically transforms the agricultural market’s business model and further enhances the bank’s position as a pioneer in this sector.
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