Innovative Agri-Food Value Chain Financing in Greece

Abstract

This paper presents the experience of Piraeus Bank in innovative agri-food value chain financing, beginning with an answer to the question of what elements could differentiate an agri-finance model and make it considered as innovative. In nowadays, the answer should be identified in complex solutions related to the total effect of the financing, not only with respect to the borrower but also to the whole value chain in which he participates and even the local economy. As an example, the Contract Farming Financial Program offered by Piraeus Bank aims at coordinating and supporting contractual partnerships between Primary Agricultural Units and Commercial / Processing Enterprises in a closed, controlled financial eco-system.

Globalization has increased the role of internationally traded agricultural commodities in the world food economy. In addition, increased international awareness is observed regarding the importance of agriculture as a generator of income, employment, foreign exchange, tax revenues, as well as for poverty reduction and preservation of natural resources (see, e.g., Ahmed et al. 2012). Further, the increasing commercialization of agriculture, i.e., the production by agricultural households of food and raw material for the market rather than for their own consumption, links poor agricultural household to markets and increases their need for finance and credit, implying an increasing requirement for agricultural finance as a facilitator of economic development. Furthermore, consumers of agricultural products demand information not only on the availability of a food product but also about the characteristics of its production and processing activities. Therefore, the entire agri-food supply chain has become important because there is increasing public awareness and concern about the availability and safety of the food being consumed (Handayati et al. 2015). As a result, agricultural finance is related to a number of issues, including the production of agricultural commodities for the market, poverty reduction, and preservation of natural resources, food security and sustainability (Echeverria and Beintema 2009).