A Journey of a Thousand Miles Begins With ... Too Much Luggage

The Bloomberg news wire service moved a delightful story yesterday, demonstrating just how fabulous -- and valuable -- Parmigiano Reggiano cheese really is! A regional bank is accepting tons of this cheese as collateral for loans to producers, apparently a longstanding practice in the area.

According to Bloomberg, the regional bank Credito Emiliano SpA in the Emilia Romagna region of Italy, is holding 17,000 tons of this fabulous cheese, also known as "the pungent gold prized by gourmands around the world."

Says Bloomberg, "The regional bank is accepting authentic parmesan as collateral for loans, helping it to keep financing cheesemakers in northern Italy amid the worst recession since World War II. Emilia Romagna-based Credito Emiliano’s two climate-controlled warehouses hold about 440,000 wheels worth 132 million euros ($187 million US)."

The story continues: “This mechanism is our life blood,” said Giuseppe Montanari, 65, a cheese producer and dealer who uses the loans to buy milk. “It’s a great way to finance our expenses at convenient rates, and the bank doesn’t risk much because they can always sell the cheese.”

Says Bloomberg: "So precious is the cheese that each 80-pound wheel, worth about 300 euros, is branded with a serial number so it can be traced if it is stolen. Thieves tunneled into one warehouse in February and made off with 570 pieces before they were apprehended by police. “Thank heavens we caught the robbers before they grated it,” said William Bizzarri, 58, who manages the cheese vaults."

"Nestled in the valleys of Italy’s Emilia Romagna region, southeast of Milan, Credito Emiliano has been using parmesan as collateral since 1953, entrusting management of the cheese to a unit called Magazzini Generali delle Tagliate,'' continues the wire story.

"The bank offers loans for as long as 24 months, equal to the time it takes the parmesan to age, at the euro interbank offered rate, plus 0.75 percent to 2 percent, Bizzarri said. The bank gives producers as much as 80 percent of the value of the product, based on current market prices," says the story.

According to Bloomberg, the bank considered taking prosciutto ham, another of the region’s specialties, and olive oil as collateral but such products are harder to store and brand, Bizzarri said. “It’s easier to steal or replace them,” he said.

Emilia Romagna is the only area in the world legally allowed to use the “parmigiano-reggiano” name for the hard, dry skim milk cheese that was first made in the region around 1200. Sales of parmesan equaled 1.54 billion euros in 2008, 25 percent from exports, according to the producer’s association.

Producer prices for parmesan averaged 7.27 euros a kilogram in July, down from 7.49 euros in January, according to data from the Parmesan Producers Association in Reggio Emilia. Prices peaked at 9.36 euros a kilo in January 2004, according to Bloomberg.