Description of the Contract Farming Programme

The Contract Farming Programme being implemented by Piraeus Bank is a contemporary initiative. It forms part of the Bank’s wider strategy to support and modernise the agricultural sector, so it can grow into a strong pillar that fosters the growth of the Greek economy. The Programme covers the entire production, supply and processing chain of agricultural production, by supporting carefully planned, mutually beneficial partnerships between farmers and businesses that trade in, process and sell agricultural products. Piraeus Bank’s role is that of coordinator and financier.

The Contract Farming Programme

  • Supports agricultural production by guaranteeing the necessary liquidity for Greek farmers, so that not only can they continue to produce but, thanks to better planning of their inputs, can achieve better prices, improve growing conditions and guarantee a better quality end product
  • Guarantees the necessary raw materials for businesses so that they can plan their payments and keep their outlays in order, while also reliably implementing product delivery agreements and clauses they have signed
  • Generates business at the level of local communities and markets in terms of agricultural inputs, agricultural supplies and energy, which will provide a significant injection of liquidity to those markets due to the immediate payment of all the necessary agricultural production inputs

The Bank’s role

The Bank enters into a loan agreement on two levels:

  • Initially with the buyer of the crop or animal production. It approves working capital to pay for the raw materials
  • And with farmers who have or will sign a contract with the buyer. A credit line is provided for withdrawals – purchases using the Contract Farming Card
  • Contracts are signed with agricultural supply companies - agricultural supply stores and petrol stations to install a POS for purchases using the Contract Farming Card

A successful international practice

Contract Farming began in the early 20th century in the industrial countries of Western Europe and North America, and primarily related to the production and processing of fruit and vegetables.

During the second half of the 20th century it spread to poultry and then later to pig farming.

In Brazil, 75% of poultry is produced under contract farming, while in Vietnam 90% of dairy products are produced in the same way. Contract farming production figures are higher when referring to export goods such as cocoa, coffee, cashew nuts, fruit and vegetables. The same holds true for commodities such as wheat and rice. In Vietnam 40% of rice is grown under contract farming.