Credito Emiliano faces rising costs to protect cheese collateral from heat

Extreme heatwaves in Italy are impacting the banking sector, specifically regarding the collateral held by Credito Emiliano (Credem). For over 70 years, the bank has accepted unmatured wheels of Parmigiano Reggiano cheese as collateral for dairy farms, allowing farmers to access 60 to 80 percent of the cheese's value upfront.

Due to record-breaking temperatures, the bank has faced a 30 percent increase in energy consumption to maintain the climate-controlled vaults required to preserve the cheese. To protect the approximately 500,000 wheels stored in Northern Italy, Credem has been forced to upgrade cooling systems, insulation, and boilers, while also investing in renewable power.

Beyond storage costs, the heatwave is affecting milk production, as dairy cows in the region eat less grass during extreme heat, reducing the supply available for cheese making.