Italy's cheese-collateral loan system strained by extreme heat

Italy’s unique financial system, which uses wheels of Parmigiano Reggiano as collateral for dairy farmer loans, is facing increased operational pressure due to extreme heat waves across Europe.

Since 1953, Credito Emiliano (Credem) has supported the $4.7 billion Parmigiano Reggiano industry by accepting young cheese wheels as security for loans, typically advancing 60% to 80% of their value. This allows farmers to cover operational expenses while the cheese ages for the required 12 to 36 months. The bank’s vaults in Emilia-Romagna hold approximately 500,000 wheels, valued at hundreds of millions of dollars.

Rising temperatures are driving up costs, as record heat has increased daily energy consumption for climate-controlled storage by roughly 30%. In response, the bank has had to invest in upgraded cooling systems, insulation, and renewable energy. Additionally, extreme heat is impacting the production side by affecting cow output on the farms themselves.