Italy’s $4.7 billion cheese economy is under threat as extreme heat endangers the country’s cheese banks, which hold Parmigiano Reggiano wheels as loan collateral. Credito Emiliano, or Credem, has accepted these cheese wheels as collateral since 1953, storing over half a million wheels worth more than 300 million euros in vaults in Emilia-Romagna. This system supports local dairy farms by providing upfront loans against aging cheese stocks, according to fortune.com.
The process involves a Credem subsidiary, Magazzini Generali delle Tagliate, which ages the cheese wheels in warehouses in Reggio Emilia and Modena. Farmers typically receive 60% to 80% of a wheel’s value upfront, allowing them to manage cash flow while the cheese ages for 12 to 36 months. Blockchain technology now enables farmers to pledge wheels still in their own facilities, effectively doubling Credem’s lending capacity and modernizing a decades-old system, fortune.com reports.
The exposure to extreme heat extends beyond cheese banks to Italy’s vineyards, olive groves, and broader economy. Parmigiano Reggiano production totals about 4 million wheels annually, making the collateral system significant for the dairy sector’s financial stability. Economists studying heat’s impact on growth warn that climate change risks could disrupt these traditional agricultural and financial arrangements, according to fortune.com.
The vaults in Emilia-Romagna currently hold more than half a million Parmigiano wheels valued at over 300 million euros. This collateral program remains a critical financial tool for small family farms, enabling them to sustain operations despite the long aging process required for Parmigiano Reggiano, as detailed by fortune.com.