Credito Emiliano accepts wheels of Parmigiano Reggiano as collateral. A warming climate is putting that unusual system to the test.
Two things that don’t mix very well: heat and cheese — unless we’re talking fondue.
Europe is experiencing its fifth heat wave since May, with temperatures in parts of the continent hitting the triple digits. Rising temperatures across the region are pushing producers to rethink how — and even where — they operate. Sweltering heat is also causing trouble for Italy’s cheese economy, where wheels of Parmigiano Reggiano are held as collateral.
Marketplace’s Nova Safo spoke with Catherina Gioino, news editor at Fortune, who recently wrote about this unusual system.
The following is an edited transcript of their conversation.
Nova Safo:So cheese banks, say more.
Catherina Gioino: Yeah, Italy has cheese banks. Around 500,000 wheels of our great Parmigiano Reggiano is located in a cheese bank in Italy.
Safo:When we say bank, you really mean bank, don’t you?
Gioino:I do. I mean Credito Emiliano, which is known colloquially as Credem, one of the major bank systems in all of the country, and they have again around $380 million or $325 million euros worth of cheese located in two warehouses.
Safo:And that’s used as collateral to give farmers money. How does that system work?
Gioino:Yeah, it’s blockchain-backed cheese loan collateral. So since the 1950s, farmers obviously need money to a pay for their OpEx [operating expense] — anything from energy usage, from labor, from feed.
But a lot of the cheese needs at least at a minimum 12 months to age. If not, people try to keep it for 24 to 36 months. And again, you can’t really have that much, let’s say, inventory without the money. So they would go and ask the banks to offer them any kind of collateral, and then we get around 60 to 80% of the value upfront.
Safo:So now we have climate change and back-to-back heat waves, year after year. How is that complicating this whole system?
Gioino:The bank is trying to upgrade their cooling systems as we speak, but it is causing the value of the cheese to go downhill. And that’s not the worst part here. It also affects the actual ingredients made into the cheese.
Cows obviously produce milk, and when it gets hot outside, they’re less likely to go roam around and eat. They’re more likely to lie down, and that reduces the quality and quantity of the milk. I’ve spoke to some researchers, they found that there’s a 10% drop in quality and quantity, and that’s only going to get worse as the weather gets hotter.
Safo:You know, a lot of times climate change consequences can be difficult to grasp. Do you think that’s changing with these kinds of very out in the open and in plain sight consequences that we’re now seeing? Like the cheese bank, like the various agricultural areas of Italy that are suffering, and in other parts of Europe, or do you think there’s still, you know, the public still is trying to grasp it?
Gioino:It’s more of a question of, is there political willpower in the first place to institute any kind of change, right? So, I mean, on the the public observational side here, people are, you know, buying air conditioners. There’s a reason why Italy, for example, receives more days out of the year than Germany of high extreme heat, and there are less deaths in Italy than there are in Germany. It’s because they are more adapted, or the people have adapted in a better way, let’s say, to extreme heat. And that includes buying air conditioners, which have been largely seen as a American invention, let’s say.
And on the grand scheme of things, when you go to the larger corporations, you go into the larger government. You do have Credito Emiliano, for example, putting more money and investing more into the cheese banks to improve their cooling systems. You have the Italian government trying to look at other forms of energy production and energy means to increase the infrastructure in the first place.
When it comes down to the United States, well, you have different kinds of administrations who might think of energy in different ways. It’s more so a political willpower question than it is a you know person to person basis.
