In the hills of Emilia-Romagna, a bank vault houses more than half a million wheels of Parmigiano Reggiano, collectively valued at well over 300 million euros. The vault belongs to Credito Emiliano—commonly known as Credem—which has accepted young wheels of Parmigiano Reggiano as collateral for loans to local dairy farms since 1953. Now, however, extreme heat is threatening Italy's so-called "cheese banks," and economists who study the economic effects of rising temperatures warn that the exposure extends far beyond a single vault, reaching into the country's vineyards, olive groves, and broader economy.

Parmigiano Reggiano is one of Italy's most economically significant products with Protected Designation of Origin (PDO) status under European Union law, a legal framework that restricts the name to cheese produced in a strictly defined zone around Parma and Reggio Emilia according to centuries-old specifications. That protected status—and the Consorzio del Formaggio Parmigiano Reggiano, which enforces production rules and quality controls—is what gives each wheel a predictable, bankable value during its multi-year aging cycle. The same EU designation system underpins thousands of regional Italian foods, from Prosciutto di Parma to Traditional Balsamic Vinegar of Modena, several of which are produced in the same Emilia-Romagna corridor now facing intensifying heat.

A Blockchain-Backed Cheese Loan Collateral Program

After receiving wheels from dairy farmers, Magazzini Generali delle Tagliate, a Credem subsidiary, ages them in two warehouses located in Reggio Emilia and Modena. Producers typically receive 60% to 80% of a wheel's value upfront.

The process has evolved considerably since the 1950s. Blockchain technology now enables farmers to pledge wheels as collateral even while the cheese remains in their own facilities, effectively doubling Credem's lending capacity. The arrangement addresses a genuine challenge: Parmigiano Reggiano requires a minimum of 12 months to age, frequently 24 or 36 months, and small family farms cannot easily keep that volume of inventory tied up without generating cash flow. The bank bridges that gap by providing liquidity before any sales occur.

The scale of the operation exceeds the vault itself. Italy produces roughly 4 million wheels of Parmigiano Reggiano annually, and the cheese banks hold approximately 500,000 of them, Giancarlo Ravanetti, who oversees the bank's cheese warehouse business, told CNN. His warehouses handle about 2.3 million wheels per year in total.

Parmigiano Reggiano is a 4 billion-euro ($4.7 billion) industry supported by roughly 300 certified dairies, and maintaining optimal storage temperatures has grown increasingly costly. Driven by this year's record-breaking heat waves across Europe, daily energy consumption at the facilities rose approximately 30%, compelling the bank to upgrade cooling systems and boilers, add insulation, and expand renewable power generation.

Climate change is also affecting dairy farmers' milk supply. In extreme heat, cows lie down more and eat less, reducing annual milk production by up to 10%. As heat events become longer and more intense, both the quantity and quality of milk decline, ultimately pushing costs higher.

Climate Change Hits the Vineyard

The same climate pressures are materializing on a comparable timeline across Italy's vineyards. Italy is consistently one of the world's two largest wine producers by volume, alongside France, and wine is among the country's most valuable agricultural exports—meaning that shifts in harvest timing and grape quality carry national economic weight.

In Lombardy's Franciacorta sparkling-wine region, the 2026 harvest commenced on July 30—the earliest start on record—after budbreak arrived more than a week ahead of the historical average. In Sicily, growers describe an extended hundred-day picking season spanning the island's diverse microclimates, as producers carefully time each variety's harvest to stay ahead of the heat.

Coldiretti, Italy's largest farmers' association, has classified 2026 as one of the earliest harvests ever recorded nationally. The association cites record temperatures and drought that are accelerating sugar development in grapes faster than flavor can mature—a imbalance particularly detrimental to late-ripening red varieties such as the Nebbiolo grape used in Barolo production.

Some producers have begun experimenting with shade netting over vineyards—a technique originally deployed against hail—to reduce sun exposure that would otherwise strip grapes of their acidity. Coldiretti also highlighted an additional cost burden layered atop the weather: the conflict in Iran has added an estimated 250 euros per hectare in energy, fertilizer, and materials costs for wine producers this year, while export values have already declined 7% in the first four months of 2026.

Olive groves, however, have absorbed the most severe impact. Puglia and Calabria, Italy's two largest olive-oil-producing regions, have seen national output fall well below the historical average of more than 350,000 tons, landing between 270,000 and 300,000 tons for the 2025/26 season. In previous drought years, Puglia's production has plummeted by more than half in a single season. Olive oil, like Parmigiano Reggiano and many Italian wines, also benefits from EU protected-origin status, and the sector has been further strained by Xylella fastidiosa, a bacterial disease that has devastated millions of olive trees in Puglia since 2013.

Hidden Economic Costs of a Warming World

R. Jisung Park, a labor economist at the University of Pennsylvania's Wharton School and author of Slow Burn: The Hidden Costs of a Warming World, says the pattern emerging across Italy's cheese, wine, and olive oil industries aligns with a broader body of research linking heat directly to lost economic output.

A European Central Bank working paper found that the GDP impact from extreme heat is smaller in Spain and Italy than in Germany, since both southern countries are more accustomed to elevated temperatures. However, Park cautioned that a modest top-line figure can still mask substantial damage in specific sectors.

"Supply chain spillovers due to heat upstream actually lead to measurable downstream firm valuation impacts," Park told Fortune.

That dynamic is precisely what is unfolding in Emilia-Romagna, where a heat shock affecting dairy cows translates into a cost problem for a bank months later, and in Puglia, where a hot, dry spring triggers a production collapse hundreds of miles from where the olives are processed. Park noted that heat's economic toll tends to manifest through these indirect, delayed effects rather than appearing all at once—which partly explains why companies and governments continue to underprice the consequences of climate change.

The U.S. Has Its Own Cheese Caves

The concept of government intervention to shield dairy farmers from forces beyond their control is not unique to Italy. During the Great Depression, collapsing milk prices led dairy farmers to dump their own product in the streets in protest. President Franklin D. Roosevelt's New Deal responded with subsidies for farmers who reduced production, and in 1933, the government established the Commodity Credit Corporation to purchase surplus butter, cheese, and dried milk to stabilize prices.

That policy endured well beyond the Depression. Decades later, the federal government was still purchasing surplus cheese and storing it in vast underground caves in Missouri, Wisconsin, and Kansas—warehouses cool enough to preserve cheese for years without spoilage. By the early 1980s, the federal stockpile had surpassed 500 million pounds.

Italy's cheese banks address a comparable problem through a different mechanism: rather than a government buying surplus to shore up prices, a private bank lends against the cheese itself, wagering that the wheels held in its vault will retain their value by the time they are ready for sale.

This story was originally featured on Fortune.com.