A new fund in Brazil aims to raise 1 billion reais ($176 million) to provide loans to small cocoa producers, assisting their growth and addressing credit access challenges. The Kawa fund, launched by four organizations, will lend 30 million reais to 1,200 farmers, responding to industry challenges and enhancing productivity in cocoa production.
On Thursday, four Brazilian organizations announced the establishment of a fund with a goal to raise 1 billion reais (approximately $176 million) by 2030. This initiative aims to provide loans to small cocoa growers in Brazil, facilitating their operational expansion. The Kawa fund is a collaboration among the Arapyau Institute, investment platform Violet, advocacy group Toboa, and impact investor MOV Investments. Initially, it will allocate around 30 million reais towards lending to 1,200 cocoa producers in the Bahia and Para states.
For many small producers, accessing credit and improving productivity remains extremely challenging. Vinicius Ahmar, the bio-economy manager of the Arapyau Institute, emphasized the difficulties faced by smallholders in securing financial assistance and technical support. He stated, “Most of the production is in the hands of small producers and producers on small holdings … in which they are unable to invest and they do not have access to technical assistance.”
The launch of the Kawa fund coincides with critical industry challenges, particularly as top cocoa producers like Ivory Coast and Ghana are experiencing crop losses due to unfavorable weather, disease, and illegal mining activities. Furthermore, Brazil’s cocoa production has declined by nearly 20% last year, with an uncertain outlook for 2025, according to Anna Paula Losi, the head of the Brazilian Association of Cocoa Processing Industries.
The Kawa fund enables cocoa farmers to repay loans over three years, starting with six months of grace. Funds will primarily be used for essential purchases, including fertilizers, irrigation systems, and equipment, drawing a 12% annual interest rate. Notably, approximately 85% of Brazilian cocoa producers operate outside the financial mainstream, highlighting their ongoing struggles to obtain credit.
Given that around 80% of Brazil’s cocoa production stems from small-scale farmers, this economic imbalance significantly impacts their income and productivity levels.
In summary, the Kawa fund represents a critical intervention aimed at improving the financial viability of small cocoa producers in Brazil. By offering access to vital loans and technical assistance, this initiative addresses longstanding barriers faced by smallholders, while simultaneously responding to broader industry challenges. The emphasis on supporting small-scale farmers is essential for sustaining Brazil’s cocoa production and enhancing economic stability for those involved in this sector.
Original Source: money.usnews.com
