The Kawa fund launched in Brazil aims to raise 1 billion reais ($176 million) to provide loans to small cocoa producers. It will initially support 1,200 growers with 30 million reais. The fund responds to industry challenges and aims to improve access to financing and resources for small-scale farmers.
On Thursday, four Brazilian organizations initiated the Kawa fund, targeting a funding goal of 1 billion reais (approximately $176 million) by 2030 to provide loans for small cocoa producers in Brazil. This initiative seeks to assist approximately 1,200 small-scale cocoa growers in the Bahia and Para states with an initial loan of 30 million reais to expand their operations.
Vinicius Ahmar, the bio-economy manager at the Arapyau Institute, highlighted that small cocoa producers traditionally face difficulties in securing credit and obtaining the necessary expertise to enhance their productivity. “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,” he noted during the World Cocoa Foundation meeting in Sao Paulo.
The launch of the Kawa fund is timely as major cocoa-producing nations, such as Ivory Coast and Ghana, are experiencing significant challenges, including adverse weather conditions and the impact of illegal activities like gold mining, which have spurred cocoa price increases. Brazil itself faced a nearly 20% decline in cocoa production last year, with projections indicating further challenges ahead in 2025, according to Anna Paula Losi, head of the Brazilian Association of Cocoa Processing Industries.
The loans provided through the Kawa fund will require repayment within three years, accompanied by a six-month grace period. These funds, typically allocated for purchasing fertilizers, irrigation systems, and equipment, will carry an annual interest rate of 12%. Notably, 85% of cocoa producers in Brazil operate at the periphery of the financial system, further complicating their access to necessary financing, as stated by the country’s Agriculture Ministry.
The launch of the Kawa fund signifies a vital effort to improve the financial situation of small cocoa producers in Brazil, amid a backdrop of declining production and increasing challenges from competing nations. This initiative aims to enhance access to loans and technical assistance, thereby fostering growth and productivity within a crucial agriculture sector.
Original Source: money.usnews.com
