The Kawa fund has been launched to raise 1 billion reais ($176 million) for loans to small cocoa producers in Brazil. It aims to support approximately 1,200 farmers initially with a focus on enhancing productivity. The funding initiative is timely as Brazil’s cocoa production is facing challenges, including significant declines. Loans will be available with favorable terms and a structure designed to support the agricultural community.
Four Brazilian organizations have initiated the Kawa fund, aiming to raise 1 billion reais (approximately $176 million) by 2030 to provide loans to small cocoa growers in Brazil. The fund, launched by the Arapyau Institute, investment platform Violet, advocacy group Toboa, and impact investor MOV Investments, will start with an initial loan of about 30 million reais to support 1,200 small-scale producers in Bahia and Para.
Traditionally, small producers face challenges in accessing credit and acquiring technical knowledge to enhance productivity. Vinicius Ahmar, the bio-economy manager at the Arapyau Institute, highlighted that most cocoa production relies on small producers who lack investment opportunities and technical assistance.
The launch of the Kawa fund is timely, given the difficulties faced by top cocoa producers in Ivory Coast and Ghana, which have experienced crop losses from adverse weather, disease, and illegal activities. Brazil’s cocoa production has also declined by nearly 20% last year, prompting concerns about the industry’s future, as noted by Anna Paula Losi from the Brazilian Association of Cocoa Processing Industries.
The loan structure allows cocoa farmers three years for repayment, including a six-month grace period. Loans will have a 12% annual interest rate and are intended for purchasing fertilizers, irrigation systems, and equipment. The statement mentioned that 85% of cocoa producers in Brazil are financially marginalized and struggle to secure loans.
With small-scale farmers contributing to 80% of Brazil’s cocoa production, this funding initiative aims to increase both income and productivity within the sector.
The Kawa fund represents a pivotal initiative to boost Brazil’s cocoa industry by providing vital financial support to small-scale farmers. By addressing the challenges of access to credit and technical assistance, the fund aims to enhance productivity and incomes for producers, especially in the face of rising cocoa prices due to global market fluctuations. This venture highlights the importance of financial inclusion for small producers in Brazil’s agricultural landscape.
Original Source: money.usnews.com
