Kawa Fund: A New Initiative to Support Small Cocoa Producers in Brazil

The Kawa fund aims to raise 1 billion reais ($176 million) by 2030, to support small cocoa producers in Brazil with loans. It plans to initially lend 30 million reais to 1,200 farmers. The initiative addresses financial accessibility challenges faced by these producers in light of declining cocoa production globally.

On Thursday, four Brazilian organizations initiated the Kawa fund with the goal of raising 1 billion reais (approximately $176 million) by 2030. The purpose of this fund is to provide loans to small cocoa producers across Brazil, thereby aiding the expansion of their agricultural operations. Initial funding will allocate roughly 30 million reais to support 1,200 small-scale cocoa growers in the Bahia and Para states.

Vinicius Ahmar, the bio-economy manager at the Arapyau Institute, highlighted the challenges faced by these producers, stating that they often lack access to credit and technical knowledge to boost their productivity. At the World Cocoa Foundation’s meeting in Sao Paulo, he underscored the precarious situation of small producers who are unable to invest adequately due to financial constraints.

The launch of the Kawa fund is particularly timely as international cocoa producers like Ivory Coast and Ghana are facing declining output due to adverse weather conditions, diseases, and illegal activities, which have increased cocoa prices. Brazil itself experienced a nearly 20% decline in cocoa production last year, with anticipated difficulties ahead, according to Anna Paula Losi of the Brazilian Association of Cocoa Processing Industries.

The fund offers a three-year repayment period for loans with a six-month grace period. With an interest rate of 12% per annum, the loans will typically help farmers purchase essential resources such as fertilizers, irrigation systems, and equipment. The fund aims to assist the 85% of cocoa producers who struggle to access financing, as documented by the Agriculture Ministry of Brazil.

The establishment of the Kawa fund marks a significant initiative to support small cocoa producers in Brazil, particularly amid ongoing challenges in the industry due to declining production in leading cocoa countries. By facilitating access to loans and technical assistance, the fund aims to enhance productivity and income for Brazilian cocoa farmers, thereby contributing positively to the nation’s agricultural economy.

Original Source: money.usnews.com