The Kawa fund, launched by four Brazilian organizations, aims to raise 1 billion reais ($176 million) by 2030 to provide loans to small cocoa producers. With an initial 30 million reais earmarked, the fund seeks to empower local farmers affected by financial constraints and improve productivity. The initiative is timely as Brazil faces declining cocoa production amidst broader industry challenges.
On Thursday, four Brazilian organizations initiated the Kawa fund, with the goal of raising 1 billion reais (approximately $176 million) by 2030. This fund is specifically designed to provide loans to small cocoa producers, aimed at expanding their operations across Brazil. The collaborating entities include the Arapyau Institute, Violet, Toboa, and MOV Investments, with an initial lending commitment of 30 million reais to support 1,200 small-scale producers in Bahia and Para.
Historically, small cocoa producers in Brazil have faced significant challenges in accessing credit and acquiring the necessary expertise to enhance productivity. Vinicius Ahmar, the bio-economy manager at the Arapyau Institute, emphasized this issue during the World Cocoa Foundation’s meeting, stating that many small producers lack investment capabilities and technical support.
The launch of the Kawa fund is timely, considering the current difficulties faced by major cocoa producers like Ivory Coast and Ghana, which have experienced crop losses from adverse weather, disease, and illegal gold mining. Additionally, Brazil’s cocoa production declined nearly 20% last year, leading to concerns about future crop performance, as noted by Anna Paula Losi from the Brazilian Association of Cocoa Processing Industries.
Under the terms of the Kawa fund, cocoa farmers will have three years to repay their loans, which will come with an average six-month grace period. These loans, typically aimed at purchasing fertilizer, equipment, and irrigation, will incur a 12% interest rate per year. The fund’s statement highlights that 85% of cocoa producers in Brazil operate outside the financial system, hampering their access to necessary funding, as reported by the Agriculture Ministry.
With approximately 80% of Brazil’s cocoa production attributed to small-scale farmers, the challenges of low income and productivity for these individuals underscore the importance of the Kawa fund in transforming the industry.
In conclusion, the Kawa fund represents a significant effort to bolster support for Brazil’s small cocoa producers, who have historically faced financial and operational challenges. By providing structured loans and technical assistance, this initiative aims to improve productivity and income for a critical segment of the agricultural sector. Given the current pressures within the global cocoa market, the establishment of this fund may offer a vital lifeline to Brazil’s cocoa industry.
Original Source: money.usnews.com
