Four Brazilian organizations have launched a fund with the goal of raising 1 billion reais ($176 million) by 2030 to provide loans to small cocoa growers in Brazil, helping them expand their operations.
The Kawa fund, created by the philanthropic Arapyau Institute, investment platform Violet, advocacy group Toboa, and impact investor MOV Investments, will initially offer approximately 30 million reais to 1,200 small-scale producers in Bahia and Para.
These producers have traditionally faced challenges in accessing credit and acquiring the knowledge needed to enhance productivity, as noted by Vinicius Ahmar, bio-economy manager at the Arapyau Institute.
"Most of the production is in the hands of small producers on small holdings who cannot invest and lack access to technical assistance," Ahmar explained.
The fund's launch is timely, coinciding with difficulties faced by major cocoa producers like Ivory Coast and Ghana, which have experienced crop losses due to adverse weather, diseases, smuggling, and reduced plantation areas due to illegal gold mining, driving cocoa prices upward.
Brazil's cocoa production also fell nearly 20% last year, and the outlook for 2025 appears challenging, according to Anna Paula Losi, head of the Brazilian Association of Cocoa Processing Industries.
The Kawa fund will allow cocoa farmers three years to repay the loans, with an average grace period of six months. The loans, typically used for purchasing fertilizer, irrigation, and equipment, will carry an interest rate of 12% per year.
According to the country's Agriculture Ministry, approximately 85% of cocoa producers in Brazil are marginalized within the financial system and struggle to access loans. With around 80% of the nation’s cocoa production stemming from small-scale farmers, this situation contributes to low income and productivity among them.