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By Oliver Griffin
SAO PAULO (Reuters) - Four Brazilian organizations on Thursday launched a fund aiming to raise 1 billion reais ($176 million) by 2030 for loans to small cocoa growers in the South American country to assist in expanding their operations.
The Kawa fund, launched by the philanthropic Arapyau Institute, investment platform Violet, advocacy group Taboa, and impact investor MOV Investments, will initially lend some 30 million reais to 1,200 small-scale producers in the states of Bahia and Para.
Traditionally, these producers have struggled to access credit for their operations or the know-how to improve productivity, Vinicius Ahmar, Arapyau Institute's bio-economy manager, told Reuters on the sidelines of the World Cocoa Foundation's meeting in Sao Paulo on Wednesday.
"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," Ahmar said.
The fund's launch comes at a critical time for the industry, as top producers Ivory Coast and Ghana have suffered crop losses due to adverse weather, bean disease, smuggling and reduced plantations in favor of illegal gold mining, sending cocoa prices upward.
Brazil's cocoa production also fell nearly 20% last year and 2025 is shaping up to be "challenging," the head of the Brazilian Association of Cocoa Processing Industries, Anna Paula Losi, told Reuters separately at the event.
The Kawa fund will give cocoa farmers three years to pay back the loans, with an average six-month grace period, according to a statement announcing the new fund. The loans - typically used to buy fertilizer, irrigation and equipment - will charge 12% interest per year.
In Brazil, 85% of cocoa producers are on the margins of the country's financial system and struggle to access loans, the statement said, citing the country's Agriculture Ministry.
With some 80% of Brazil's cocoa production coming from small-scale farmers, the combination leads to low income and low productivity, the statement said.
The loans are exclusively intended for producers using agroforestry methods, the statement said, adding this will encourage forest conservation and regeneration.
($1 = 5.6486 Brazilian reais)
(Reporting by Oliver Griffin; Editing by Sandra Maler and David Evans)
