July 19, 2024

Liquid assets: the role of water when lending to farmland agriculture.

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Water security is crucial for the stability and growth of agricultural operations in Australia. Fluctuating water availability significantly impacts agricultural productivity and is expected to become even more critical. As a leading private credit fund manager within the agricultural sector we anticipate that the value and importance of water rights will intensify due to evolving government policies and climate conditions. Our key insights on water as an asset class, market dynamics, and policy impacts:

Long-term climate forecasts predict more frequent and severe droughts, emphasizing the need for water-efficient technologies, precision agriculture, and secure water rights to strengthen agricultural resilience. Our expertise in integrating water entitlements into security pools and structuring loans with strategic safeguards underscores our robust investment approach. We are currently reviewing a loan to acquire multiple NSW properties with significant water entitlements in the Murray-Darling Basin, structured with a forward sales contract with an institutional equity fund specifically for the water assets, to ensure a clear and timely loan repayment.

Source: BOM & ABARES

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