Merricks Capital Agriculture Credit Fund Portfolio and Market Update – April 2024

The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.8%* in April and 10.2%* on an annualised basis since inception.

The 2024 outlook for the Australia and New Zealand’s agricultural sectors is growing in confidence and benefiting from improved seasonal conditions and reduced input costs. Despite lower agricultural commodity prices compared to the 2022/23 highs, positive farm margins are expected across key sectors, particularly in grazing, mixed-farming and dairy production. The challenges for the sector continue to be a tight labour market, but backpacker visas picked up in 2023 (Home Affairs), and 2024 is expected to have a further uptick. The demand for capital continues to be from businesses seeking to acquire additional farming properties and achieve efficiencies of scale or operations via capital investment.

Our investment strategy remains focused on senior lending secured by real property in the agricultural sector at an LVR between 50-65% and generating 5-7% above the risk-free rate. Cash on hand at the end of the month impacted on Fund performance (estimate 5bps) with the Fund holding 10% cash in anticipation of settlements scheduled for early May.

*These returns are stated net of fees and costs