The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.7%* in January and 9.9%* on an annualised basis since inception. The Fund declared a 4.0% distribution as of 31 January, which is expected to be paid mid-February.
The outlook for Australian agriculture remains positive across multiple sectors. Wheat price futures imply a steady 6.4% CAGR over the next two years (CBOT), while beef prices are expected to grow in the short term as reductions in herd sizes in major exporting nations, including the United States, tighten global supply.
In smaller sectors, almond prices are experiencing strong growth as Californian orchards face drought headwinds. Meanwhile, the Australian milk price is expected to remain relatively high and potentially increase through 2025, as domestic supply continues to decline due to farm conversions (Dairy Australia).
A key overarching factor across several agricultural sectors is the potential impact of global trade wars under a possible Trump presidency in the United States. For example, during his previous term, China imposed triple-digit tariffs on U.S. agricultural exports, driving Australian almond prices to record highs. If similar conditions were to arise again, Australian growers would be well positioned to benefit across multiple sectors. Notably, the U.S.’s three largest export markets in 2023—China, Mexico, and Canada—have already faced tariffs imposed under Trump’s administration.
There were no significant changes to the portfolio during the month, which is typical for January. The Fund maintains a healthy liquidity position (~11%) to support deployment into a growing opportunity pipeline. In particular, two substantial agricultural loans, approximately $165m total, are in due diligence and expected to settle in the coming weeks. A $64m loan secured by grazing land in Tasmania and a $102m facility secured against Queensland horticultural properties. Both loans feature modest LVRs (60% and 50%), defined repayment exits via full or partial property sales and forecast net investor IRRs of 10–11%.
*These returns are stated net of fees and costs
