The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.7%* in March and 10.1%* on an annualised basis since inception.
Australian agricultural production has remained solid, with ABARES lifting its 2024–25 summer crop forecast by 7% to 4.7 million tonnes—28% above the 10-year average. Winter crop receivals during the March quarter confirmed the third-largest harvest on record. Regional outcomes were mixed: Queensland and New South Wales recorded historically strong volumes, while South Australia and Victoria faced challenges from dry conditions and frost. Western Australia improved late in the season following well-timed rainfall. These production results reflect gradual improvements in farming practices, although seasonal volatility remains a key risk.
Horticultural yields have been supported by drier weather in key growing regions. Price trends have been generally favourable, aided by increased export demand and currency weakness. Global trade dynamics remain a key source of uncertainty. The Trump tariffs have reignited concerns globally around access to key export markets and the potential for second-order impacts across commodity supply chains. We’re closely monitoring these developments for flow-on effects to borrower cashflows and commodity-linked collateral values.
Cyclone Alfred and associated flooding impacted one property within a borrower’s national portfolio. Whilst a short-term earnings impact is expected, no long-term impairment is currently anticipated, and the borrower’s business remains on track to deliver positive operating performance in FY25.
No new loans were settled in March. The Fund’s pipeline remains strong, with due diligence well progressed on a $102 million loan secured against Queensland horticultural assets. The loan, expected to settle over the next four to six weeks, has a forecast LVR of 50% and net IRR of 11% (after fees and costs).
*These returns are stated net of fees and costs
