The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.8%* in May and 10.1%* on an annualised basis since inception.
The Bureau of Meteorology’s latest outlook indicates a neutral ENSO phase persisting through winter 2025, supporting stable seasonal conditions across most agricultural regions. Combined with firm commodity prices, this creates a constructive environment for borrower performance and near-term deployment of capital. The Fund has minimal exposure (6% allocation) to the dry conditions affecting parts of South Australia and Victoria, with the majority of borrowers currently well-positioned to generate solid operating profits over the year ahead.
Persistent global macro volatility, including fluctuating inflation and ongoing supply chain rebalancing, continues to highlight the defensive qualities of Australian and New Zealand agriculture. The sector’s role as an inflation hedge, underpinned by non-discretionary demand for food and fibre, is drawing increasing interest from global capital allocators, particularly on the equity side.
Whilst no new loans settled in May, capital recycling activity increased. The Fund received full repayment from Farm Pride, its longest-standing loan, following a successful refinance with a major Australian bank. Originally funded in 2019 after Avian Influenza disrupted operations, the facility supported the business through multiple industry challenges. With profitability restored, the borrower has returned to a major bank, demonstrating the importance of non-bank capital in providing transitionary support against quality real assets.
The Fund remains well-positioned to redeploy capital, including into a near-term $100m opportunity in Queensland horticulture and a broader $250m pipeline of attractive agriculture land-backed credit opportunities.
*These returns are stated net of fees and costs
