“O, Christmas tree, O Christmas tree,
How lovely are your branches!”
There is nothing more iconic to signal the beginnings of the Christmas season than the humble but mighty Christmas tree. Well, that and Mariah’s “All I Want for Christmas is You,” blaring from speakers pretty much everywhere.
But behind this simple and humble tree that graces many living rooms this time of the year is a $2 billion industry and a ten-year journey from seedling to evergreens. 98% of all real Christmas trees come from tree farms and about three quarters of the supply of real Christmas trees are controlled by roughly 430 larger tree growers.
350 million trees are growing in the United States annually, but only 25 million are harvested for sale. Despite the enormity of this market, majority of these trees are located in only 4 states: Oregon, North Carolina, Michigan and Pennsylvania.
The cost of a seedling ranges from $0.50 to $1 and spends the first two years of its life in a nursery. After two years, the healthy seedlings earn their place in the farm, where they spend the next 6-8 years to mature before harvesting. The lifecycle of a tree is roughly a decade! During this decade, a tree won’t make any money and does in fact becomes a financial blackhole, once we consider the cost of the land, farm machinery, labor, herbicides, fertilizers, water, etc. The whole endeavor is an exercise in patience and ability to weather the unpredictable, such as frosts, droughts, and the like.
Forecasting is also a large part of this exercise and we are talking 10 years out. Planting too much can cause an oversupply, which can cause prices to drop to below profitable levels, and planting too little could cause excess demand, which leads to higher prices.
And yet, there are many variables that cannot be accurately forecasted, especially if we look ten years out. The pandemic and inflation are those that tree growers could never have seen coming 10 years ago.
Case in point, the effects of the 2008 recession on the Christmas tree industry is still felt many, many years after. During the recession, as consumers tightened their budgets, many trees were left unharvested or unsold leading to a surplus and oversupply. Because of this, the prices of trees were greatly reduced, pushing many local farmers and smaller growers out of business. Over time, with fewer growers, there are fewer trees for sale in the market leading to higher prices overall.
The good news: Christmas tree supply has started to pick up again in recent years, so there will be more to go around.
The not-so good news: Prices will be higher due to inflation.
But hey, nothing should really stop us from celebrating the most wonderful time of the year, whether it be an artificial tree, a miniature tree or even a Charlie Brown tree, because…
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