Last week, we considered the impact of Oregon’s drought and the 2008 recession on this year’s Christmas trees. We saw how shipping slowdowns and wait times in LA hit artificial trees. But there is more.
Starting with a seedling and ending with a 6-footer, we need to follow the money path of a Christmas tree.
The Life of a Christmas Tree
Quarter Pine Farm grows Christmas trees. They and 15 thousand others (sort of) like them are the source of close to 25 to 30 million real Christmas trees every year. While 15 different varieties were possibilities, it is most likely that you bought a Fraser fir with a $75 or so price tag.
It was 10 years old.
The life of a Christmas tree begins as a seedling that timber firms like Weyerhaeuser sell for 50 cents to a dollar to farmers. Next comes the two years of growth in the nursery and then a 6′ x 6′ plot in the field. After that we have to fast forward 8 to 10 years to get our 6-footer. During that decade or so, the tree soaks up money while it generates none. Farmers need to pay for their mortgages, equipment and upkeep, maybe irrigation, labor, and even some harvesting helicopters.
Then, at this point, the trees get a height and quality grade and go to market or the market comes to them. Those that leave are cut, shipped to close by and distant distributors and retailers. The ones that remain, called U-Cuts, tend to come from smaller farms, are more expensive, and attract families looking for a shared memory.
You can see that the vast amount go to wholesalers:
Our Bottom Line: Competitive Market Structures
Typical of produce markets that range from strawberries to soybeans, most of the supply comes from the large farms. For Christmas trees, the 434 largest farms provide approximately 75 percent of the supply. Typical of the big ones, Oregon’s Holiday Tree Farms harvests a whopping one million trees in 30 days. Having paid close to $35 a tree, a West Coast Home Depot could get its shipment in 3 to 4 days. Meanwhile, two-thirds of that supply comes from four states. In size order, first we have Oregon and North Carolina. Then, in the third and fourth spot, Michigan and Pennsylvania.
Below, although the numbers are four years old, do keep in mind that it takes close to 10 years to grow a tree:
Looking back along that money path that took as much as ten years to navigate, the tree began as a dollar seedling. As a mature tree, the price jumped to $35 and finally, we paid $75.
Especially because of the growing time during which the tree is solely an expense, it makes sense that the large firms dominate the market. Thinking of competitive market structures, an economist would say we have an oligopoly in which big farms have some power. However, fires, drought, and shipping woes surely are diminishing their clout.
My sources and more: Again, I thank The Hustle for sharing the fun facts about the life of a Christmas tree. From there, the NY Times, ABC Action News, and The Washington Post had up-to-date stories.
