The Reason Christmas Tree Prices Have Skyrocketed

Global supply chain disruption has affected virtually every industry across the world, from apparel and cars to medical needle containers and home siding. Extreme weather events such as we saw earlier this year in Texas, and port backlogs, have exacerbated the situation for many manufacturers already struggling with the pandemic.  The latest victim of global supply chain disruption is the Christmas tree industry, according to reporting by Click Orlando

Click Orlando interviewed a grower of Christmas trees, Tom Ulsman, who has been growing them in Eustis, Florida, since 1989. He also imports Christmas trees from Michigan and North Carolina, although those tend to cost him more to acquire. Rising costs forced him to raise prices at his store, Santa’s Christmas Tree Farm, by 10%. Customers on the market for large, 12 to 13-foot trees will find them more expensive this year. If, for example, you are a fan of the Fraser fir tree, and you especially like it in an 8 to 9-foot size, you will have to pay a premium to get it. Ulsman is one of many Christmas tree farmers who have found that they have had to raise prices in this economy. 

All across the country, the price of live cut trees has been rising by an average of 10 to 15%, according to a report in the New York Times, regardless of whether the tree is real or fake. The Christmas Tree Promotion Board cautions that customers should not worry that there will be mass shortages of Christmas trees. Price rises are due to tightening supply, rather than depleting stocks. 

The industry is experiencing a combination of long-term and short-term drivers of price inflation, such as rising fuel costs, severe weather in many growing regions, and issues with trucking and labor. The summer heat wave in the Pacific Northwest affected tree growers, while flooding in British Columbia hurt imports from Canada. 

Higher prices for live trees, she said, are a result of long-term industry trends combined with short-term factors, including higher costs for fuel, trucking and labor and severe weather in some growing regions. A summer heat wave affected tree growers in parts of the Pacific Northwest, while flooding in British Columbia has affected imports from Canada.

Two decades ago, there was an oversupply of Christmas trees and that drove prices down. Farmers struggled for profitability, given that it takes eight years to a decade for a Christmas tree to mature, and forecasts pointed to declining prices. That caused many growers to leave the industry, and the pace of exits sped up during the Great Recession of 2008. Many growers turned to more profitable lines such as different tree types, or lumber for firewood delivery, as they fled the losses the Christmas tree industry was facing.

Census data obtained from the Agriculture Department shows the extent of exits in the dustry: the number of growers declined from 22,000 in 2002, to 15,000 in 2017. In that period, the number of trees harvested declined from 20.8 million to 15.1 million. The price inflation is the consequence of the diminishing supply of Christmass trees on the market, as the industry returns to profitability.

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