Econ Edge: The Economic Week

Dec. 20, 2004 — -- The shortened holiday week has a few shining economic reports that the markets will be watching. Wednesday's look at November consumer spending and income will get a lot of attention as the holiday retail season comes to a close.

Filled with the holiday spirit, we decided to forgo our routine and dig into an industry that lends some sparkle to the season. Rick Dungey, Public Relations Manager for the National Christmas Tree Association, helped us size up the American Christmas tree industry.

ABC:How big is the Christmas tree industry in the United States? Is it growing?

Dungey:Depends on how you measure. In terms of number of trees harvested and purchased, typically between 25 million and 30 million, although some of those would come from Canadian growers.

In terms of retail market value, typically about $800 million each year spent by U.S. consumers on real Christmas trees. And note, this is in about a four-week time span; the other 48 weeks are zero. In terms of producers, the USDA National Ag Stats Service reports that just over 21,000 farms in the United States are producing conifers for the cut Christmas tree market on approximately 450,000 acres. It is estimated that 100,000 people are employed by the fresh Christmas tree industry (full and part time).

ABC:Has the price of a Christmas tree gone up significantly this year? What about over the past 10 years?

Naroff: We don't measure or track price really. It's impossible to tell consumers "Here's what you can expect to pay for a real tree this year" because prices vary greatly by many factors and can change day to day in many places.

Some factors that influence price: what the particular market is willing to pay, species, distance it had to be shipped, location of purchase (i.e. retail lot, choose-and-cut farm, nonprofit group, etc.), size of tree, grade of tree, etc.

One example: if you bought a 7-foot grade 1 Noble fir at a choose-and-cut farm in Oregon, you would probably pay a much different price than if you bought a pre-cut 7-foot grade 1 Noble at a retail lot in Miami. That's why it's pointless for us to say "here's what trees cost this year" or something to that effect.

We have, however, tracked for the past three years what consumers report paying for their real Christmas tree and from that compute a national mean average. In 2001, the mean average price paid was $31.90. In 2002, it was $32.90. In 2003, it was $33.80.

ABC:What does it take to grow a Christmas tree? (How many years? How many people to tend them?)

Dungey: Christmas trees are much like any other crop -- corn, wheat, pumpkins -- they have to be planted in a field in the spring and harvested in the fall.

The main difference is the length of time between planting and harvesting. While it can take as little as four years or as long as 15 years, the average is seven to 10 years to get a tree from seedling first planted to market height.

Farm sizes can range from five acres to thousands of acres. Typically, a grower can produce about 1,000 trees per acre, varying much depending on terrain, soil type, climate and species.

In 2004, Christmas tree farmers in North America planted about 73 million new seedlings for the Christmas tree market. They won't harvest and sell those however for another seven to 10 years. This is the factor that can be the most difficult to account for in this industry.