How many people think about Christmas trees before November? Not me. But some people work and think about them for 12 months, Christmas tree farmers! I will go over Christmas trees from seed to sold in this blog post.
Not every tree can be a Christmas tree. a Christmas tree needs to have certain features. The most common Christmas trees are fraser fir, scotch pine, balsam fir, white pine, and norway spruce. Scotch pine is the most common Christmas tree species.
The difference between trees is size and maintenance. The taller a tree is, the more maintenance the tree needs. Some trees might max out at 8 feet tall. They need less work than a tree that is 15 feet tall.
Every tree starts out as a seed. The seeds do not start out with the farm. Seeds start at a nursery, and they grow for 3 or 4 years. The nursery grows the seed into a tree that is about 1-2 feet tall.
The Christmas tree farms buy the 1-2 feet tall stump from the nursery. The cost of a stump ranges from $0.30 to $1 per stump. They will buy ~200 per acre. Then, the farm has to plant the stumps into the ground and take care of them.
The farm needs to grow the tree to 7-8 feet tall. The tree will grow a foot each year. They need to grow the tree and maintain it.
For a Christmas tree to grow, the farms need to give it water. The amount of water a tree needs depends on its size and age. The older and taller a tree is then the more water it needs. The amount of water gets measured in acre-inches. One acre-inch is over 27,000 gallons.
During the first two years, a tree needs 1 acre-inch of water. Then, for years 3 and 4, the tree needs 4 acre-inches of water. In the 5th year, trees need 10 acre-inches of water. Then, in years 6 and 7, a tree needs 18 acre-inches of water. Finally, in the 8th year, a tree needs 18+ acre-inches of water.
The cost of the water depends on the location of the farm.
On a farm, there are several types of expenses. Farms will spend most of their money on maintenance such as shearing and weed control. Then, costs related to harvesting activity: cutting, cleaning, baling, and loading.
Christmas trees need to be grown in certain climates. They cannot be grown in any random spot. The trees need flat land to grow.
The cost to buy the land depends on location. A farm in Santa Cruz, CA, will cost more than a farm in North Carolina.
Labor is a variable cost. The cost of wages depends on the location of the farm and the experience of the workers.
Employers base pay on experience. Someone that has 10 years of experience will make more than someone with 5 years of experience. Cost of living factors into wages. The higher the cost of living then the higher the wages.
The farm needs to keep the trees alive. Maintenance involves shearing, mowing, watering, and greening the trees.
Farms have fixed costs. These expenses are cleaning, bailing, hauling, and loading.
Some tasks can get done by hand. But many tasks need tools to get done. The tools are a fixed cost because they get purchased once.
The farm needs tools to cut the grass, shear, color, bale, water, and plant.
Farms have different options for shearing. They are hedge trimmers, handheld knives, or rotary cutting heads.
The expenses for the trees can get broken down per tree. The site preparation, which is before planting, is $0.10 per tree. The planting of the trees is $0.12 per tree.
Once the tree gets planted, the farms need to spend money to grow and maintain the trees. The farms need to mow the grass, which costs $0.04 per tree, weed control is $0.04 per tree, and clean up at $0.12 a tree.
If a farm has 200 trees per acre, the expenses per acre are $128.
The three methods for selling Christmas Trees are wholesale, choose-and-cut, and retail.
For a farm to sell trees wholesale, they would need to sell their trees to another business. The business would sell to consumers.
Businesses might pre-order trees. They buy trees that are still growing for the future. A business might reserve 5-year\-old trees to own them in three years. Pre-orders allow farms to pay for the growth of trees. The other option is to fund the growth by waiting to sell adult trees.
A farm might decide to sell with the choose-and-cut method. The people visit the farm and choose their own tree to cut down themselves.
A choose-and-cut needs extra maintenance for consumers. Consumers need to get around without issues. A farm needs to hire more employees to assist consumers on the farm. When consumers are on the farm cutting their trees, that can lead to liability for the farm. The employees assisting the consumers will help prevent any issues.
The retail method is when farms are selling the trees direct to consumers. Some farms might have their own retail lot or sell them on the side of the road.
The revenue generated from trees gets determined by size and type. Different trees need different care. Some trees may need more care than others. While the trees that may need more care might grow more, they cost more to grow. The higher cost means that the profit margin gets cut. A bigger tree does not mean more money.
Some farms might make wreaths and sell them. Similar to trees, they get priced based on their size. The price of a wreath can range from $20 to $1000.
The choose-and-cut sales method generates between 4-15% more revenue. When broken down by trees, the scotch pine generates 2-3% more revenue. The fraser fir generates 10-15% more revenue. The higher rate of return gets attributed to the demand for the tree.
In the wholesale method, the farm's responsibility for the trees gets extended. For choose-and-cut trees, once the tree gets cut, baled, and loaded, the farm is not responsible. When selling trees wholesale, a farm must transport and deliver the trees. These tasks are extra work that cut into the profits for the farm. The farm has to spend time and money getting the trees to the buyer.
On December 26th, people do not want to buy trees. The farms might have some uncut trees. What do they do with them?
The trees that do not get bought will get ground down and used as mulch. This means that those trees that did not sell will get used to help the new trees grow and get sold.
A few trees might get sold to the zoo. The zoo will break down the trees and feed them to the animals.
Many people do not want to deal with getting a real Christmas tree every year. These consumers buy a fake tree. The trees get made with plastic. Although, since 2007, sales of artificial Christmas trees have been going down.
Some animals and bugs kill Christmas trees. At 200 trees an acre, some trees will end up getting eaten. A farm can protect trees from bugs and animals by keeping up the maintenance.
After the tree is not worth selling, the farm needs to dig it out and plant a new one. Which costs time and money.
There is more liability on a choose-and-cut farm. The risk of injury is higher if consumers cut down their own tree.
The farms do not want someone to hurt themselves when cutting down a tree. To reduce the risk of injury, the farm needs to hire extra employees. These employees keep an eye on the people and trees and help out if needed.
After cutting the tree and bringing it home, consumers need to take care of the tree to make it last. Farms could create kits to make maintenance easier for consumers. The kits could contain instructions on maintenance. The kits could have a schedule when the tree should get watered to prevent over-watering. Another idea would be to add small packets of fertilizer for consumers to add to the water.
Many people consider buying a Christmas tree an experience. As opposed to purchasing an item. A farm could add to the experience for families. They can sell hot chocolate. Add cardboard cutouts for kids to take pictures. They could sell shirts and stickers. Which would remind families of the farm throughout the year.
The average person only thinks about Christmas trees in November and December. But in any business, it is important to stay top-of-mind for the customer. A Christmas tree farm could show consumers their work throughout the year to stay on their minds. They could collect emails from consumers then start an email list and blog. Each month they could document the work they are doing to show consumers. Every month when a consumer sees the email, they will be thinking about the farm.
The farm needs to give an incentive for people to join the email list. The incentive will get them to come back to the farm. They could offer exclusive email list discounts.
A Christmas tree needs lights and ornaments. Some consumers might want to buy the lights with their trees. Farms could sell lights that fit well with the trees. Lights are nonperishable. The same light get sold every year.
The farm could sell their own Christmas tree ornaments. The ornament will help stay top-of-mind for families. Buying the ornament might give a family a sense of brand loyalty. When a family buys an ornament, they are more willing to come back. They do not want to have a random ornament from a farm they went to once. The ornament might give them the incentive to go back to the farm more than once.
Some people want a tree but might not want to deal with the tree. Farms can offer a subscription to have people pick up the tree. The consumers would be paying to have less to worry about.
The next tier for the subscription is driving the tree to the house and leaving it at the door. They do not have to deal with going to the farm.
The most expensive tier would be driving the tree to the house. Then, they set the tree up for the consumer. The consumer has nothing to deal with for the last tier.
The farm might add an option to have the tree pre-decorated.
The farm could ask people in October or early November if they want to renew their subscription.
The farm could take pictures of all the trees and create their own store. Consumers can pick trees from the website and have them delivered.
One issue that might arise from the e-commerce store is that people might order from around the world. This is an issue because shipping a live Christmas tree might get expensive. At the same time, if there is a shipping error, the tree might die in transit.
Every year the Rockefeller Center in New York City displays a Christmas tree for the season. People submit their trees to become the Rockefeller Christmas Tree. The tree that got displayed in 2019 was first submitted in 2009. They waited 10 years. That tree was 77 feet tall. The owner started to grow it in 1959. Many of the trees for the Rockefeller Center are norway spruce. At the retail price, someone would pay $75,000 for it.
The lights on the tree get powered with solar panels. The tree had 50,000 lights.
After the Rockefeller Center gets rid of the tree, it gets donated to Habitat for Humanity to become a house.
In 2019, the average price of a Christmas tree was $65. For 2020, the average price went up to $75. The increase in expenses led to higher prices. Some farms had to shut down. They might have had some trees die at that time. The farms need to make up for those losses by raising prices.
People were still willing to pay the higher price. Consumers were trying to buy trees even earlier than usual in 2020. On an average year, Christmas trees start getting sold the weekend before Thanksgiving. Then, the farms get sold out around December 23rd.
But in 2020, consumers were looking to buy trees at the beginning of November. This caused the farms to start selling out around December 15th.
Choose-and-cut farms were more popular than in previous years. People were looking for an excuse to leave the house. Choose-and-cut farms are in the mountains. People could have their social distance while getting a tree. The choose-and-cut farms inherited consumers from farms that were unable to open.
Farming Christmas trees takes patience. Anyone looking to make money within the next two years should avoid Christmas trees.
Retail is the riskiest selling method. The other selling methods allow farms to keep uncut trees. In retail, a farm has to cut the trees before selling them. If those uncut do not get sold then, they lose them. Wholesale and choose-and-cut allow farms to keep unsold merchandise.
The sales of artificial trees have been going down because they are a one-time purchase. The point of buying an artificial tree is to buy it once. Most people that want an artificial tree have one.
The rise in the number of Christmas trees sold in 2020 has multiple factors. Some people travel every year for Christmas, they might not decorate their house. But since they had to stay home, they decorated in 2020. The decorations included buying a Christmas tree. This person would have taken part in the rise of Christmas trees getting sold.
The Christmas tree industry is stable. The trees are grown with the same process year after year. Then, the people that buy the trees come back next year. The industry is due for some innovation.