Market Overview

Christmas Tree Shortage Driving Prices Higher

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Christmas Tree Shortage Driving  Prices Higher

A limited supply of Christmas trees in Oregon, the country's No. 1 producer, continues to drive up wholesale and retail costs. The pricetag for Noble Firs doubled compared to five years ago. In the past two years, prices have risen 15% annually.

"Supply is definitely tight, said Greg Smith, owner of Molalla Tree Farms in Molalla, Oregon and a third-generation Christmas tree farmer.

On average, consumers paid $78 for a tree in 2018, up $3 from 2017, the Associated Press reported.

An Eight-Year Growing Period

Oregon is home to nearly 400 licensed Christmas tree growers, down from around 900 growers 15 years ago, according to Chal Landgren, a Christmas tree extension specialist with Oregon State University's College of Forestry.

The decline dates back to the early 2000s, when a glut of trees hit the market, causing prices to plummet. Many farmers, mostly small, independent growers, "couldn't take those kind of losses," Smith said.

Growing Christmas trees is not a profession for the impatient, he added. It takes eight years from seed to sale, a long wait that serves as a barrier to entry for new growers, who prefer to harvest crops producing an annual yield.

Capacity Impacts

The tree shortage is one reason securing transportation hasn't been a problem this year, said Carl Johnson, owner of PacWest Transport, a Portland-based brokerage that specializes in perishable, frozen and temperature-sensitive transportation.

Many of the large growers are also shipping by rail, Johnson said.

Abundant capacity — and a limited supply of trees — are not exerting downward pressure on trucking rates. The cost to ship perishables to Texas goes up by $1,000 for Christmas tree season, according to Johnson, who added that prices are highest starting from the weekend before Thanksgiving to the weekend after.

Oregon outbound tender rejections declined by 47.69% during Thanksgiving week 2019, compared to the same week in 2018. (Image: SONAR)

Shortages notwithstanding, Oregon's status as world's largest Christmas tree market is holding steady. The state sells about 4.6 million trees a year, valued at around $100 million. .

Shipping the trees — most are destined for the Pacific Northwest, California, Nevada and Arizona — is laborious work. PacWest hauls nursery stock year-round, but Christmas trees require special attention, Johnson said. "The difference is once you cut the trees, they are literally dying. Time is critical."

To keep the trees cool and moist, the majority of shippers favor a combination of reefers and ice, he explained, adding that PacWest works with a core group of carriers year after year to ensure the trees arrive in good condition.

"The beauty of hiring the same crews is they know what they are doing," Johnson said. "Some people are lured by the price and don't realize how difficult the job can be," he explained. "We're very upfront with any new truck [drivers]."

On-The-Job Pressures — And Dangers

A tragedy that struck the day after Thanksgiving this year underscored the challenges — and, occasionally, the dangers — present at all levels of the Christmas tree supply chain. Three Guatemalan tree workers died in a three-vehicle crash involving a box truck of 350 Christmas trees near Salem, Oregon.

The workers were exhausted after a long day harvesting and loading trees, according to a report published in the Oregonian.

Growers face their own pressures. Smith expects to sell about 17,000 trees this season, a small increase over last year. He credits the boost in sales to the steady planting he's done year after year.

Still, the clock is ticking.

"I've got five weeks to make my annual salary," Smith said.

Image by Pexels from Pixabay

 

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