CBC
Every year in late November, in the central square of Padua, Italy, a spectacular Christmas tree goes up.Heavy with baubles and bright with lights (and the neon-lit signs of that year's corporate sponsors), it doesn't just mark the official beginning of the Christmas season. At more than 20 metres tall, it quickly becomes a local landmark, a beacon to tourists who've lost their bearings among the city's medieval streets.An exquisite Nordmann fir like this, grown over more than two decades, can cost a city upwards of $200,000 to harvest, transport and decorate. Not everyone is buying 20-metre trees, but it wasn't long ago that this variety was so highly sought after in Europe that the then-head of Denmark's Christmas tree growers' association called it "the Rolls-Royce of Christmas trees," capable of fetching double the price of other, cheaper varieties.Yet today, across the street from Padua's glimmering tree, you can find a two-metre (6½-foot) Nordmann fir for the rock-bottom price of 15 euros ($22), bundled in the corner of a dimly lit grocery store.A grocery store in Padua, Italy, was recently selling two-metre (6½-foot) Nordmann fir trees for 15 euros ($22 Cdn). (John Last/CBC)This fact suggests something is changing in Europe, where Christmas tree prices have been falling for the better part of the last decade — in stark contrast to Canada, where the average price in some regions for a six-foot (1.8-metre) tree is $75 or more.While concrete data on Europe's Christmas tree markets can be hard to come by, it seems that despite shrinking forests, smaller farms and more people to supply, their trees today are much cheaper than Canada's. Why?A vicious cycleLike in Canada, only a few regions in Europe are responsible for the vast majority of Christmas tree production.Quebec, Ontario and Nova Scotia dominate the Canadian industry, producing 80 per cent of the country's Christmas trees. In Europe, it's Denmark and Germany that take the lead, producing nearly half the trees sold on the continent. Christmas tree growing looks romantic on the screen, but in reality, this is a brutal business. - Jay Zagorsky, economist at Boston University's Questrom School of BusinessHistorically, in both places, these producers are actually many small-scale farms, growing trees on just a few dozen acres of property. After all, Christmas trees make a good side hustle for farmers with idle land, a slow-growing crop that generates agricultural tourism in the off-season."In Austria, you can live off two hectares [five acres] of Christmas trees," said Claus Jerram Christensen, managing director of the Danish Christmas Tree Association. "You add some sheeps, and a family can live from just that."That means that "when there are good prices, there are more growers," Christensen said. Farmers jump on the bandwagon and plant a few stands to cash in on high demand.But trees like Nordmann firs take almost a decade to reach maturity. "Eight to 10 years later … we have simply too many trees," he said. "The prices decline and people say this is not a good business anymore.""Christmas tree growing looks romantic on the screen, but in reality, this is a brutal business," said Jay Zagorsky, an economist at Boston University's Questrom School of Business. "You have a relatively fragmented industry … [with growers] making independent decisions, very many years into the future, on low profit margins."When you do that, he says, you get large fluctuations in price.In other industries facing similar problems, Zagorsky said, the solution is often consolidation — the emergence of larger players that can absorb more losses due to fluctuating supply.It would seem that trend is well underway — and Padua's 15-euro grocery store trees are just one manifestation."That's been a market change," said Christensen. "The big box stores are taking more market share from the smaller stakeholders, which are often elderly people [for whom] it's difficult to get their children to take over."WATCH | This Christmas tree farmer says climate change is leading to higher costs:That challenge is made worse by European Union policy, which makes most Christmas trees ineligible for agricultural subsidies. With stiff competition for land, many small farmers are abandoning tree growing for more profitable pursuits.In Canada, too, many small-scale operators are finding succession planning difficult — leading to shrinking supply."The [average] age of a Christmas tree farmer is between 65 and 85," said Shirley Brennan, executive director of the Canadian Christmas Tree Growers Association. "We lost, in 10 years, 20,000 acres of Christmas tree farming — and that was strictly due to retirement."Unlike in Europe, where demand is fairly static, Canadian demand for Christmas trees is skyrocketing at the same time that supply is shrinking.In just the last 10 years, the value of Canada's market has gone from $53 million to $160 million. "We couldn't forecast that," Brennan said.WATCH | So you want to buy a Christmas tree farm?Canadian farmers are under other price pressures, too: Increases in the cost of equipment and fertilizer have driven inflation across the economy. "Demand is going up and prices are going up, but so is everything else," she said.How tariff threats could affect tree pricesThat's unlikely to change anytime soon. Zagorsky points out that the steep tariffs on Chinese goods proposed by incoming U.S. president Donald Trump would explode the cost of plastic trees in the U.S., which have been eating into the real tree market for decades and are now found in more than three-quarters of U.S. households.If that happens, he said, "there's going to be a large shift toward fresh trees. And where do many of our fresh trees come from? They come from Canada."Trees at Chickadee Christmas Trees in Puslinch, Ont. (James Dunne/CBC)In Europe, meanwhile, the glut of the past few years seems to have split the market. Wholesalers and chains offer discount trees for next to nothing — less than 20 euros ($30) at most stores — while smaller farms, like Padua's Azienda Agricola Berton Giuseppe, can charge more than three times the price for the same variety. But Giuseppe Berton, the owner, says they can make their sales on the guarantee of quality. "The grocery stores take the trees that are truly scraps, second-hand stuff," he said. "It's a completely different quality … They don't really compete with us."It's a strategy that appears, finally, to be working. European trees are still a long way off Canada's prices — but after a decade in decline, the average cost of a tree is expected to rise by a few euros this year."We are still in the bottom of the curve," Christensen said, "but we are going in the right direction now."
