Christmas tree growers in US predict stocked supply this year, but with higher prices

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FILE - An employee walks across a Christmas tree plantation and examines the growth. (Photo by Klaus-Dietmar Gabbert/picture alliance via Getty Images)

HOWELL, Mich. - The Christmas tree industry is preparing for another holiday season, and while there will be no shortage of real trees to decorate, families will likely pay a little more for the perfect fir or pine tree.

The Real Christmas Tree Board, a U.S. industry group, surveyed 55 wholesale growers of real Christmas trees across the country in August. Collectively, the respondents accounted for two-thirds of the country’s entire real Christmas tree market, the group said.

Like most consumer goods this year, the tree growers in the survey said prices are likely to increase a bit in 2022 — citing a jump in their own input costs.

More than a quarter (27%) estimated that their input costs jumped 16% to 20% compared to 2021, and another 25% said such prices have gone up as much as 10% year-over-year.

Across industries and households, U.S. inflation remains a heavy burden. While gas and cheaper used cars slowed consumer prices in August, many other items rose in price.

High inflation has also kept pressure on the Federal Reserve, the agency tasked with keeping prices stable. Last month, the Fed raised its key interest rate by a substantial three-quarters of a point for a third straight time, leading to higher costs for many consumer and business loans.

Christmas tree growers anticipate wholesale price jump

The majority of tree growers (71%) cited a likely wholesale price increase of 5% to 15% compared to 2021, while 11% of growers anticipated a more modest price increase of no more than 5%, according to the survey.

Another 11% anticipated a price increase of 16% to 20% more than last year. Only 5% said they expect their increase to hit 21% or more.

Fewer than 2% of respondents said they don’t anticipate increasing their wholesale Christmas tree prices this year, according to the survey.

The biggest concern among Christmas tree growers leading up to the holidays was supply chain slowdowns (44%). This was followed by concern about the impact of inflation on consumer spending (35%) and labor availability and cost (21%).

What causes inflation?

There are three factors that could lead to inflation which include demand-pull inflation, cost-push inflation and built-in inflation.

"The good news is fans of real Christmas trees say they believe the trees are worth the price and they are willing to pay more this year if necessary to get one," Marsha Gray, executive director of the Real Christmas Tree Board, said in a statement.

Roughly 75% of U.S. households displayed a Christmas tree in 2021, according to the American Christmas Tree Association. Nearly 6.5 million households opted to put up both a real Christmas tree and an artificial tree last year.

‘We’ve never run out of trees’

While inflation remains the dominant story of 2022 when it comes to consumer products, the Real Christmas Tree Board’s survey indicated that families should not worry about any shortage of real Christmas trees.

"Remember that no one story is the whole story. It has always been the case that this retailer may sell out earlier than that retailer, but neither one provides a complete picture," Gray said.

"The real Christmas tree industry is bigger than any one farm, retailer, or region — and we’ve never run out of trees," Gray added.

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Meanwhile, families who opt for an artificial Christmas tree may find one from last year’s inventory. During an earnings call last month, Costco executives said some of the company’s artificial trees came in after Christmas 2021 due to supply chain issues, according to Business Insider.

"If you add in the cost of holding them and a little cost of interest, I think they're still a little cheaper than the ones we added to the inventory this year," Costco CFO Richard Galanti said, according to the news outlet.

The artificial Christmas trees at Costco range in cost from $150 to $400, according to Galanti. He added that keeping the artificial Christmas trees to sell this year didn't "hurt" the company, except that it doesn't "like to have extra inventory."

Due to supply chain disruptions in 2021, shoppers will also notice Christmas trees on display "earlier than ever before." according to the American Christmas Tree Association.

This story was reported from Cincinnati.