Why Christmas trees in Europe are much cheaper than in Canada

Every year at the end of November, in the central square of Padua, Italy, a wonderful Christmas tree goes up.

Heavy with baubles and bright with lights (and the neon-lettered signs of that year's corporate sponsors), it doesn't exactly mark the official start of the Christmas season. At more than 20 meters high, it will quickly become a local landmark, a beacon for tourists who have lost their bearings among the city's medieval streets.

A magnificent Nordmann pine like this, grown over more than two decades, a city can spend up to $200,000 to harvest, transport and decorate. Not everyone buys 20-metre trees, but it wasn't long ago that this variety was in such high demand in Europe that the head of the Danish Christmas tree growers' association called it “the Rolls -Royce of Christmas trees” on. able to get double the price of other, cheaper types.

But today, across the street from the shiny Padua tree, you can find a two-meter (6½-foot) Nordmann pine for the rock-bottom price of 15 euros ($22), tucked away in the corner of an unlit grocery store.

This fact suggests that something is changing in Europe, where the prices of the Christmas tree has been falling for the better part of the last decade – completely different from Canada, where the average price in some areas for a six-foot (1.8-meter) tree $75 or more.

Although concrete data on European Christmas tree markets may be difficult to come by, it is nevertheless likely declining forestssmaller farms and more people to supply, their trees today are much cheaper than Canadian trees. Why?

A vicious circle

Like Canada, only a few regions in Europe are responsible for the majority of Christmas tree production.

Quebec, Ontario and Nova Scotia control of Canadian industryproduces 80 percent of the country's Christmas trees. In Europe, Denmark and Germany are in the lead, producing almost half of the trees sold on the continent.

Growing a Christmas tree looks romantic on screen, but in reality, this is a brutal business.– Jay Zagorsky, economist at Boston University's Questrom School of Business

Historically, everywhere, these producers are many small farms, growing trees on only a few dozen acres of property. After all, Christmas trees make a good buzz for farmers with lazy land, a slow-growing crop that generates agritourism 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 sheep, and a family can survive from there.”

That means “when prices are good, there are more growers,” said Christensen. Farmers jump on the bandwagon and put up a few stands to cash in on high demand.

But trees like the Nordmann pine take nearly ten years to mature.

“Eight to 10 years later … we just have too many trees,” he said. “The prices are falling and people are saying this is not a good business anymore.”

“Growing Christmas trees looks romantic on 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, many years into the future, on low profit margins.”

When you do that, he says, you get big price swings.

In other industries facing similar problems, Zagorsky said, the solution is often consolidation — the emergence of larger players who can absorb more losses due to fluctuating supply.

It would seem that a trend is well underway – and Padua's 15-euro grocery store trees are just one manifestation.

“That's been a market change,” Christensen said. “The big box stores are taking more market share from the smaller stakeholders, who are often seniors (for whom it's) hard to get their kids over.”

That challenge is exacerbated by European Union policy, which makes most Christmas trees ineligible for agricultural subsidies. With fierce competition for land, many small farmers are abandoning tree growing for more profitable pursuits.

In Canada, too, many small operators are experiencing difficulty in succession planning – leading to declining 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 just like due to retirement.”

Unlike Europe, where demand is relatively stable, Canada's demand for Christmas trees is increasing significantly at the same time as supply is shrinking.

In just the last 10 years, the value of the Canadian market has gone from $53 million to $160 million.

“We couldn't have predicted that,” Brennan said.

Canadian farmers are under other price pressures as well: rising costs of equipment and fertilizers 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 prices

That is unlikely to change anytime soon. Zagorsky says the steep tariffs on Chinese goods proposed by US president Donald Trump would explode the cost of plastic trees in the US, which has been eating into the real tree market for decades and is now available in more than three-quarters of US households.

If that happens, he said, “there will be a big movement towards new trees. And where do many of our new trees come from? They come in Canada.”

In Europe, meanwhile, the glut of the past few years seems to have split the market. Wholesalers and chains offer discount trees for very little – less than 20 euros ($30 at most stores) – and smaller farms, such as Padua's Azienda Agricola Berton Giuseppe, can sell more than three as much as the price charged for the same type.

But owner Giuseppe Berton says they can make the sale on a quality guarantee.

“The grocery stores take the trees that are really scraps, second-hand items,” he said. “It's a completely different quality … they don't really compete with us.”

It's a strategy that seems, finally, to be working. European trees are still a long way from Canadian prices – but after a decade of decline, the average cost of a tree is expected to rise by a few euros this year.

“We're still at the bottom of the curve,” Christensen said, “but we're going in the right direction now. “