Why are Christmas trees cheaper in Europe than in Canada?

Every year at the end of November, a magnificent Christmas tree is erected in the central square of Padua, Italy.

Massive and bright (and the neon-lit signs of that year’s corporate sponsors), it not only marks the official start of the Christmas season. At over 20 meters tall, it quickly becomes a local landmark for tourists who have lost their bearings among the city’s medieval streets.

This kind of fine Nordmann fir, grown for more than twenty years, it can cost a city $200,000 harvest, transport and decorate. Not everyone buys a 20-metre tree, but it wasn’t long before the variety was so sought-after in Europe that the then-head of the Danish Christmas Tree Growers’ Association called it the “Rolls-Royce of Christmas trees”. able to double the price of other, cheaper varieties.

Yet today, across the street from Padua’s glistening tree, you can find a two-meter (6½-foot) Nordmann fir stacked in the corner of a dimly lit grocery store for €15 ($22).

This fact shows that something has changed in Europe, where Christmas tree prices are has been falling for the better part of the last decade — in stark contrast to Canada, where the average price is in some regions $75 or more for a six-foot (1.8-meter) tree.

While concrete data on European Christmas tree markets is hard to come by, it appears to be the case shrinking foreststo support small farms and more people, their timber is cheaper than Canada’s today. Why?

Bad cycle

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

Quebec, Ontario and Nova Scotia It dominates the Canadian industryproduces 80 percent of Christmas trees in the country. In Europe, Denmark and Germany lead the way, producing about half of the wood sold on the continent.

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

Historically, in both places, these producers are actually many small-scale farms growing trees on a few tens of hectares. After all, Christmas trees make a good side hustle for farmers with vacant land, a slow-growing crop that generates off-season agritourism.

“In Austria you can live with two hectares (five hectares) of Christmas trees,” said Claus Jerram Christensen, managing director of the Danish Christmas Tree Association. “If you add a few sheep, a family can live on just that.”

That means “when there are good prices, there are more growers,” Christensen said. Farmers plant several stands to earn money with high demand.

However, trees like Nordmann firs take almost ten years to reach maturity.

“Eight to 10 years from now … we just have a lot of trees,” he said. “Prices are going down and people are saying it’s not a good business.”

“Growing a Christmas tree looks romantic on screen, but in reality it’s a brutal business,” said Jay Zagorski, an economist at Boston University’s Questrom School of Business. “You have a relatively fragmented industry … (with growers) making independent decisions, many years later, with low profit margins.”

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

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

It seems the trend is going well – and Padua’s €15 grocery trees are just one manifestation.

“It was a market shift,” Christensen said. “Big box stores are getting more market share than smaller stakeholders, who are often older people (for whom) it’s difficult to get hold of their kids.”

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In the 20 years he’s been working at Bastien Christmas Tree Farm in Essex, owner Ovide Bastien says he’s seen climate change more and more. To combat this, Bastien grows climate-resistant Christmas tree varieties and uses a special coated fertilizer that doesn’t evaporate and lasts longer. But Bastien says that means higher entry costs.

This problem is exacerbated by European Union policies that make most Christmas trees ineligible for agricultural subsidies. In the face of fierce competition for land, many small farmers are abandoning tree cultivation for more profitable purposes.

In Canada, too, many small-scale operators are struggling to plan consistently, leading to reduced supply.

“The (average) age of Christmas tree growers is between 65 and 85,” said Shirley Brennan, executive director of the Canadian Christmas Tree Growers Association. “We’ve lost 20,000 hectares of Christmas tree planting over 10 years – and that was largely due to pensions.”

In contrast to Europe, where demand is fairly static, the demand for Christmas trees in Canada is growing rapidly, while the supply is decreasing.

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

“We couldn’t have predicted it,” Brennan said.

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As Christmas tree farmers retire, who will take over? Statistics Canada says the industry’s average age is 59 — about 14 years older than the average Canadian.

Canadian farmers are also under other price pressures: Rising equipment and fertilizer prices have fueled inflation in the economy.

“Demand is increasing and prices are going up, but that’s the way things are,” he said.

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This is unlikely to change anytime soon. Zagorski notes that the new US President Donald Trump’s proposed high tariffs on Chinese goods will increase the price of plastic trees that have entered the real wood market in the US for decades and are now found in the country. More than three-quarters of US households.

If that happens, he said, “there will be a big shift toward fresh wood. Where do most of our fresh wood come from? They come from Canada.”

And in Europe, the glut of the past few years seems to have split the market. While wholesalers and chains offer discount trees for next to nothing — under 20 euros ($30) in most stores — small farms like Padua’s Azienda Agricola Berton Giuseppe can charge more than three times the price for the same variety.

But owner Giuseppe Berton says they can sell with quality assurance.

“Grocery stores really take scrap wood, second-hand stuff,” he said. “It’s a completely different quality … They don’t really compete with us.”

It’s a strategy that finally seems to be working. European timber is still well below Canadian prices – but the average price of a tree is expected to increase by several euros this year after a decade of decline.

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