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December 19, 1980
Evergreen Industry
Department stores and similar retailers ring
up one-sixth or more of their annual sales
during the brief Christmas season-but another sector rei ies on the Ch ristmas seasonfor
100 percent of its annual sales. We're referring, of course, to the Christmas-tree industry-an industry which brings joy to the
young and solace to the old, and as a bonus,
produces enough oxygen for eight million
people every day.
putting numerous candles on a fir tree to
impress his son with the message that the
Christ child was the light of the world.
(Modern fire marshals would frown on his
approach.) Also, according to legend, Hessian soldiers introduced the Germanic custom into this country, although their attempts
at decorating a tree at Trenton in 1776
were ru i ned by a Scrooge named George
Washington.
This $300-million industry is concentrated
near the Canadian border-primarily
the
Great Lakes states and the Northeast and
Northwest border states-although growers
can be found in almosteverypartofthecountry. About 12,000 people work fu II-ti me as
growers, wholesalers and retailers, but another 100,000 (mostly part-time student
workers) help out during the spring planting,
summer pruning, and fall harvesting seasons.
And another 30,000 retailers can be found in
December on practically every vacant lot
throughout the nation, helping harried husbands and wives make one of their most important decisions of the year from a selection
of about 35 million trees.
The modern popularity of the Christmas-tree
celebration may be traced back to the famous
style-setter, Prince Albert, who' introduced
the custom into England after he married
Queen Victoria. His example, and the efforts
of German settlers in this country, increased
the popu larity of the custom throughout the
19th century. In the early days, most trees
were decorated with home-grown goodiessuch as cookies, apples, cranberries, and
pine cones-but German-made decorations
became the rage after their introduction in the
1880's.
Adam and Eve to Coolidge
The origins of this industry are wrapped in
antiquity. Primitive cultures attributed godlike powers to trees that remained green in
wi nter, because they seemed to guarantee the
retu rn of vegetation to desolate gray forests. In
mediaeval times, the actors in the miracle
plays held in front of churches on December
24 (Adam and Eve Day) used a standard
prop-a "Paradise tree," which was an evergreen decorated with apples. And eventually,
by the early 16th century, decorated evergreen trees became fairly common in Germanic countries.
Marti n Luther may be considered the father of
the modern industry. According to pious legend, Luther was out walking one starlit night
in 1536, when the stars gave him the idea of
Franklin Pierce introduced the Christmas tree
into the White House in 1856, and the custom was interrupted only once thereafter, by
a Scrooge named Theodore Roosevelt. TR, an
ardent conservationist, was alarmed because
roughly halfthetrees in the country had been
cut down by the time of his Administration,
and he feared that the Christmas-tree industry
would remove the rest. But his Chief Forester,
Gifford Pinchot, argued that there would be
no danger with proper reforestation, and he
was proven right over the next several decades-with the help of the other Roosevelt,
who was a noted tree farmer on his Hyde Park
estate. Meanwhile, in 1923, Calvin Coolidge
established the Christmas-tree lighting ceremony at the White House, in what was perhaps the most notable achievement of his
presidency.
Growing trees
Growers plant about 90 million seedlings an-
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nually to ensure the harvest of about 35 million trees each year. Producers mostly grow
their trees in rural areas on soil which is unsuitable for other types of crops and on slopes
which are too steep for agricultural production. The trees help prevent erosion, provide
a habitat for wildlife, and of course improve
the scenery. But life is not always evergreen
for producers, because of ever-present problems with insects and diseases. This year they
had to worry about the Midwestern drought,
and in several preceding years they found
many of their stands quarantined because of
the spread of the dreaded scleroderris canker.
And growers also worry about "night crawlersil-the visitors who climb fences at night
and cart 9ff the best specimens.
_-
-
growth, the grower can encourage each tree
to branch more quickly, and gradually
achieve the full bushy appearance that people prefer in Christmas trees. An important
step is the annual shearing, which develops
thick branches and the desired triangular
shape. This work begins when each tree is
three years old, and continues until the harvest. And many growers help to ensure the
industry's evergreen character by spraying
the trees green, since many pines lose their
bright green color when they become dormant each fall.
Investing in trees
Roughly 85 million trees are now under management on some 450,000 acres throughout
the country. Tree farms range in size from. 50
to 5,000 trees, with most producers raising
between 800 and 1 ,500 trees each. Cost
studies show that a total investment of about
$3.25 per tree is needed to develop a 6 %-foot
sheared Douglas fir during a seven-year rotation. That means an investment of $4,225 an
acre, on the basis of a normal stocking of
1 ,300 trees an acre.
Producers count on a 6-to-1 2 year growing
cycle, depend i ng on the species and region of
the country. Each year they replant a number
of two-year old seedlings in thin sandy soil,
and then carefully tend the trees for the next
several years. By holding back rapid upward
Aboutone-halfofthe
investment is in terms of
personal labor-what
the small operator can
perform by himself. The balance ofthe investment includes out-of-pocket costs for parttime help, planting stock, tools, chemicals,
and of course taxes. If the trees are sold
wholesale at roadside for $1 .00 per lineal
foot -or $6.50 for a 6 V2-foottree -the grower can make a net profit of $3.25 per tree or
$4,225 per acre. That means a net return of
$600 per acre per year for the seven-year
cycle. But growers can obtain such returns
only if everything goes well from the planted
seedling to the marketed trees. StqtisticalIy, only about half of all tree farms ever develop trees of sufficient quality to reach the
marketplace.
2
percent are between five and six feet, and the
other 44 percent are smaller.) But all retailers
agree on the popularity of sheared (tapered)
trees, which in the last several decades have
increased from 5 percent to 80 percent of the
Northwest's total production.
The wholesale value ofthe industry's production this year could approach $150 million,
and retail sales might range between $300
million and $350 million. (Like everything
else, Christmas trees seem to go up about 10
percent in price each year.) Ornaments and
accessories add mill ions more to the total bi II.
According to industry sources, at least onethird ofthe nation's households are displaying natural Christmas trees this season, while
perhaps one-fourth are displaying artificial
trees-and the others are just looking in other
people's windows.
Will artificial trees ever replace natural trees?
Not very likely, especially in view of the influence of the OPEC nations on this Christmas
product. (Most artificial trees are made from
petroleum-based plastics.) Many dealers now
report a trend away from artificial trees, with
their share of the total market dropping from
about one-third of the total in pre-pP E C days
to perhaps one-fourth of the total today. With
oil prices soaring, many such trees are selling
from $80 to $120 this season. The dominance
of the natural product thus seems assured, so
tree farmers should feel confidentoffinding a
market a decade hence for many of the 90
million seedlings that they'll plant next
spring.
Marketing trees
Although growers produce about 40 different
types of Christmas trees, six different species
account for about three-fourths of all sales.
Most households generally purchase Scotch
pine for their living rooms, but Douglas fir
and balsam fir have grown sharply in popularity in recent decades. Cedar, spruce, and
red pine are also favored by many buyers.
Prices vary sharply from region to region,
with the cost of freight being a major factor.
Certain areas with heavy demand, such as
New York City, can count on paying several
dollars per tree just for the cost of freight.
California is a major market for natural trees,
importing about three million trees from the
Northwest and Great Lake states..and buying
about two million more from California tree
farms. Many purchasers buy directly from
about 600 "choose and cut" tree farms scattered around the state, while others rely on
the more traditional street-corner and vacantlot locations.
William Burke
Retailers differ about the favored size of tree;
some say that households are now buying
larger trees, while others claim a growing
popularity for smaller trees. ( One major
Northwest producer claims that only 30 percent of his trees are over six feettall, while 26
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BANKINGDATA-TWELfTH FEDERAL
RESERVE
DISTRICT
(Dollar amounts in millions)
SelectedAssetsand Liabilities
large Commercial Banks
Loans(gross,adjusted)and investments*
Loans(gross,adjusted)- total#
Commercial and industrial
Realestate
Loansto individuals
Securitiesloans
U.S. Treasurysecurities*
Other securities*
Demand deposits - total#
Demand deposits - adjusted
Savingsdeposits - total
Time deposits -total#
Individuals, part. & corp.
(LargenegotiableCD's)
Weekly Averages
of Daily Figures
Member Bank ReservePosition
Excess
Reserves )/Deficiency (- )
(+
Borrowings
Net free reserves(+ )/Net borrowed(-)
Amount
Outstanding
12/3/80
144,394
122,226
36,294
49,648
23,781
1,251
6,695
15,473
47,547
33,980
29,149
69,129
60,027
27,221
Weekended
12/3/80
n.a.
65
n.a.
Change
from
11/26/80
Changefrom
year ago
Dollar
Percent
636
8,258
6.1
607
9,150
8.1
429
3,912
12.1
213
6,751
15.7
- 155
312
1.3
45
- 16.1
240
40
692
9.4
11
200
1.3
1,636
1,196
2.6
1,742
1,336
4.1
7
454
1.6
353
10,299
17.5
312
9,793
19.5
53
5,175
23.5
Weekended
Comparable
11/26/80
year-agoperiod
n.a.
299
n.a.
25
281
306
* Excludestrading account securities.
# Includes items not shown separately.
Editorial comments may be addressed the editor (William Burke)or to the author . ... Freecopies of this
to
andother FederalReserve
publications can be obtained by calling or writing the Public Information Section,
Federal ReserveBank of SanFrancisco,P.O. Box 7702, SanFrancisco94120. Phone (415) 544-2184.
@FedFRASER