Why Christmas trees in Europe are much cheaper than in Canada

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

Full of decorations and twinkling with lights (and the neon signs of that year’s corporate sponsors), it not only marks the official start of the Christmas season. At more than 20 meters high, it quickly becomes a local landmark, a beacon for tourists who have lost their way among the medieval streets of the city.

An exquisite Nordmann spruce like this, cultivated for more than two decades, it can cost a city upwards of $200,000 to harvest, transport and decorate. Not everyone buys 20-metre trees, but it wasn’t long ago that this variety was so sought after in Europe that the then-head of Denmark’s Christmas Tree Growers Association called it “the Rolls-Royce of Christmas trees “. able to fetch double the price of other cheaper varieties.

Today, however, across the street from Padua’s shining tree, you can find a two-meter (6½-foot) Nordmann fir for as low as 15 euros ($22), including in the corner of ‘a dimly lit grocery store.

This fact suggests that something is changing in Europe, where the prices of Christmas trees have fallen for most of the past decade — in stark contrast to Canada, where the average price in some regions for a six-foot (1.8 meter) tree it is $75 or more.

While concrete data on European Christmas tree markets can be hard to come by, it appears that despite shrinking forestssmaller farms and more people to supply, their trees today are much cheaper than Canada’s. Why?

A vicious circle

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

Quebec, Ontario and Nova Scotia dominate Canadian industryproducing 80 percent of the country’s Christmas trees. In Europe, Denmark and Germany take 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, in both places, these producers are actually many small-scale farms, growing trees on a few tens of acres of property. After all, Christmas trees are a good boost for farmers with idle land, a slow-growing crop that generates off-season agritourism.

“In Austria, you can live off two hectares (five acres) of Christmas trees,” said Claus Jerram Christensen, director general of the Danish Christmas Tree Association. “Add some sheep, and a family can live on that alone.”

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

But trees like Nordmann firs take nearly a decade to reach maturity.

“Eight or 10 years later … we just have too many trees,” he said. “Prices are going down and people are saying it’s not a good deal anymore.”

“Growing the Christmas tree 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 producers) making independent decisions, many years in the future, with 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 that can absorb more losses due to fluctuating supply.

It seems the trend is on, and the trees in Padua’s €15 grocery stores are just one manifestation.

“This has been a market shift,” Christensen said. “Big stores are taking more market share from smaller stakeholders, which are often older people (for whom) it’s hard to get their kids to take over.”

This 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 cultivation for more profitable activities.

Also in Canada, many small-scale operators have difficulty with succession planning, resulting in a reduction in 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 hectares of Christmas tree cultivation, and that was strictly due to retirement.”

Unlike Europe, where demand is fairly static, Canadian demand for Christmas trees is skyrocketing at the same time supply is shrinking.

In the past 10 years, the value of the Canadian market has grown from $53 million to $160 million.

“We couldn’t foresee this,” Brennan said.

Canadian farmers are also facing other price pressures: increases in the cost of equipment and fertilizers have driven inflation across the economy.

“Demand is going up and prices are going up, but so is everything else,” he said.

How tariff threats could affect tree prices

That’s unlikely to change anytime soon. Zagorsky notes that the steep tariffs on Chinese products proposed by incoming US President Donald Trump would explode the cost of plastic trees in the US, which have been consumed in the real tree market for decades and are now a more than three-quarters of US households.

If that happens, he said, “there’s going to be a big shift toward fresh trees. And where do a lot of our fresh trees come from? They come from Canada.”

Meanwhile, in Europe, the glut of recent years appears to have split the market. Wholesalers and chains offer discount trees for next to nothing—less than 20 euros ($30) in most stores—while smaller farms, such as Padua’s Azienda Agricola Berton Giuseppe, can charge upwards of three times the price for the same variety.

But Giuseppe Berton, the owner, says that they can make their sales with the guarantee of quality.

“Grocery stores take trees that are really junk, 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 trees are still a long way from Canadian prices, but after a decade of decline, the average cost of a tree is expected to increase by several euros this year.

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