Why are Christmas trees in Europe much cheaper than in Canada?

Every year in late November, in the central square of Padova, Italy, a stunning Christmas tree rises.

Filled with ornaments and bright with lights (and neon-lit signs for that year’s corporate sponsors), it not only marks the official start of the Christmas season. At more than 20 meters high, it quickly became a local landmark and a beacon for tourists who lost their bearings among the city’s medieval streets.

A magnificent Nordmann spruce like this one, grown over more than two decades, It could cost the city upwards of $200,000 For harvesting, transporting and decorating. Not everyone buys 20-metre trees, but it wasn’t long before this variety became so sought-after in Europe that the then president of the Danish Christmas Tree Growers’ Association dubbed it “the Rolls-Royce of Christmas trees”. Able to fetch twice the price of other cheaper items.

However, today, across the street from the sparkling tree of Padua, you can find a 2-meter (6.5-foot) Nordmann fir for the very low price of 15 euros ($22), huddled in the corner of a dimly lit grocery store.

This fact indicates that something is changing in Europe, where Christmas tree prices are It has been declining for the better part of the past decade — in stark contrast to Canada, where the average price In some areas For a six-foot (1.8 m) tree it’s $75 or more.

While it may be difficult to obtain specific data on Christmas tree markets in Europe, it appears to be the case nonetheless Forest shrinkageWith smaller farms and a larger supply of people, their trees are today much cheaper than trees in Canada. Why?

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 Dominates the Canadian industryIt produces 80 percent of the country’s Christmas trees. In Europe, Denmark and Germany lead the way, producing nearly half of the trees sold on the continent.

Planting a Christmas tree sounds romantic on screen, but in reality it’s a brutal act.– Jay Zagorski, an economist at Boston University’s Questrom School of Business

Historically, in both places, these producers were many small farms, growing trees on a few dozen acres of property. After all, Christmas trees are a good side hustle for farmers with idle land, a slow-growing crop that generates agritourism in the off-season.

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

That means “when there are good prices, there are more farmers,” Christensen said. Farmers are joining the bandwagon and growing a few plants to take advantage of the high demand.

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

“After eight to 10 years…we simply have too many trees,” he said. “Prices are coming down and people are saying this is not a good business anymore.”

“Planting a Christmas tree sounds romantic on screen, but in reality, it’s a brutal act,” said Jay Zagorsky, an economist at Boston University’s Questrom School of Business. “You have a relatively fragmented industry… (with farmers) making independent decisions, many years into the future, with low profit margins.”

When you do that, you get huge price fluctuations, he says.

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

And the trend seems to be well underway – and Padua’s €15 grocery store trees are just one manifestation.

“This was a change in the market,” Christensen said. “Big stores take a larger market share from smaller stakeholders, who are often older people (for whom it is difficult) to convince their children to take over.”

This challenge is exacerbated by European Union policy, which makes most Christmas trees ineligible for agricultural subsidies. With intense competition for land, many small farmers are abandoning tree planting for more profitable endeavors.

Also in Canada, many smaller operators are finding it difficult to plan for succession – leading to a shrinking supply.

“(The) average age of a Christmas tree grower is between 65 and 85 years,” said Shirley Brennan, executive director of the Canadian Christmas Tree Growers Association. “In 10 years, we lost 20,000 acres of Christmas tree farming — and that was due to retirement.”

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

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

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

Canadian farmers are under other price pressures as well: increases in the cost of equipment and fertilizer have fueled inflation across the economy.

“Demand is rising, prices are rising, and so is everything else,” she added.

How can tariff threats affect tree prices?

That is unlikely to change any time soon. Zagorski points out that the steep tariffs on Chinese goods proposed by incoming US President Donald Trump would drive up the cost of plastic trees in the United States, which have been eating into the market for real trees for decades and now exist in the United States. More than three-quarters of American households.

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

Meanwhile, in Europe, the glut of the past few years appears to have split the market. Wholesalers and chains offer trees at discounted prices – less than €20 ($30) in most stores – while small farms, such as Azienda Agricola Berton Giuseppe in Padua, can charge more than three times the price for the same variety.

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

“Grocery stores take trees that are actually scraps, used stuff,” he said. “It’s a completely different quality… They’re not really competing with us.”

It’s a strategy that seems to be working in the end. European trees are still a far cry from their 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, but we’re headed in the right direction now,” Christensen said.