Michigan State University Extension
Ag Experiment Station Special Reports - SR619201
07/28/98
Melvin R. Koelling James B. Hart Larry Leefers
Department of Forestry Michigan State University
INTRODUCTION
The production of plantation-grown Christmas trees is
a significant agricultural industry in Michigan. Each year
more than five million trees are harvested by Michigan
growers. In addition to supplying Michigan markets, nearly
three-fourths of the annual harvest is sold wholesale
through brokers and retailers located outside the state.
Michigan is recognized as a major supplier of Christmas
trees, accounting for approximately 15 percent of the
national supply.
Michigan is a leading Christmas tree producing state
for several reasons. The climate of the state is
favorable, with mild summers and cold winter temperatures
conducive to the growth of several coniferous trees.
Adequate precipitation, generally evenly distributed
throughout the growing season, is favorable for tree
establishment, survival and growth. The proximity of the
Great Lakes results in a large coastal area with maritime
climatic characteristics favoring tree growth and the
development of high-quality foliage.
Soils of the state are variable, ranging from deep
sands to heavier loams and clays. The wide variety of soil
types in conjunction with the favorable climate permits the
adaptation of several native as well as introduced species
to different locations within the state. Finally, several
types of topography are present in the state. By locating
plantations at different positions (hilltop, mid-slope or
sheltered sites), non-native species such as Douglas fir,
concolor fir and Fraser fir can be effectively grown.
Description of the Industry - There are an estimated 1400 Christmas tree producers in Michigan. While Christmas tree farms are present in every county, concentrations of producers occur in the western portion of the lower peninsula and in several other locations including Menominee County in the Upper Peninsula and in the Thumb of the Lower Peninsula. Collectively these growers manage about 130,000 acres of plantations. Operations range in size from only a few acres to some farms of more than five thousand acres. Many farms provide full-time employment while others are supplemented by non-farm activities. Over 90 percent of the work on Christmas tree farms is performed by family members and locally available help.
For years Scotch pine has been the most important
Christmas tree species planted and managed, accounting for
six out of every ten trees planted from 1985-1991.
However, it accounted for just under 50 percent in 1991.
This non-native species is well adapted to nearly all areas
of the state. Several varieties representing geographic
seed origin are recognized and have differences in needle
color, needle length, growth rate, climatic adaptation and,
to some extent, growth form. However, in addition to
Scotch pine, other important species are grown. Other
pines include Austrian and Eastern white pine.
Additionally red pine and southwestern white pine can be
cultured into a Christmas tree although neither of these
species is widely planted.
Douglas fir, a species native to the western United
States, also enjoys wide popularity among Michigan growers.
It accounts for about 15 percent of current plantings
(Figure 1). Several varieties of Douglas fir of Rocky
Mountain origin are available. Each reflects different
foliar characteristics, branch structure, and angle and
growth rates. It is essential that Douglas fir plantations
be established on sites with both finer textured fertile
soil and good air drainage. For this reason Douglas fir
plantations are most common on upland sites in the western
and north central regions of the state.
The true firs, namely balsam fir, concolor fir and
Fraser fir, are being more widely planted than in the past.
As Christmas trees these species have increased in
popularity among consumers and accordingly growers have
expanded plantings. Like Douglas fir, the true firs are
more demanding with respect to site than are the pines.
These species require sites which have excellent soil
drainage. Likewise, adequate fertility is necessary for
the production of high-quality trees. Most fir plantations
are located on sandy loam or heavier soils.
Colorado blue spruce and eastern white spruce are also
grown in plantations for Christmas tree production
purposes. Together these species account for about 15
percent of the annual harvest. Eastern white spruce is
declining in popularity among both growers and consumers
due to its reputation for poor needle retention.
Substantial plantings of Colorado blue spruce are made each
year for Christmas trees as well as material for landscape
plantings. Like the true firs, Colorado blue spruce grows
best when planted on fertile loam and sandy clay loam
soils.
Over 80 percent of trees harvested annually from
Michigan plantations enter the wholesale or direct retail
market. The remaining trees are sold through
choose-and-cut operations located primarily in the southern
portion of the state near larger metropolitan areas.
Choose-and-cut farms are increasing in both popularity and
number throughout Michigan, as in other parts of the United
States. Some 75 percent of Michian trees are marketed
outside the state. Michigan-produced trees are delivered
to retail destinations in at least 40 other states. Major
markets are present in nearby industrial states and in the
south, principally Texas and Florida (Figure 2).
Christmas trees make a very significant economic
contribution to Michigan. The annual tree harvest has a
wholesale value of about 60 million dollars, not including
the value added by retail market sales. In addition to the
important harvest values, Christmas trees generate notable
benefits through employment opportunities and materials and
equipment sales necessary to establish and manage existing
plantations. Full-time employment is provided to an
estimated 5000 individuals while seasonal employment level
may exceed 35,000 during planting, trimming and harvest
operations. Family and local workers (including high
school-aged) supply over 90 percent of the labor. Smaller
farms rely mostly on family labor, while larger operations
sometimes use migrants for labor-intensive, seasonal work.
Furthermore, the Michigan Christmas tree industry supports
employment and other economic contributions in seedling
nurseries, chemical supply companies, equipment
manufacturing and distribution firms, and transportation
businesses. Few data are available currently on the total
economic impacts of the industry.
TRENDS WITHIN THE INDUSTRY
Traditionally Scotch pine Christmas trees were viewed
as a crop requiring non-intensive management. Christmas
tree plantations typically were established on land
marginally suited for intensive agricultural crop
production. Initially many plantations were established
with furrowed planters which provided partial control of
competing vegetation, but which removed much of the more
fertile topsoil in the immediate vicinity of each seedling.
Subsequent management usually consisted of annual shearing,
beginning most often in the third growing season following
planting. An occasional spray to control defoliating or
otherwise damaging insects would be made if necessary.
Following eight to ten growing seasons, Scotch pines would
be ready for harvest; a few more years would be necessary
for firs and spruces. While there were a few full-time
growers, the majority of Christmas tree farmers were
part-time producers.
Beginning in the 1960s some changes became evident in
the Christmas tree industry. The number of part-time
growers declined. Some ceased operations while others
expanded and became full-time producers. Plantings
increased, particularly in the late 1970s and throughout
the 1980s (Figure 3). The principal species, Scotch pine,
was planted in substantially larger numbers than were
necessary for annual harvests. This resulted largely from
strong markets and increased profitability. While some
concern about future demand and markets was voiced, most
producers were confident of their ability to remain
competitive. Many of these trees are now of market size.
While expansion was occurring in Michigan, it was also
taking place in other producing areas of the country,
especially in the Pacific Northwest and in North Carolina.
As others' plantings reached maturity, many growers
developed aggressive promotion and marketing programs. To
some extent these were directed toward new markets.
Eventually they focused on replacing existing markets
supplied by trees from regions such as the Lake States and
Michigan (i.e., buy locally produced as opposed to
"imported trees"). These efforts were successful to some
degree. Scotch pine growers found themselves struggling to
maintain markets they once considered as their own.
Increased consumer popularity and more competitive prices
for Douglas fir and other true firs reduced the
attractiveness of Scotch pine to many retailers,
particularly for lower quality trees. Today severe
competition is present not only from trees produced in
other regions but among Michigan growers as well. Over 90
percent of trees sold in 1990 came from farms over 150
acres in size. These growers are forced to compete with
each other as well as with smaller farms during hard times.
Many attempt to carve out and maintain a niche in very
competitive markets. Plantings in recent years reflect the
downturn in the industry.
Competition has resulted in a decrease in sales as
well as price. An estimated 5 million trees were sold in
1985, followed by increasing annual sales. The 1990
estimate was 4.5 million trees. Prices are stable at best,
but decreasing in real terms for Scotch pine, our principal
species. Data on relative prices and sales of trees from
other states are unavailable. The roles of price and other
factors in terms of market competitiveness have not been
studied.
Accordingly, significant ongoing changes are
continuing within the industry. Some indications include
the following:
1. Change In Species Produced - Although still a major species within the Michigan Christmas tree industry, Scotch pine is declining in importance. It is being replaced by increased plantings of Douglas fir and the true firs. This change reflects a shift in consumer demand as well as greater difficulty in producing quality Scotch pine trees. Increased insect and disease problems have contributed to higher production costs for Scotch pine. For some disease problems such as Cyclaneusma needlecast, it is difficult and often impossible to obtain total control regardless of control method followed.
True firs and Douglas fir are increasing in consumer
popularity because of several characteristics including
pleasing fragrance, soft foliage, relatively short needle
length and straight stems. These features, often imitated
by artificial tree manufacturers, are not present in most
varieties of Scotch pine. Scotch pine typically have
stiffer foliage, an overall coarser appearance and longer
needles. Many Scotch pine have stem crooks, thereby
increasing the difficulty in placing in a tree stand.
Douglas fir and true fir plantings have increased
although it is generally understood that more intense
management is required to produce trees of consistently
high quality. These species are more demanding with
respect to site and soil fertility, and thus fertility man-
agement is essential. While insect and disease problems
are less for these species than for Scotch pine, control of
competing vegetation is more important for obtaining rapid
growth and development of quality foliage.
2. Focus on Higher Quality Trees - To produce trees which will be competitive in the national marketplace, it is necessary that they be of the highest possible quality. As the national supply of Christmas tree available for the market has increased, it has become much more difficult to market trees of average to low quality. Accordingly growers are adopting more intensive management practices in an attempt to produce higher quality trees. For Scotch pine this includes practices such as staking to correct stem crooks, basal pruning to produce trees with a complete whorl of bottom branches, culling recognized low-quality trees from the plantation and shearing designed to produce a symmetrical tree with natural appearing foliage. For Douglas fir, the true firs, and spruces, greater emphasis is placed on soil preparation and weed control prior to planting, selection and use of large-size quality planting stock, control of competing vegetation throughout the rotation and maintenance of soil fertility levels, to attain rapid growth and quality foliage.
3. Need to Reduce Length of the Rotation - As production costs for management practices necessary to produce quality trees have increased, market prices are flat or declining. It has thus become necessary that growers attempt to shorten the production period. Shortening the rotation length by one year can significantly reduce production costs and increase returns on investments. Some approaches being followed to reduce the production time include (1) locating plantations on more productive soils, (2) use of larger and higher quality uniform-size planting stock, (3) application of intensive weed control practices and (4) use of irrigation for some species such as concolor and Fraser fir. Fertilization and changes in traditional shearing practices for small trees are being used to reduce rotation lengths for Douglas fir and the true firs.
4. Increases in Production Efficiency - While several of the practices previously described will contribute to this objective, a few other practices can be identified. These include regrading of seedling or transplant stock prior to planting to assure that only quality planting stock is used. Grading favors plants with good branch development, bud set and vigor. Following planting, those individual trees which will not develop into quality trees should be removed whenever they can be identified. This reduces shearing and other cultural labor and contributes to improving quality and uniformity of the entire plantation.
5. Promotion of the Natural Tree - In the past several years, artificial trees have absorbed an increasing amount of the total Christmas tree market. Recent surveys project that approximately 40 million households display artificial trees. This contrasts with an estimated 5 million units which were in use in 1960. Many factors have been cited to explain why sales have increased. These include perceived value and reusability, convenience, cleanliness, concerns about fire safety and, in the past few years, environmental issues (e.g., no tree cutting, landfill concerns, etc.). Additionally artificial tree manufacturers and vendors of artificial trees have invested heavily in promotion. As growers of natural trees have witnessed their market share decline, they have become more vocal in promoting both the economic and environmental values and contributions of natural trees.
ASSUMPTIONS FOR THE 1990S
Christmas trees will continue to be a significant
Michigan crop throughout the 1990s. However, the industry
will be reshaped from what it has been in the past. To a
large extent those trends already present within the
industry will continue to exert their influence in the next
several years. The significant features which will
characterize the industry in the 1990s include:
1. Market Competition From Other Regions Will Continue - It is likely the present competitive market for natural Christmas trees will continue. More trees have been planted than are needed to meet current and projected national market demands. In a market where supply exceeds quantity demanded, substantial efforts will be required to sell all available trees. It is likely Michigan growers will be affected more than others because of concerns about the demand and popularity of Scotch pine. Increased emphasis must be placed on service and related factors to win the business of potential buyers. This will be true for wholesale as well as retail and choose-and-cut operations.
2. Wholesale Prices Will Decline or Remain Steady for the Early 1990s - Growers should not expect that any significant increases in wholesale prices will occur in the next few years. (Table I) Substantially more trees will be available than the market will demand, especially for some species.
3. Artificial Trees Are Competitive - The artificial tree will continue to be sold in large numbers in a slowly expanding Christmas tree market. Characterized by convenience, perceived value and cleanliness, these products will receive increased support from those concerned with fire safety and alleged lower environmental impacts. Growers must learn to compete successfully with artificial trees by learning more about consumer concerns and demands.
4. Environmental Concerns Are Greater - Environmental concerns related to both the production and use of natural Christmas trees will continue to increase. Increased concerns and restrictions can be expected regarding the use of chemical fertilizers and pesticides. Likewise, concerns related to tree disposal are likely to increase in some regions, which may result in favoring artificial trees. Some slight increases in the use of living (potted) Christmas trees can be expected, although limitations imposed by species suitability, size constraints and general inconvenience will probably restrict widespread use.
5. True Firs Will Increase in Popularity While Pines Will Decrease - Fraser fir, Noble fir and to a lesser extent balsam fir and concolor fir will increase in popularity among retailers and consumers. At the same time the demand for pines, especially low-quality Scotch pine, will continue to decline.
6. Trees Must Be of Higher Quality - Trees which will be competitive in the marketplace must represent quality with respect to cleanliness, uniformity, symmetry, stem straightness and needle retention. Low-quality trees are and will continue to be plentiful for the next few years. To be marketable at a profit, only quality trees must be produced and harvested.
7. Production Cost Control Is Critical - Although not expected to increase at rapid rates, production costs will likely increase at a rate equal to or slightly greater than inflation, as growers emphasize preferred species and higher quality. Cost increases will be most evident for supplies and equipment. Some slight increases in labor costs should also be anticipated.
PROJECTIONS FOR THE FUTURE
Several changes in the Michigan Christmas tree
industry will occur in the future. These will be
substantial and will result in a reconfiguration and
shaping of the industry by the year 2000. Changes will
occur in several areas including the following:
1. Production - It is probable that the total number of Christmas trees harvested annually in Michigan will decline. This decline from the six million-plus trees of the late 1980s will be most noticeable in the early to mid-1990s, following which production is likely to stabilize. Relative to the number of trees planted in the mid-1980s, annual plantings have decreased dramatically.
The decline in production will be mostly confined to
Scotch pine. Reductions for this species will be most
severe for lower grade trees although a decrease in the
annual harvest of number one grade trees can also be
expected. For species other than Scotch pine, production
can be expected to remain the same or increase. Eastern
white pine production will remain generally constant while
annual plantings and harvests of species such as Douglas
fir, balsam fir, concolor fir and Fraser fir will expand.
Plantings of Colorado blue spruce will likely increase
although trees in many of these plantations will also be
directed toward the nursery and landscape market.
2. Input Requirements - Michigan growers can be expected to make greater inputs into the Christmas tree production process. All production inputs will be directed toward growing preferred species and increasing the quality of trees produced. To this end it is probable that increased emphasis will be placed on providing adequate soil fertility, obtaining more effective control of competing vegetation and control of destructive and/or damaging insects and diseases. Growers will also place greater emphasis on site selection, soil preparation, purchase of higher quality planting stock and weed control techniques prior to planting. For species such as Fraser fir, increased use of irrigation can be expected in an effort to maximize survival and growth.
With greater production inputs many growers will
attempt to increase production efficiency, particularly
with respect to percentage of planted trees which are
actually harvested. More effort will be directed toward
developing every tree into a salable product. More
individualized attention will be given each tree with
respect to trimming, staking, basal pruning and top
development.
3. Number and Size of Farms - Concurrent with the expected decrease in annual harvests, it is probable that a decline in the number of Christmas tree producers can also be anticipated. Decreases will be most likely in those farms which produce only Scotch pine. It is probable this species will continue declining in consumer popularity. Those producers who fail to produce high- quality trees or who do not aggressively pursue and maintain markets will be among the most vulnerable. Within the past two years, three of the largest Christmas tree operations in the state have ceased operation. Annual harvests from these firms represented over one million trees. While several factors contributed to the failure of these firms, a primary focus on producing large volumes of a single species (Scotch pine) which were of average to low quality was significant.
It is also probable that several Christmas tree farms
will decrease in size. This will occur as growers apply
more intensive management practice to fewer total acres,
but which are the most suitable for plantations. For some,
total tree production is expected to remain the same or
increase slightly as the intensity of management increases.
This feature will be most characteristic of farms which
produce true firs and Douglas fir.
4. Shifts in Location within the State - Those areas of the state which are presently important producing regions will likely continue to be so over the next several years. An exception to this generalization should be made for those counties where Scotch pine is the dominant species and shifts to other species will require more fertile, heavier textured soils. It is probable that declining demand for this species will result in downsizing to some degree. Plantings of Douglas fir and the true firs will increase, although the limitations imposed by site may result in reduced total acreage. Impacts of reduced Scotch pine plantings and harvests will be most apparent in counties located in the west central and north central regions of the Lower Peninsula.
While downsizing of the Scotch pine sector of the
Christmas tree industry can be expected, increases will
occur for some other species. These increases will occur
in areas of the state where Douglas fir is presently an
important species. Douglas fir is more demanding with
respect to site requirements and reflects locations where
conditions are favorable for producing true firs including
balsam, concolor and Fraser fir. While some favorable
sites are present throughout the state larger acreages
exist in those Lower Peninsula counties bordering Lake
Michigan. Total Christmas tree production in several of
these counties is likely to increase over the next several
years.
5. Choose-and-Cut Farms Will Increase - Over the past several years the number of choose-and-cut Christmas tree farms has continued to increase. This trend will continue for the next few years. In response to continued difficulties in wholesale marketing, more growers will attempt to market trees directly to consumers. It is not likely that substantial increases in the total number of trees sold will occur, but competition among choose-and-cut farms will intensify. Over time some operations will probably discontinue planting and eventually leave the business.
6. Management From an Environmental Perspective - Like others involved in the production of agricultural goods, management activities of Christmas tree producers will continue to be affected by environmental concerns. Most notably these will relate to the use of pesticides and fertilizer compounds. Growers will be subject to the constraints imposed by society in their efforts to safeguard groundwater supplies and to minimize the use of products of potential environmental harm. Accordingly, it is expected that the use of recommended best management practices, integrated pest management techniques and biological maintenance of soil fertility will become more widespread.
It is suggested that Christmas tree producers exercise
greater caution in the use of chemical products. At the
same time, those associated with Christmas tree production
should become more aggressive in informing the public of
the many positive contributions Christmas tree production
makes to the environment, notably those identified with
water quality, wildlife habitat, soil erosion control,
oxygen production and carbon dioxide absorption.
7. Increased Sophistication of Management Records - Successful Christmas tree growers in the 1990s will become much more involved with good recordkeeping, particularly as related to production costs. Continuing competitive markets will necessitate that growers know their production costs in order to price their products at a profitable level. It is likely that many successful growers will adopt computer-assisted record systems to record and review cost and return information. Growers will also become more concerned about the benefits realized by specific man- agement practices (e.g., staking or basal pruning). Demand for information on expected costs and returns can be expected to increase.
EMERGING NEEDS
Substantial changes are and will continue to occur in
the Michigan Christmas tree industry. These have resulted
primarily from increased competition in the marketplace and
changes in consumer demand with respect to species and tree
quality. Scotch pine, the principal species produced in
Michigan, is declining in popularity, especially trees of
average to low quality. For Michigan to continue its role
as a leading Christmas tree-producing state, several
changes will be necessary. These relate to promotion and
marketing activities as well as changes in production
techniques. Continuity of the industry will be markedly
assisted by a strong, relevant research program. Failure
to establish and maintain such a program will likely hasten
the decline of Christmas tree production in Michigan. Some
suggestions for needed activities and research include:
1. Natural Tree Marketing-Promotion Research - Although a few studies have been done on consumer preferences and concerns about natural Christmas trees, more information is needed. This information would be useful in assisting growers in targeting markets and in choosing species for planting. Christmas tree producers have not done an effective job in identifying their market niche and then modifying production and marketing practices to fill it. Cost and product competitiveness, as well as approaches which will effectively maintain and/or expand natural Christmas tree markets, need to be explored.
2. Consumer Education - A major educational effort to apprise consumers of the environmental and economic benefits associated with natural Christmas tree production and use is needed. Consumers need information on the positive environmental contributions related to Christmas tree production. Also development of methodology and an information campaign on the alternative environmentally-friendly methods of recycling Christmas trees following the Christmas season would contribute to increased markets and ease concerns about disposal. Consumer education efforts should also focus on the energy-demanding, polluting aspects of artificial Christmas tree production and use.
3. Evaluation of Alternative Species - Many conifer species have the potential to be grown and cultured for Christmas tree production purposes. However, identification and adaptation to Michigan soil and climatic conditions and evaluation for Christmas tree purposes has not been done on a scientific basis. This information is necessary to permit growers to plan for future plantings and marketing possibilities.
4. Fertilization Research - Fertilization of Christmas tree plantations is becoming more widespread, particularly for production of species other than Scotch pine. Information is particularly needed on methods of determining and quantifying nutrient needs. Application methods and rates to obtain desired responses in an economical and efficient manner are also necessary.
5. Mechanization of Harvesting - Christmas trees are a labor-intensive crop. Much manual labor is involved not only during production but in the harvesting process as well. Opportunities exist to mechanize several aspects of the harvesting process. Research designed to reduce harvesting costs and thus improve production efficiency is needed.
6. Production Cost Containment and Management - Inputs for producing quality Christmas trees are increasing, yet the prices received by most wholesale growers have declined in the past year or two. In order to adjust to changing market dynamics, growers could benefit from accurate production cost and return information.