Don't panic, but there's a shorter supply of Christmas trees this holiday season than in recent years.
"Most people [tree growers] that I know are sold out, or close to sold out. Phones are really ringing as people are looking to get Christmas trees," said Mark Arkills, production manager at Holiday Tree Farms in Corvallis, south of Portland, Oregon. Roughly 6,500 acres, Holiday Tree Farms is one of the largest tree farms in the country.
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"It's a real tight supply right now," Arkills said.
Turns out Christmas trees — from Douglas firs to Scotch pines — resemble a commodities market. Trees can take roughly seven years to grow from seedlings to adult trees ready for harvest. And it's this yearslong lag time between plantings and harvest that creates a cyclical, fast-famine market for trees. Sure, growers want to manage inventory better. But strategic shifts in plantings take years to influence supplies — not weeks or even months. This is an agricultural product, after all.
"Basically, tree supplies are coming off an oversupply situation that has been unraveling for years," Arkills said.
Across the U.S., tree retailers have been on alert and securing inventory as soon as possible this season. Just ask Tyler Kupper, co-founder of Tyler's Trees, based in New York and Charlotte, North Carolina. Thesmall business delivers and sets up trees for a flat fee, starting at $139 for a five-footer.
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"The oversupply drove the smaller farms out of business and a consolidation of suppliers," Kupper said. "Now we are entering a period that trees will be in short supply, creating greater demand," he said.
And since U.S. trees are shipped to many locations, including overseas markets, tight domestic inventories are likely to influence many wholesalers — and consumers. The four largest state producers of Christmas trees are Oregon, North Carolina, Michigan and Washington.
In Oregon, as an example, about 90 percent of inventory is shipped out of state to places such as California, the Caribbean and Mexico, said Bryan Ostlund, executive director of the Pacific Northwest Christmas Tree Association, based in Salem, Oregon. "We went through a period of five years, where it was bleak. There were too many trees for the size of the market," Ostlund said.
Higher consumer prices?
If you hang out among tree growers, talk of the drought out west eventually comes up. But while little precipitation affected some smaller tree seedlings, the bulk of the large trees in the West were not impacted by the drought, said Ostlund and other growers.
So how will tight tree inventories impact retail prices this year?
Consumer prices are likely to be stable, with upticks of around 5 percent in warmer states such as California and Florida, Ostlund said.
"With Christmas trees, it's surprising how fine the line is between the right supply and oversupply," Ostlund said. "It has shifted to a seller's market."
This article originally appeared on CNBC. Read more from CNBC:
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