2017 Christmas Tree Forecast
We just returned from a week long journey through the Pacific Northwest Christmas tree growing region. Much of our time was dedicated to visiting with our current, loyal farms. We also made sure to allocate plenty of time searching for other farms that may be in a position to take on more customers. We returned with some great insight about the 2017 Christmas tree forecast, but did not find any other farms that could take on new business.
The 2016 Season marked the beginning of an overall shortage of Christmas trees. 2017 inventories will be tighter than 2016. In addition, many growers oversold in 2016 and were forced to cut into portions of their 2017 inventories to honor their commitments, increasing their shortage.
Big box retailers still appear to be the primary market for big farms. They are relying heavily on smaller farms to sell them the trees they need to complete their orders now. Big farm’s buyers are prepared to offer other growers whatever price is necessary to acquire their trees. It looks like most mid sized farms prefer to keep their relationships with their regular customers, however. Big farms were not able to acquire all of the trees they promised the big boxers in 2016. Maybe the retailers are finally gaining some ground on them.
In light of these and other changing conditions, growers are now weighing against many factors when determining the worth of their regular customers. We speculate that mid sized farms 2017 prices will increase again about as much as in 2016. Several mid size farms will likely eliminate some problem and late paying customers, freeing up some inventory for the rest.
In an effort to counteract an ever increasing shortage of labor, and rising freight costs, many farms are reshaping their trees to become narrower and lighter. This will reduce labor costs and increase the quantities that can fit in a van. We expect this to be the beginning of a trend that may eventually become the norm for them. Handle sizes are increasing to 10 -12 inches.
A few farms are out of the commodity market altogether. They are mostly family farms that cultivate premium trees on a small scale. By focusing entirely on quality and continually meeting their customers needs, the demand always exceeds their supply. We expect their prices to increase modestly, and their inventories to remain the same.
One can only speculate as to how this will all trickle down. We have been assured that our normal quantities of trees will be reserved for us. However, allocations of some popular sizes will be reduced and substituted with what is left. One farm that we buy many trees from will be down 40% on 7/8 Noble, 50% on 7-8 Douglas, and has no Nordmann over 8ft. Farms normal practice of outsourcing from neighboring farms to supplement and correctly fill their customer orders may not be much of a possibility in 2017. We think that premium big tree inventories 14 ft and up will decrease in 2017, and continue to diminish in future years. We expect tree quality to improve now that growers have more dollars to put into them. Some farms are still working through a bit of distressed inventory left over from the drought. Retailers may have to deal with them the best they can again since substitutions may not be available. Growers don’t want to be first to release their prices. They will likely wait as long as possible to release them.
Our strategy of getting orders to the farms early has helped us stay a step ahead of others so far. One would expect that some of our customers will contact other farms and shop for comparable options. We do not want to rush them through their normal decision making process. However, we are strongly encouraging these customers to perform their due diligence ahead and get the results of their comparisons early. We need them to be ready to make their educated purchasing decision early, since supplies are limited.
Although most retailers started the 2016 Season with a lot to overcome, most all sold out, many earlier than expected, and most reported an increase in profits over the 2015 Season. We don’t anticipate the 2017 Season to be much different for most retailers.