Kentucky Christmas Trees Production, Market, and Expected Return December 2008 copyright eStudy.us 2008 michael.roberson@eStudy.us

Overview The Christmas tree market was created 1,000 years ago in Germany Brought to the U.S. during the Revolutionary War by the Hessians 25-30 million trees sold every year in the U.S. Christmas trees are grown in all 50 states, including Hawaii

Market Opportunities Choose and Cut Sales- Retail Spaces- Wholesale- Occurs at the farms where consumers actually pick out the tree they want while they are still planted. Retail Spaces- Occurs when Christmas tree growers open up spots closer to consumers where they can sell trees on their own. Wholesale- Occurs when growers sell trees to large retailer such as supermarkets, Wal-Mart, etc. Typically, growers are responsible for delivery of trees to sites.

Market Opportunities Kentucky Christmas Tree Association www.kychristmastreefarms.com

Market Opportunities Christmas Tree Species Most Popular Species: Arizona Cypress Balsam Fir Colorado Blue Spruce Canaan Fir White Fir Douglas Fir Eastern Red Cedar Eastern White Pine Fraser Fir Grand Fir Leyland Cypress Noble Fir Norway Spruce Scotch Pine Virginia Pine White Spruce Most Popular Species: -Virginia Pine

Virginia Pine Characteristics Description: The Virginia pine's needles occur in pairs. They are twisted and range from 1.5 to 3" in length. They are relatively short when compared to those of other pines. Loblolly needles, by comparison, are from 4 to 9" long. Individual needle clusters can remain for 3 or 4 years. They are then shed and replaced with new needles as the branches grow in length. The branches are stout and woody. The bark is typical for most pines. It forms plates that are reddish brown in color with shallow fissures or furrows. The bark has a coarse appearance. Cones begin forming in about the fifth year. They are about 2 inches long and are protected by quite prickly scales. Pollination occurs in early June and cones mature in late September to early November of the following year. Open pollination is used in most Virginia pine seed production. Virginia pine responds well to trimming. And, on Christmas tree plantations their foliage can become extremely dense. As with other pines, these show a tendency to self pruning when grown with competition from other trees. This characteristic becomes apparent after about the sixth year as the lower limbs begin to wither. Virginia pine has been the staple for the Christmas tree industry in the south since its inception. But in prior times it was not considered to be commercially significant to the forest products industry. Due to the intense demand for planting stock with enhanced Christmas tree characteristics, two genetic improvement programs were initiated. Both were begun in the early 1980's. One was a Texas Forest Service project and the other was based at Alabama A&M University. In both cases, the respective State Christmas tree associations were major contributors to the effort. After years of progeny tests and selective removal of trees from the seed orchards, growers have Virginia pine seed sources specifically cultured for Christmas tree production. Virginia pine is considered to be a small to medium sized tree. Breast height diameters of over 31inches and heights of 114 feet have been recorded.

Virginia Pine Characteristics Range: The natural range of the Virginia pine begins in central Pennsylvania and extends southward into northern Mississippi, Alabama and Georgia. Bounded on the east by the Atlantic coast, it extends west into Ohio, southern Indiana and Tennessee. Using the selection and genetic improvement projects described above, its range has been extended into Florida, Louisiana, Arkansas, east Texas, and southern areas of Georgia, Alabama, and Mississippi. Propagation: Virginia pine is almost exclusively propagated through seed germination. There has been some success in rooting cuttings and air layering, however. Uses: In addition to being the original basis of the southern Christmas tree industry, the Virginia pine has been effective in strip mine site reclamation in the eastern and central States, and a source of pulpwood in its natural range. Because the older wood is softened by fungal decay, Virginia pine provides excellent nesting sites for woodpeckers. Virginia pine Christmas trees are available on both choose and cut farms, and retail lots. Prepared by Clarke J. Gernon, Sr., Shady Pond Tree Farm  

Production Characteristics Planting can be fairly versatile with regards to soil selection. Good agricultural soil is desired, but marginal soils will suffice. Soil must be moist, but well-drained. Land should allow no standing water. If converting forest land, should plant an intermediary crop the year before trees are planted. During growing process, it is possible to plant a cash crop between seedlings as a financial supplement during the intermediary period. Trees should be planted during the months of March or April in Kentucky

Production Characteristics Rainfall should suffice for first two years of growth. If drought occurs, trickle and drip irrigation should be used. Application of woody mulch to the soil should help soil retain moisture. Maintenance of trees should occur weekly after planting with emphasis on pest control and pruning after the first year. After third year, trees should be sheared into appropriate conical shape during the summer months. Labor costs will significantly increase after the fifth year when harvesting actually occurs. A single year’s planting will occur over a maximum of three years.

Production Characteristics Pest Management Trees should be monitored April through September Pests include: sawfly, aphids, bagworms, pine-tip moth and pales weevil Diseases include: needlecasts and needle blight Livestock should not be allowed on land during growth period as they can compact soil and kill saplings

Production Characteristics Labor Demands and Capital Requirements Given: 1,000 trees per acre harvested over three years 5 hours of site preparation 40-48 hours of planting 24-48 hours during establishment years 55-70 hours during harvest years 124-171 hours per acre total over seven year period Capital requirements include: 1-10 acres of land, mower, sprayer, and axes

Production Cost Overview Planting Year Interval Year Production Year Variable Costs Saplings Fertilizer Variable Machinery Costs Irrigation Fixed Machinery and Equip Variable Costs Fertilizer Variable Machinery Costs Irrigation Insecticide Herbicide Fixed Machinery and Equip Variable Costs Fertilizer Variable Machinery Costs Irrigation Insecticide Herbicide Fixed Machinery and Equip

Risk Assessment Market Risk: Price is dependent on the size of the tree. Average price between $15-20 per tree Production Risk: Very low risk with regards to weather, pests, and disease. Financial Risk: Takes five years for trees to reach maturity for cutting. Farmer must be willing to operate at loss until year 7 when significant returns can be made. Costs tend to be relatively fixed despite the yield with the exception of labor. This is due to the fact that the majority of labor is actually accomplished by the consumer during the cutting process. Most other labor can be accomplished by farmer. 25% of labor hours must be hired out.

Return and Payoff Tables Yield in trees (per acre) After 7 Years 900 1000 1100 Gross Revenue (price $17.50) $15,750.00 $17,500.00 $19,250.00 Costs $6,710.00 Profit $9,040.00 $10,790.00 $12,540.00   Yield in Trees (per Acre) After 7 Years Price 900 1000 1100 $15.00 $6,790.00 $8,290.00 $9,790.00 $17.50 $9,040.00 $10,790.00 $12,540.00 $20.00 $11,290.00 $13,290.00 $15,290.00

Basic Summary Market Opportunity Choose and Cut Retail Wholesale Advantages of Western and Central Kentucky Low labor and overhead costs Easy access to consumers via three different market opportunities Very little risk as far as pests or diseases Has small presence in Kentucky so the potential for growth is high Good replacement for existing crops since trees can grow on marginal land. Also good to replace former strip mining ground

Appendices

Appendix- Costs (Prep Year and Year 1)

Appendix- Costs (Years 2 & 3)

Appendix- Costs (Year 4 & 5)

Appendix- Costs (Years 6 & 7)

Bibliography Overview Market Opportunities Va. Pine Characteristics http://www.christmastree.org/facts.cfm http://www.christmas-tree.com/where.html Market Opportunities http://www.kychristmastreefarms.com/index.php?option=com_content&task=view&id=15&Itemid=110 http://www.uky.edu/Ag/NewCrops/introsheets/christmastrees.pdf Va. Pine Characteristics http://www.kychristmastreefarms.com/index.php?option=com_content&task=view&id=30&Itemid=50 Production Characteristics http://www.ca.uky.edu/agc/pubs/for/for36/for36.htm