AN ECONOMIC ASSESSMENT OF CHRISTMAS TREES
                            Executive Summary


Christmas trees are produced in all 50 states, but the bulk of
production is located in the northern half of the country.  The
top producing states include Oregon, Michigan, North Carolina,
Washington, Wisconsin, California, and Pennsylvania.  U.S.
producers have harvested 34 to 36 million live Christmas trees
annually since 1988, up from 29 million during 1977-79.  The
value of the 1994 crop is estimated at $360-$540 million.

Pine, fir, and spruce trees are the three major Christmas tree
species.  The top selling trees are balsam fir, Douglas fir,
Fraser fir, noble fir, Scotch pine, Virginia pine, and white
pine.  In recent years, fir trees have been growing in popularity
because they are a short-needle species that retain their needles
and hold their green color for a longer time following cutting
than do other types.

Although the Census of Agriculture does not report any Christmas
tree statistics, industry estimates suggest that as many as 1
million acres may be planted to trees and that 100,000 people are
employed either full or part-time in producing Christmas trees. 
Many Christmas tree producers grow trees on a part-time basis as
a supplement to other types of farm-related enterprises or non-
farm income.  

Although different species of Christmas trees are native to
specific regions of the United States, cultivation practices and
the breeding of new varieties have enabled species to be grown
beyond their native habitats.  Pine trees are noted for surviving
on poor soil, often where other agricultural crops would not do
well.  Spruces and fir are more specific as to soil and climate
requirements, with the fir varieties being the most demanding. 

Christmas trees are usually planted for the exclusive purpose of
being harvested for Christmas trees or, to a limited extent, for
nursery stock.  Wild trees are not cultivated for Christmas trees
and are rarely sold as Christmas trees in today's market.  Wild
trees are estimated to make up no more than 1 to 2 percent of
Christmas tree sales.

Seedlings are started from seed in a nursery seedbed.  Seedlings
may be transplanted to nursery field beds at two years of age to
allow more room for both shoot and root development.  In the
South, seedlings may be set into the field right from the
seedbed.  Even in the North, pines may be transplanted directly
to the field from the seedbed.   

On average, about 2,000 to 2,100 trees are planted per acre.
Spacing within and between rows, however, varies by species, the
size to which the tree will be grown, and the equipment to be
used.  The within-row spacing at planting averages 4 feet to 6
feet.  After the initial loss of trees, an average of 1,000 to 
1,500 trees per acre will remain for harvest as Christmas trees. 
In more northern regions, about 750 trees per acre remain. 

Most varieties require shearing to obtain the desired density
(number of lateral branches) and taper (shape).  The ideal tree
is thick (has many branches with few open spaces) and has a taper
of about 66 percent.  Pine trees require more shearing to achieve
the desired shape and compactness than do the other species.  

A Christmas tree is considered mature and ready for harvest when
it reaches 6 to 7 feet, the most popular height desired by
consumers.  It usually takes 5-12 years from planting until trees
reach the 6-7 foot height.  The actual number of years depends on
geographic location, species, size at harvest, age of seedlings
when planted in the field, soil fertility, cultural practices,
and other variables.

The major production perils affecting Christmas trees include
drought, excessive rain, excessive wind, hail, and fire.  Some of
the perils may kill the tree, but more typically, the tree's
appearance is altered to the extent it is no longer saleable as a
Christmas tree.  

For several reasons, many of the individuals contacted for this
study implied that crop insurance would be mostly an issue for
mature Christmas trees.  First, costs during the early stages of
production are minimal compared with the costs of producing the
adult tree.  Third, younger trees can sometimes outgrow damage,
such as needle or branch loss, by the time the tree is ready to
be marketed. 

Our assessment is that there is likely to be a substantial amount
of interest in purchasing insurance, particularly among the
larger producers in the Pacific Northwest and northern states. 
Smaller, part-time producers may be less interested.  However, 
moral hazard and adverse selection are potential problems; these
insurance issues, along with others, are discussed in the text.

Two contacts mentioned that insurance had been offered about 20
years ago by a private company.  It covered natural disasters
such as fire, hail, and winds.  However, the insurance was too
costly for most producers and the company felt it was too risky. 

In recent years, the National Christmas Tree Association (NCTA)
Insurance Representative has written 3 policies on growing trees. 
These policies cover fire, lightening, wind, and hail damage, and
were required before growers could obtain financing from lenders.