Christmas tree prices - blame the GFC!

As I was driving down the road the other day, I was shocked to see the high price of the "real" Christmas trees being sold on the side of the road. As an Economics teacher, I of course started mulling over the changes to supply and / or demand that might have caused this.

The next day i came across this article which explained why Christmas tree prices were high in the United States - it seemed that my local observations were possibly a global phenomenon. The answer is full of economics - it seems that Christmas trees take about ten years from planting to maturity and that ten years ago many countries were at the height of the GFC and in recession. Planting Christmas trees can be very profitable but you have to wait ten years to reap the rewards and when times are tough, entrepreneurs are much more likely to put their time and money into shorter-term payoffs. Hence not many trees were planted in 2007 / 2008 and due to the highly inelastic supply it means that there are not many available to be harvested now.

Moral of the story - next time that times are tough, plant trees!