Christmas Trees - Seasonal Cheer For Investors
The traditional Christmas tree is proving that it has a lot more to offer than simply the joy of seeing it all decked out in lights and tinsel. In a sector hit by low timber prices for the past several years, Christmas trees have provided an annual ray of light for investors and farmers.
Sales of Christmas trees in the UK are now in excess of 6 million per year. However production of Christmas trees is a highly specialized operation. While Christmas tree production does have a high profitability potential, it is also a long-term investment, not without risk, requiring occasional periods of intensive labour.A feasibility study should always be undertaken prior to considering planting any species of tree for commercial purposes. Christmas trees are not usually harvested until they are five to eight years old and any return would not be seen until after the final harvest year.
Christmas trees can be produced on a wide variety of soils. While good agricultural land is ideal, some species can even be grown on marginal soils. A moist but well drained, level site is best. It is important to match the tree species carefully with existing soil conditions. Growers who plan to convert forested land should clear the land and establish a beneficial cover the year before planting.
Christmas trees can be marketed in a choose-and-cut operation, where the consumer selects the tree and then assumes the cost of harvest and transportation. This type of operation is successful when the plantation is located close to a major town. Alternatively trees can be sold via supermarkets, which involves the grower abiding by stringent regulations on size and appearance, plus the obligation to meet deadlines for production.
The British Christmas Tree Growers Association estimates that production costs for establishing one acre of manually planted Christmas trees (1,000 trees) and growing them over a seven year period, would range from £6,250 to £7,000. Assuming 330 trees are sold annually in years five, six and seven, at an average price of £15-£20 per tree, an acre of Christmas trees will generate between £4,950 and £6,600 in annual gross revenues. Returns over and above all costs should be in the range of £8,000 however most of this return will not be realised until the final year of production.
CKD Galbraith has one of the largest in Scotland, with a woodland management portfolio now in excess of 150,000 acres. Clients include estates, individuals, commercial companies and the public sector. For more information please contact John Mackay, head of our Forestry department.