Economic aspects of Christmas tree production and marketing in Virginia

An economic description and analysis of Christmas tree production was made for the benefit of Virginia's farm and other landowners. The purpose of the study was to aid in determining if investment in Christmas trees was likely to be economically successful, and to improve plantation management on existing plantations.

Basic production and marketing data was collected from the state's growers, and used to describe and recommend certain operations commonly involved in the production process. Evaluation of the operations was based primarily upon financial considerations, with emphasis on cultural effectiveness whenever possible or appropriate. A computer analysis program was also developed which, given a set of input data, calculates the present net worth of the investment and break-even price per tree using a discount rate of 12 percent. In addition, the internal rate of return, and yearly and accumulated cash flows are presented.

It was found that if the operations recommended in the study were carried out on a five-acre plantation over a production cycle of nine years that the internal rate of return could be expected to range from 9.4 percent for a high-cost operation and $1000 per acre land cost, to 39.8 percent for a low-cost operation and a $100 per acre land value. The primary financial disadvantage of Christmas tree production was found to be the large negative cash flow incurred up to the last year of the cycle.

The computer program developed in this study has been stored on the VPI & SU Extension Division's Computerized Management Network so that it will be readily accessible to prospective and current Christmas tree growers.