We buy a lot of Christmas trees (Update) | Planet Money

Intro

In this episode of Planet Money, the hosts delve into the fascinating world of the Christmas tree market. They explore the economics and logistics behind the industry, from the world’s largest Christmas tree auction to the challenges faced by tree farmers and retailers. Join them as they navigate the complexities of buying and selling Christmas trees.

Main Takeaways

The Christmas Tree Auction: A Hub of Activity

• The world’s largest auction of Christmas trees in Mithlamburg, Pennsylvania determines the number of trees sold and their prices based on supply and demand.
• Neil Courtney, the auctioneer with over 30 years of experience, expects this year’s auction to be the hottest in the last three decades due to the pandemic.
• Hundreds of buyers and sellers from Pennsylvania, Canada, and North Carolina gather at the auction to trade various types of trees, including classic and exotic varieties.
• The auction takes place outdoors, with the auctioneer moving from tree pile to tree pile on the back of a pickup truck.

The Impact of the Pandemic and Supply Shortage

• The pandemic led to an unusual increase in demand for Christmas trees as people sought something cheerful while being stuck at home.
• Tree growers like Byron and Holly Mitchell are delighted with the soaring prices, even for lower-grade trees, indicating a profitable year for them.
• Due to the Great Recession, the Christmas tree farming business collapsed, leading to a shortage of trees today.
• The shortage of trees creates a sense of urgency, leading the hosts to consider buying trees at an auction.

The Bidding Process and Market Dynamics

• The auctioneer primes the pump with a high starting price and quickly drops it, creating a sense of urgency and excitement among the buyers.
• Bidders engage in strategic bidding, waiting for the price to drop before swooping in with a winning bid.
• The concept of the winner’s curse is discussed, highlighting the idea that winning an auction often means paying more than the object’s actual value.
• An innovative idea to market misfit trees as “Zoom trees” for virtual backgrounds is proposed, reflecting the adaptability and creativity in the tree-selling business.

The Tree-Selling Venture and Lessons Learned

• The hosts purchase 19 trees at the auction with the intention of selling them for a profit in Brooklyn.
• However, they struggle to negotiate due to sharing the story of the trees with potential buyers.
• Despite various costs incurred, they end up selling all 19 trees but at a loss.
• Nevertheless, the venture brings moments of satisfaction and heartwarming experiences, such as a customer sending a photo of their tree in their living room and a family recording a song about their tree-buying experience.

Summary

The Christmas Tree Auction: A Hub of Activity

In Mithlamburg, Pennsylvania, the hosts visit the world’s largest Christmas tree auction, where the number of trees sold and their prices are determined based on supply and demand. Neil Courtney, the experienced auctioneer, expects this year’s auction to be the hottest in three decades due to the pandemic. Hundreds of buyers and sellers from different regions gather to trade various types of trees, creating a bustling atmosphere. The auction takes place outdoors, with the auctioneer moving from tree pile to tree pile on the back of a pickup truck, facilitating the bidding process.

The Impact of the Pandemic and Supply Shortage

The pandemic has led to an unexpected surge in demand for Christmas trees, as people seek something cheerful while being stuck at home. This increased demand, coupled with a limited supply, has resulted in soaring prices for trees. Tree growers like Byron and Holly Mitchell are benefiting from this situation, even earning profits from lower-grade trees. However, the shortage of trees is a consequence of the Christmas tree farming business collapsing during the Great Recession. This shortage creates a sense of urgency, prompting the hosts to explore buying trees at an auction.

The Bidding Process and Market Dynamics

The auctioneer at the Christmas tree auction employs strategic tactics to create excitement and urgency among buyers. Bidders strategically wait for the price to drop before making their winning bids. The concept of the winner’s curse is discussed, emphasizing that winning an auction often means paying more than the actual value of the item. The hosts observe the dynamics and market inefficiencies at the auction, challenging the notion of efficient markets. They also encounter sellers with unpredictable success stories and propose innovative ideas to market misfit trees, showcasing the adaptability and creativity within the tree-selling business.

The Tree-Selling Venture and Lessons Learned

The hosts embark on a tree-selling venture, purchasing 19 trees at the auction with the intention of selling them in Brooklyn for a profit. However, they face challenges in negotiating prices due to sharing the story of the trees with potential buyers. Despite the various costs incurred, including gas, rental car, hotel rooms, parking, meals, taxes, and tolls, they manage to sell all 19 trees but at a loss. Nevertheless, the venture brings moments of satisfaction, such as a customer sending a photo of their tree in their living room, and heartwarming experiences, such as a family recording a song about their tree-buying experience.

Conclusion

The Planet Money episode provides a captivating exploration of the Christmas tree market, revealing the complexities of the industry. From the bustling Christmas tree auction to the challenges faced by tree farmers and retailers, the hosts shed light on the economics and logistics behind this seasonal tradition. Despite the ups and downs of their own tree-selling venture, the hosts gain valuable insights into the dynamics of the market and the importance of adaptability in the face of changing consumer preferences. The episode serves as a reminder of the hidden intricacies behind seemingly simple holiday traditions.