Planet Money - We buy a lot of Christmas trees (Classic)

Episode Date: December 15, 2021

Nick and Robert head to the world's largest Christmas tree auction with $1,000 and a truck. And get schooled in the tree market. | Subscribe to our weekly newsletter here.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This is Planet Money, from NPR. If you have not purchased a Christmas tree yet, well, I'm afraid I don't have great news for you. The Christmas tree market, like a lot of supply chains right now, is tight. Which means that prices on live-cut trees are running, on average, 5-10% higher than last year. Which was already a pricey year for Christmas trees. And in most stories about supply chain shortages, this is the part where we talk about the pandemic and its sweeping impact. But what's happening to the Christmas tree market actually has much deeper roots. Robert Smith and Nick Fountain tell the story in this episode that first aired

in December of 2020. And stay tuned for an update at the end. Christmas tree. Christmas trees. Christmas tree, yep. Planet Money Christmas tree. The day after Thanksgiving, Nick, you and I participated in a grand American tradition, trying to make a buck off a religious holiday. You guys need a Christmas tree?

We're good, thanks. Christmas trees. Look at that beauty're good, thanks. Christmas trees! Look at that beauty right there. Planet money Christmas trees. We had a pickup truck filled with Christmas trees, a few signs on a corner in a fancy Brooklyn neighborhood, and we were ready to make some cash. How much does a six to seven foot Christmas tree go for these years?

We're asking for $150. And people are actually paying $150. No, no they are not. Not a single person. That's why we still have a truck full of trees. So are you trying to dupe people into buying too expensive Christmas trees? Is that what's going on?

I don't think it's duping. It's seeing what the market will bear. Okay, and the market so far has borne nothing. He was right. We were striking out. What was it? Were our prices too high?

Was our sales pitch off? Maybe people couldn't see our fancy podcast microphones. I think we got a customer. We're curious if this is a tree sale or if it's a news program. It is both. Whoa!

I know. It's kind of crazy. Amanda and Leo Sidron and some extended family were headed to the park when they saw our sign. It was just a matter of reeling them in. Are you interested in a tree? Yes, we are interested in a tree. Excellent. We were just discussing how much to charge for them because we have a little... I overheard you say that you think they might be worth $150. Before we put a price on this tree, would you like to hear the story of the tree?

Of course. Excellent. Picture, if you will, a farm in the middle of Pennsylvania. Rolling hills, there are cows, there's a beautiful little barn off in the middle of Pennsylvania. Rolling hills, there are cows, there's a beautiful little barn off in the distance. And you're thinking, oh, is this where they grow the Christmas trees? But no, this is where they auction the Christmas trees. All right, ready? Three, two... Vroom, vroom, vroom, vroom, vroom, vroom.

Crossfade with walking sounds. Footsteps in a field. One week ago. All right. Good morning, Mifflinburg. Woo! Beautiful, beautiful day. Sunrise, 38 degrees.

Gonna be warm today, not very Christmassy. Hello and welcome to Planet Money. I'm Robert Smith. And I'm Nick Fountain, and we are in Mifflinburg, Pennsylvania. You know, every time I've had a Christmas tree, I somehow pictured it cut down from a snowy forest by a burly lumberjack, and it magically appearing on my street corner. lumberjack and it magically appearing on my street corner. But really, there are a bunch of weird, fascinating steps in between that determine exactly how many Christmas trees get sold and how expensive they are. Today on the show, we visit the world's largest auction of Christmas trees, where the yuletide

dreams of boys and girls meet the hard reality of supply and demand. We have $1,000 in cash. We have a pickup truck. Anything can happen. Let's just take a moment. That is a lot of trees. It's amazing. The Buffalo Valley Auction Center is a big warehouse plopped down in the middle of prime Pennsylvania farmland.

The Christmas trees are stacked like firewood in this big quarter mile circle around the building. Far as the eye can see. It looks like an evergreen wall surrounding the property, like it's a medieval castle. Each of the trees is wrapped in twine and piled in mounds the size of a truck. And in front of each mound is a single tree that's unwrapped so you can smell the needles or count the rings or kick the stump, whatever people do here. Good morning. Hey, we're looking for the office for the Courtney's. There are 45,000 Christmas trees here. So many that the auction doesn't take place inside the building.

Oh, we have topiary over here. No, the auctioneer is going to move from tree pile to tree pile on the back of a pickup truck. Check, check, check. And we hear that auctioneer before we spot him. Neil Courtney is getting ready to haul himself into the back of the auction pickup truck. There's a tiny stool for him in the back. The auction starts in 10 minutes, so we're already talking fast.

How long have you done this? I've been on the tree truck sort of year. What's the deal with the little stool? The little stool is where I sit. That is a tiny little stool, and you are not a tiny little man. It'll be all right. You have a sense of balance on the back of the truck?

I do. Have you ever fallen off? No, the chair screwed fast. Gotcha. Neil says this big Christmas tree auction started as a way to make his professional life just a little bit easier. 30 years ago, he was a traveling auctioneer. Farmers would bring him out to their farm to auction off, well, anything they had to sell. And eventually Neil and a bunch of farmers thought,

why not build an auction center and cut out all that driving? Centralized location. Yeah, what if everyone comes to me? And they did it. People said no one will cut trees and bring them. They cut trees and brought them. 30 years ago, Neil sold $3,000 worth of Christmas trees here. Today, he's hoping he's going to auction off

$1.3 million worth of needles and branches. Today, he's hoping he's going to auction off $1.3 million worth of needles and branches. But to hit that huge number, everything will have to go perfectly. And Neil has this theory that this year will be the hottest auction in the last 30 years. He can just feel it. With everyone stuck at home during a pandemic, he thinks people are desperate for something cheerful. And Christmas is going to be huge. Christmas is going to be huge. You think people will get more trees, more boughs, more holly? They're gonna, they're gonna, they're gonna make Christmas, Christmas. Yeah. If this is indeed a banner year for Christmas trees, the market will sense it here first. This is definitely the largest tree for all in the nation. Tree for all. Hundreds of buyers and sellers come together in one spot.

The farmers truck in conifers from across Pennsylvania and as far away as Canada and North Carolina. Little trees for apartments that were planted only a few years ago. Big 18-footers for apartment building lobbies. Those take over a decade to grow. And it's not just your classic Fraser furs. We got Frasers, we got Douglas, we got Turkish fur, we got Canines, we got Concolors, we got Blue Spruce, Serbians, Nordmans, lots of different varieties. I've never heard of most of those varieties.

Well, you're going to hear the Douglas and the Fraser, the two you hear. The rest are exotics, and that's our... We suddenly hear a loudspeaker calling for the start of the auction. I guess that means I've got to get to work. Check, check. Ooh, that's hot. Neil climbs up into the bed of the pickup and onto the little stool. Go ahead, Bill. And the truck drives off along a dirt path towards tree pile number one. Good luck with the driving.

I don't know where all the buyers were hiding, but as the truck moves into position, a crowd starts to assemble. Maybe a hundred guys, and they're mostly guys, in hoodies and Carhartts. They work at garden centers, hardware stores. Some are just planning to set up in a vacant corner lot. And they're all here looking for a good deal. I position myself next to a man who looks like he spends a lot of time outside. My name is Kerry Knowles. And where do you work? What do you do?

Alexandria, Virginia, in the farm market business. That's right outside of Washington, D.C. Kerry has this brick red baseball cap. It's the only one in the crowd. Maybe it's just fashion. Maybe it's some sort of auction trick to get the best deal. That's unclear. But what is clear is that everyone will need some sort of edge today.

This is going to be a day like nobody's ever seen. How many do you need? Don't need any, but if the right stuff's there, the right money, it could be a thousand, could, could be $2,000. Check, check. Neil, the auctioneer, is ready. Just about showtime. His mic is hot.

All right, ladies and gentlemen, here we go. We're going to give you the terms and conditions for today's auction. Ladies and gentlemen, your eyes, your guide, your checkbook talks. When I say sold, it's yours, okay? Neil runs through a few more rules, and then... Ladies and gentlemen, let's get this show off the ground. You're on, Harvey. We're going to start here?

You're set. You bet. Five 12-foot con callers. Five 12-foot con callers. What are you going to give? What are you going to give? $200 to go. Did he just say $200 a tree? That's just the first number out of his mouth.

It's meant to prime the pump, to anchor expectations. Watch, watch. He's going to quickly drop the price. Sold for $95 a treat, and you can feel a chill go through the crowd. That's about $15 more than last year. Neil was right. This is going to be a hot year for Christmas trees. A lot of the buyers aren't even bidding yet. Linfama has a garden center in New Jersey. The prices are a little high right now. We're going to wait.

Well, I hear if you wait, you might have to pay even more. Then we'll be going home with nothing. After each sale, the auction truck starts up, moves about seven feet down the road, stops in front of the next pile, and the auction starts all over again. Neil can auction off a pile of 50 trees in 30 seconds flat.

Carrie with the red hat has been right in the middle of the bidding. I've come to check in. What's it looking like this year? It'll be a good year to be a tree farmer and have trees here to sell. They're bringing big money for them. So that means a bad year to be in the retail business? Well, you've just got to adjust your figures a little bit. There's not enough to go around for everybody, so you've got to get in there and get them. Kerry is already lowering his standards. The very best trees here are graded number one.

Kerry was desperate in buying number two grade trees. These are trees that are, you know, misshapen or have a big bald spot on the back. You got a lot of misfits. You bought a misfit? Yeah, a misfit. Gotta give them a home, too. Everybody's watched

Charlie Brown at Christmas. Washington, D.C., you're getting misfits this year. Good misfits. Check back with me in a little bit. You know, there's something Kerry said that stuck with me. There are not enough trees to go around, which seems incredible with 45,000 trees here. But there's clearly something unusual going on this year beyond just the increased demand during a pandemic. If there's a supply problem, we need to go to the source, to the growers.

And it wasn't hard to find them. They were the folks hanging out at the back of the pack with huge smiles on their faces as prices went up and up. These prices are amazing. Even for the misfit trees. My name's Byron Mitchell and this is my wife. Holly Mitchell. And where's your farm? Where

do you grow? Gaines, Gelton, Pennsylvania area. The Mitchells have about 250 acres of trees, which sounds like a lot. But Byron says, in fact, this year, all across the nation, we are experiencing a critical shortage of Christmas trees. Not because of COVID, but because of the way Christmas trees are grown. Remember how we said that it takes about a decade to grow a decent-sized Christmas tree? The seedlings of this year's shortage were planted 10 years ago. They were planted during the Great Recession. Now, I didn't know about this because at the time I was covering, you know, banks going under. But during those years, the tree farming

business also collapsed. Remember how no one was buying real estate and there were all those new homes that were, you know, either vacant or foreclosed upon? Well, no one was buying evergreen trees for landscaping. And the farmers who grow those trees, they'd lost this huge revenue stream. And so in desperation, they started to cut the landscaping trees to sell as Christmas trees. That Christmas during the recession, trees flooded the market. Byron remembers the prices plunging. Trees that might usually sell for $24. Here at the auction, $7 a piece. We were losing money. It was just cash flow to keep the business running. The price for trees was so low that during the worst year, 2013, farmers started to give up entirely.

They didn't even bother cutting the trees down and shipping them to market. We had fields of trees, literally thousands and thousands. We probably lost somewhere in the realm of 75,000 to 100,000 trees that we just let grow because we couldn't afford to maintain them any longer. People stopped planting new trees. A lot of tree farms went out of business. Byron estimates half of his fellow tree farmers gave up. The Mitchells only survived because a gas company came in to lease some of their land for fracking.

And that's why there are so few farmers here, so few trees up for auction this year. All these years later, these trees that we see today are the miraculous survivors of the worst financial crisis since the Great Depression. And to the survivors, go the riches. It gives us hope for the future, the prices that we're seeing today, that we're going to be able to continue. And in the springtime, we'll be able to plant seedlings. So that way, in 10 years, we'll have more trees to keep going. A nationwide shortage of trees. You know, when I heard that, I got that feeling, that feeling you get when you're shopping online and you see a little pop-up that says,

only three items left at this price and you start clicking because you lose all your rational thought because you just have to buy it now. You thinking what I'm thinking? We should buy a metric buttload of trees. I mean if we can get it at a good enough price we could totally turn a profit in New York. Everything is expensive in New York. We can't not buy them really. It's weirdly easy to turn from being reporters to auction participants. We walk over to the auction. Your son, Ben, we fill in a form. He doesn't ask if we know what we're doing or if we have enough money or even if we have a truck.

Although we did come ready, just in case. I got $1,000 cash in my pocket and a small pickup truck. It is the world's smallest pickup truck. No! It has a six-foot bed and a lumber rack. Ben hands us an official piece of paper with our number 1099 written on it in big sharpie. That is our bidder number. 1099 like the tax form.

We plunge into the crowd gathered behind the auction truck. Starting to feel a little desperate. We got a show to fill. By this point, we kind of understand how the auction works. You do not bid on the first price you hear. That's just the teaser number. You do have to be able to do math quickly in your head. The number you hear from the auctioneer is the price per tree.

But if you bid and win, you get the whole pile of trees. You all of a sudden own 57 Fraser firs. I spot a pile I like. 40 cute little trees that would fit in my truck and inside tiny New York apartments. And while we're trying to figure out what they're worth, Neil starts auctioning them mark. $50. Wait until the price drops. $20. $20 for this thing on that land? Keep going down. $22.5.

$22.5. $22.5. Put up the auction number. I got $26. I got $26. You got $26. Oh. $26.

Oh, $26, $27. Somebody's bidding against you. I can't do it. I can't go more. No, no. Oh, wait. $27? No, you bid 26.

We missed it by a dollar? We go over to talk to the pro who beat us, Steve Kropp of Virginia. Did you just buy these? Yeah. You just beat me by a dollar. Daggone it. I thought I could get a steal,

but then you just swooped in there. No, I started it. I started with a 20. You went up to it. I started it. I was at 20. You went up to 26. I'm like, what are you doing? We got to work together. Seriously, let's collude. Yeah, we got to work together.

Now, we should be jumping right back in, but Robert is just kind of wandering off muttering, I don't know, about flaws in auction theory. So I know it's capitalism, and I know that's the way the market works, right? This is price discovery. But we don't know anything. It's true.

We are complete idiots. We're complete idiots. So are those really worth $27? I mean, that guy's willing to pay it, but he had to have something. We bid it up. If we hadn't been here, would they have gone for $20, $21? What is the price of that tree? The price is what he paid for it, man. If we hadn't been here, would they have gone for 2021? What is the price of that tree?

The price is what he paid for it, man. You know, I did remember there is a name for this in economics. It's called the winner's curse. By definition, in order to win an auction, you have to bid more than everyone else thinks the object is worth. Throw in a couple of city boys like us, and this whole efficient markets thing goes out the window. Also, it's starting to seem like there are other inefficiencies here. We spot the red hat of Kerry Knowles,

the guy who sells just outside of Washington, D.C., and ask him how he's doing. Fantastic. I swear, I just kicked, yeah, it's been good. Wait a minute, you are smiling. I did not expect that early this morning. You were grim-faced. That's what makes this business so fascinating is that it turns, just spins right out from you. Well, explain to me what happened. What'd you get? Why are you so happy? I must have all been sleeping or something. I don't know. Somebody came over there with a box

of donuts and half the buyers went over there to get them a free donut and I just scooped them up. What did you get? How many? Just a couple piles. Piles of trees, not a piles of donuts. Kerry, though, has inspired me to think creatively, to just like grab the moment. And I'm thinking, let's go for misfit trees. The number two trees. This is where we brand the Zoom tree. I think like, I don't think anyone's tried this yet. Hear me out here. For a lot of people, their social life now and their work life is on Zoom, right? Sure. And so you want to have a nice background that says like, oh, you know, I'm enjoying the holidays. And it doesn't matter if it's a good tree.

It just has to look good on Zoom. Right, right, right. Just like nobody's wearing pants anymore. We get a skanky, we get a flawed number two tree and then we just market Zoom trees. We add 20 bucks to it. I'm loving it. Let's do it. Then we spot them. The smallest pile

of number two trees around. 1967 feet. These are hefty trees. You can sell 19 trees in New York. So we're making our stand here. Can you guys who know something about trees tell us how much these are going to go for? Nobody knows. And then it's too late.

Neil and his auction truck pulls up. Which one? I make eye contact with Neil. But don't bid yet. Okay, we're at $50. Are you in? Are you in, Nick? Nick finally bids, but he's quickly outmatched. $52.50.

Okay, he's doing $52. Nick bids $55 a tree, and then, I cannot believe I'm seeing this, he bids against himself. And you only get one free pass a day. $52.50. You just went pass go, you bought it. Hell yeah! Yeah, we got it!

Let's hear it! 50-yard strikes. What's the number, guys? $10.99. $10.99. $10.99. Largest news media group in the country. You bought those things? Oh, no.

Immediately, people start giving us a hard time about the price we paid. But you know what? We don't care. We got treats. We start throwing them in the bed of my pickup. All we have to do now is bring them back to Brooklyn and sell these 19 trees for a profit. When our show continues after... Wait, what?

One second, I got a... Nick. The truck is full. Well, you've only put in half the trees. Yeah, we have seven trees we can't fit into Nick's tiny truck. It's a decent-sized truck. But Nick, ever the hustler, approaches a bunch of guys next to us. Excuse me, sir. No, you're not going to try it.

And goes into sales mode. I bought them for $55. I mean. Would you take them for $55? How about $50? It's worth it to me. Okay, come on. Wait, did we just lose money already?

We just lost seven times five, $35. Okay, Nick. Now are we ready? Just got to tie them down and head for the big city after the break. Well, now that you've heard the story. And so that brings us back to the day after Thanksgiving.

A street corner in Park Slope, Brooklyn, the Sidron family listening to our every word, captivated by the story of why the Great Recession means they should pay $150 for a tree that we bought for $55. But the nice thing is, if someone were to see your tree, maybe in the background of a Zoom call or perhaps a visit, you could just say to them, hey, do you have 20 minutes? Because you could listen to an entire episode about this exact tree.

I mean, that's just... Well, that does make it more valuable. Yeah, definitely. It could make it more valuable because obviously the story has currency. I mean, that's what you're selling us is a story. And a Christmas tree. Don't forget, we're also selling you a Christmas tree.

Biggest one off the top. We pull the top tree off the pile, unwrap it, and honestly, it is not that bad. It's time to haggle. And immediately we realized that because we told the Sidron family the story of the tree, we have lost a lot of our negotiating power. We don't need to hear the show to know that these are second-rate trees. What?

Ouch. But frankly, there's no other trees out right now. There's a lot of demand in Brooklyn for trees this year. Not yet. What did they say they paid? They told us. They told us. If we roll back the tape, they're going to tell us what they paid.

Well, I mean, there's all sorts of extra costs. The gas, I got a rental car, two hotel rooms. I bought loppers and a saw. I paid to park the truck in a garage because we didn't want the tree stolen. Brooklyn, meals, taxes, New Jersey tolls. But Leo Sidron is not buying it. He lobs a lowball offer. The standard $10 per foot, that's the going rate around here.

I'm going to say $70 for this tree. Oh, no, no, no, no, no, no. Well, what do you think? I mean, I think i guess i i would say a hundred dollars i will take a hundred dollars for this tree sold sold wait he's shaking his head he's shaking his head he's trying to do a negotiation it's our first sale and our only sale for a really long time. Yeah, we stood there for hours and we tried every trick. We told the story of the miraculous recession tree at least a dozen times. No one

was impressed. Four hours later, as the sun was starting to set, we had only sold the one tree. And so we got desperate. We drove around Brooklyn with a cowbell. Christmas trees. Also, we got desperate. We drove around Brooklyn with a cowbell. Christmas trees! Christmas! Which actually got a few sales. Christmas trees!

We also sold one to Robert's wife, to his neighbor. I sold two to my neighbors. And then we just started to show up at our NPR colleagues' apartments, forcing them to buy a tree for the sake of the podcast. Stacey Vanek-Smith. Robert Smith. How's it going? How's the Christmas tree business? How well could it be going if we're selling it to our co-workers at this point?

Jacob Goldstein, we've come to sell you a tree. $35. Come on. I'll give you $60. That's what Stacey paid. She didn't even question it. She wanted to pay more. Well, maybe it's worth more to her.

Nick, I know you made a spreadsheet of our profits and loss. Here it is. With taxes, we paid $1,107.70 for the trees. And we sold all 19 of them for a grand total of $1,105. That is a loss of $2.70. Before expenses. Yes, there is that. So for the sake of accounting, I'm going to book all of the expenses into the cost of the podcast part of the venture. We'll call it goodwill.

And so basically we're even. That is some creative accounting. Not going to lie, driving home that night, we were a little depressed. But later in the evening, one of our customers sent us a photo. Not going to lie, driving home that night, we were a little depressed. But later in the evening, one of our customers sent us a photo. Our tree was set up in their living room with sparkling lights and a little Santa on top. And you know, it did not look like a misfit. It didn't look like a number two tree.

It looked like the Christmas tree of my childhood memories. And that family who paid $100 for their tree, Leo, Amanda, Sol, Zelta, they went home and, believe it or not, recorded this song about the experience. Leo Sidron, the dad, he's a composer. Strolling through the neighborhood Wondering if maybe we'd find a tree for the family. And we tried and tried and tried and tried, tried to negotiate. Then we paid a hundred dollars for a tree that's second rate But it's funny, funny, funny

Because we bought it from the boys at Planet Money That was Robert Smith and Nick Fountain last Christmas. And we were curious to know what had changed in the Christmas tree market this season. So we called up our friend Neil Courtney with Buffalo Valley Produce Auction to see how 2021 compares. It's been a great season. As far as Christmas trees, we thought last year was probably going to be our best year ever. Very wrong on that one. Neil says the Christmas trees Robert and Nick bought last year would probably cost them $15 to $18 more per tree this year.

And for some of the larger trees, Neil says people are paying $1 to $200 more. Our gross sale was $1.4 million higher than last year. So it's staggering. But Neil says he predicts that this is the pinnacle. The tree supply, he says, it's catching up with demand. And as for Robert and Nick, Neil thinks they were right to get out of the tree sales business when they did. Well, they played their hand on the first tree they tried to sell.

They might want to keep their day job. Zap is running. And we bought it from the boys at Planet Money. We always want to hear your stories. You can email us at planetmoney at npr.org. Or you can find us on social media at Planet Money. Today's show was originally produced by James Sneed with help from Gilly Moon. It was edited by Bryant Erstad. This update was produced by Emma Peasley with help from Isaac Rodriguez. Alex Goldmark is Planet Money's

executive producer. Louise Story and Ebony Reed are our senior consulting editors. Be sure to tune in next week to hear another original holiday song from Leo Sidron. Special thanks to Matt Harsh for inspiring this episode and to Nick Fountain's dad for the regular-sized truck. I'm Alexi Horowitz-Ghazi. This is NPR. Thanks for listening. And a special thanks to our funder, the Alfred P. Sloan Foundation, for helping to support this podcast.