It's Not the Money

The full text of one of my favorite quips is "When they tell you it's not the money that matters, it's the principle. It's the money." One of my favorite writers, Dorothy Parker, wrote that back in the 30's. A case in point is in today's Milwaukee Journal Sentinel regarding one of Wisconsin's largest ag products, Christmas trees.

They are Wisconsin's happiest crop, millions of Christmas trees growing on thousands of acres, strung across the state like garlands.
But they are also a crop under stress. Not biological stress, but the stress of globalization and free markets in the form of an increasing flood of cheap, artificial trees from Asia. Since at least 1990, more people have displayed artificial trees than live ones, according to data collected by the National Christmas Tree Association in St. Louis. Between 2001 and 2003, sales of artificial trees grew 32% while sales of real ones fell 16%.

In Wisconsin, which ranks No. 5 nationally in Christmas tree production, that translates to a drop of more than 25% in the number of trees harvested in the past 20 years.

Read a little further for the real reason for Christmas tree production and the cut back.

New regulations recategorized profit from a harvested tree as farm income, not the previous long-term capital gain. As farm income pays a higher rate than capital gains, that pruned profits from the tree trade and caused some farmers to cut back production.

So is it foreign competition or tax laws that are the greater disincentive for Christmas tree growers? Back in my commodity trading days, there were players always looking to bury money and one of the best ways was to buy land and then grow Christmas trees on it. I knew people who let churchs or Boy Scout troops harvest the trees and sell them for themselves, while the landowner took an even bigger charitable deduction. I don't doubt there are some growers in it because it's a "happy crop," but I'll side with Dorothy why the majority are in it or getting out of it.