I keep on hearing advice about putting mulch around the base of a tree to "help it." What is mulch and how does it "work" to improve/help trees?
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Well, I can tell you about my experience with apple trees in a grassy area vs. the same apple trees in bare dirt. Grass isn't mulch, but it can serve a similar purpose, in some ways. With the trees in the bare dirt, most of the apples dropped before ripening, especially in times of heat and drought. The trees in the lawn (before the lawn was removed) retained a lot more apples. – Brōtsyorfuzthrāx Nov 27 '15 at 09:46
2 Answers
To Bamboo's post, I'd just add that if the tree is planted in a lawn, mulching around the tree has two additional benefits. First the tree and the grass are not competing for nutrients. Second, you do not need to mow over the exposed roots of the tree, so there is less of a chance of damaging the tree with your mower.

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Mulch is a term used to describe any layer of material on the top of soil. This can include leaf litter (naturally occurring in woodlands, for instance), stone, slate, chippings, paper, coca shell, bark chips, garden compost, soil conditioning compost and well rotted manures.
The main benefit of any substance placed on top of the ground is moisture conservation and, to a lesser extent, weed suppression. The most beneficial to any plant, though, are the organic ones - composts such as garden, soil conditioning or manure based, coca shell and bark chips (though there are other possible drawbacks to the latter, because they can carry infective spores). These will rot down over time and the nutrients from it will end up in the soil, improving bio diversity and environmental conditions, and so enabling whatever plant it is to take up any nutrients more readily.
The main reason for suggesting using it around young trees is water conservation - young, new planted trees need a lot of water during their first three years, and in the first couple of years, they may be relying on you to provide it during dry spells. Care must be exercised when applying mulch around trees though - the mulch must not be up around the base of the trunk, but rather, spread around over the top of the ground for a couple of feet all round, with the base of the trunk left clear.

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2Trees have to be planted at their current level when supplied in a pot, or up to where they've obviously been planted before if supplied bare root - soil above, onto the trunk, can kill a tree, often by causing rot. it's the roots that need the moisture and nutrients, and they'll be spread out round and below the base of the tree. – Bamboo Mar 24 '14 at 14:36
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I just posted an answer to someone having issues with a tree that may be getting too much nitrogen. This is another reason to mulch. It's not the mulch so much as making the area around the tree separate, so that you don't treat this area the same as the lawn (and in this case perhaps get too much nitrogen). This can also pertain to other lawn care treatments. – Eric Deloak Nov 29 '15 at 05:09