This is a case of Mother Nature knows best: when it comes to spreading mulch around a tree, be sure not to mound it up around the trunk. In fact, the flare, the part of the tree at the soil line, is very important to the tree's health. Mulch should not be touching the tree's bark, because the mulch would retain moisture against the bark, rotting it and providing a haven for destructive diseases, rodents, and insects. Although some landscapers still volcano-mulch trees, arborists, extension services, and foresters have mounted a campaign to explain the best way to mulch trees. For more information see these sites: Why Mulch Volcanos Are Bad (U. Missouri Extension), Proper Mulching (U. Vermont Extension), and Mulch: Your Tree's Best Friend (Missouri Department of Conservation).
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