Eden-Monaro MP Mike Kelly said the future of the timber industry will see farmers dedicate land to forest resources and reforestation via a carbon farming initiative, which would allow farmers to make money from day one.

Dr Kelly said the industry has the potential to exploit the concept of carbon sinks, a move he said would also create new jobs in the electorate.

That would include getting a coordinator to help farmers set up a timber coop to diversify their income by assigning part of their property to plantation resources, Dr Kelly said.

He denied recent comments he does not support the timber industry, and said the industrys peak body the Australian Forestry Products Association has estimated a possible 250,000 hectares of land in Eden-Monaro is suitable for further plantations.

He said he is focused on growing the industry, and the recent comments are not based on industry knowledge, but politically motivated ahead of the May election.

Dr Kelly said the land estimates provided by the AFPA would provide well beyond what is needed for mills in the region, while maintaining a sustainable balance between farming food and fibre.

Expanding plantations is the industrys number one policy, Dr Kelly said.

Carbon farming will be a major driver of growth in the industry.

Last year the federal government announced a $20million plan for a billion new plantation trees over four years to attempt to meet demand, and a commitment to creating regional forest industry hubs.

"A key theme which came up during consultation was Australia will need to plant a billion new trees over the next decade to meet demand in 2050, particularly sawlogs for building and construction, Minister for Agriculture and Water Resources David Littleproud said.

With plantations currently supplying 40 per cent of the Eden chipmill, Dr Kelly, who supports the hub concept, said the use of plantations on privately held land could see that figure jump to as much as 85 per cent.

AFPA chief executive officer Ross Hampton this week said he supports the idea of forest farming on private land, which the proposed industry hubs will help support, but said greater incentives must be implemented by government.

Both the planting goal and the focus on hubs are very welcome, however without changes to allow tree planting to gain carbon payments we may see little change in the alarming downwards trajectory in plantation plantings, he said.

Demand for forestry and forest products continues to grow, but for a decade, policy has been lacking to enable tree planting to keep pace with demand.

Already we are importing significant quantities of softwood for house frames.

Dr Kelly said the Labor Party is committed to working alongside the AFPA on stimulating investment in plantations, and to help land owners earn money by maintaining native forests as carbon sinks.

One farmer in Bombala has part of his property dedicated to the Eden chipmill, Dr Kelly said.

He is happy because it is diversifying his income.

Dr Kelly said the move will also have social benefits in that it will resolve the tensions between those who support native forest logging in the community and those who want to preserve the regions native forest heritage.

We need to diversify the economic base. It is important for the rest of the region, he said.

Im not trying to throw people out on the street without a job.