The development of a wood-based biofuel industry will open up new income opportunities for farm foresters and other forest owners, the Bioenergy Association says.
A recently completed study has confirmed the technical feasibility of producing biofuels from forestry waste. There is also a growing interest in using wood residues to replace coal or gas for heating at processing plants.
Association executive officer Brian Cos said getting enough raw material would be crucial.
Farmers and foresters needed to talk about getting together to organise supply contracts, and groups such as Maori forest owners in Northland had already started the process, he said.
"The Maori forestry groups all came together and have developed a strategy for Northland. In Southland, there's a group led by Venture Southland who are facilitating that. In Rotorua, there's a bioenergy cluster who are looking at these types of opportunities, so, they are starting.
"We've also got some of the large dairy factories who are starting took at their producers not only providing milk, but providing fuel. So a farmer can produce for Fonterra, fuel and milk and get both collected."