Plans to revive Australia's forest products research have been outlined at a national forestry investment conference.

The Forest Investment and Market Outlook (FIMO) 2014 conference, heard funding for forestry research and development has collapsed, from a peak of $100 million to $25million this year.

The cuts have seen 200 forestry research and development jobs lost, leaving fewer than 80 positions in Australia.

But Forests and Wood Products Australia (FWPA) statistics, show forestry and timber harvesting activity is starting to rise, with demand for softwoods for Australian housing and for woodchips in China.

FWPA managing director Ric Sinclair, says the industry is now looking at long-term investment in research, to drive productivity gains.

"One of the challenges of the forest sector is that it is long-term investment," he said.

"Making the right investments at the start of the cycle is about achieving that productivity.

"Some mills are starting to lift volumes by going up extra shifts.

"Some are investing in some new equipment.

"Productivity growth in the forests though is really a 15 to 30 year decision.

"There's a proposal at the moment by the Australian Forest products Association, AFPA, to create a research institute.

"This is a long term proposal, about holding the research capacity in a new structure, whether that is in one location, or across several nodes.

"We are also in the process of developing a bid for a CRC, which is very much focussed on how we transform the sector, given that we know the future markets and what are the type of products that are required.

"It's really aimed on the principle that we know the trees that are in the ground, for the next 15 to 20 years, we know their qualities.

"What is the best way to process those to ensure a sustainable and profitable sector?

"There are three themes we are looking at: solid wood products, as well as engineered products and new engineered biomaterials.

"Bio-plastics and bio-refinery precursory materials; there's a lot of work happening overseas in this space.

"But in Australia, we don't really know from the nature of our industry and the diversity of our resources, how well we are suited to this new range of products."