Timber industry representatives say a new plan for research into agroforestry will not be a repeat of failed managed investment schemes.

On Thursday, Deputy Prime Minister Barnaby Joyce announced $520,000 in funding for a research and development project to look into growing trees for harvest on farmland.

Forest and Wood Products Australia (FWPA) would coordinate the research to investigate the tree varieties, soil types and planning needed to introduce timber plantations on farm.

Minister Joyce said the research would seek to allow farmers to diversify into planting trees for harvest and give farmers another source of on-farm revenue.

"This [funding] works very well inside our program of a better agricultural outcome, a better timber outcome, for our nation," he said.

Industry representatives have also sought to clarify the project would not be a repeat of failed forestry managed investment schemes, which devastated thousands of farmer investors.

FWPA managing director Ric Sinclair said funding for the research project would benefit both timber processors and farmers.

"This research is about giving decision support to farmers about how and where to put trees on their property that can maximise value," he said.

Mr Sinclair said the industry had "learnt a lot" from the mistakes made by the agribusiness companies behind failed managed investment schemes.

Ross Hampton from the Australian Forest Products Association said growing trees on farms would lead to a significant increase in Australian timber resources.

"The resource is obviously fundamental for growth," Mr Hampton said.

"We've had two large resource baskets in Australia — the plantations and the native forest area.

"What's been missing in Australia really has been a large input from our farming community."

Forest and Wood Products Australia will partner with several groups including Dairy Australia, the CSIRO and the Rural Industries Research and Development Corporation to carry out the project.