The Dryland Forests Initiative is seeking more funding to continue its development of a New Zealand-grown hardwood timber industry.
The initiative was started in 2003 to cultivate a genetically-improved eucalypt species for planting on drought prone and erodible pastoral land.
It aims to provide untreated hardwood posts for New Zealand industries, and to replace some of the $270 million worth of hardwoods imported each year.
The initiative received a $400,000 boost from MAF's sustainable farming fund in 2010.
Chairman Shaf van Ballekom says it has applied for funding from the Ministry of Science and Innovation to continue the programme.
He says these species have not been grown to any great extent and they have some qualities such as durable wood and an ability to withstand tougher conditions.
"We're pretty confident that out of this will come a really good resource of material that can be used to develop new industries around naturally durable timber" says Mr van Ballekom.
He says there's quite a bit of work to be done on these species in terms of selection and breeding.